Profitability of Islamic Banking – A Study of Select Islamic Banks from Asia

Abstract

Recently, the trend of Islamic banking profitability has attracted much attention in the literature of banks' profitability. This study attempts to measure the impact of internal and external (macroeconomic) factors on the profitability of Islamic banking using data of select Islamic banks from Asia (Bahrain, Iran, Turkey and Malaysia) in the period of 2011-2020.Panel data method is used in the empirical analysis. Return on Average Assets (ROAA) and Return on Average Equity (ROAE) are used as proxies of profitability in this study. Descriptive statistics, correlation and regression analysis are applied to the variables under study.Illustratively, there is a positive correlation between Liquidity Ratio (LQR) and Operating Expenses Ratio (OER). In addition, there is a negative correlation between Bank Age (BA) and Inflation Growth Rate (IGR). According to the test findings, Bank Size (BS) and Equity Ratio (ER) have statistically positive significant impact on profitability; while Bank Age (BA) has statistically negative significant impact on profitability of select Islamic banks. Inferentially, it is revealed that external (macroeconomic) variables viz., GDP Growth Rate (GDPGR), Inflation Growth Rate (IGR) and Type of Banking System (TBS) have non-significant impact on profitability of select Islamic banks.

Pengaruh Efisiensi Terhadap Kinerja Bank Yang Terdaftar Di Bursa Efek Indonesia

“…Sehingga dapat diketahui kondisi profitabilitas suatu bank dengan menggunakan perhitungan Return on Average Equity (ROAE) serta dengan Return on Average Asset (ROAA). Kedua rasio tersebut dapat memberikan perhitungan yang lebih akurat atas volatilitas asset dan equity bank dalam satu periode (Malek & Rao, 2022).…”

Asymmetric Causal Linkages Between Liquidity and Profitability for Mena Islamic Banks

“…Alzoubi, 2017;Elfeituri and Alotaibi, 2021) or even insignificant links (e.g. Chowdhury, 2015;Malek and Rao, 2022). Consequently, it is difficult to make clear predictions of the liquidity and profitability trade-off for Islamic banks.…”

Determining the Financial Performance of Companies by DEA Window Analysis: A Study on Venture Capital Investment Trusts Operating in BIST

“…Analiz edilen dönemde, ölçeğe göre sabit getiri altında ortalama etkinliğin %70-78'e ve ölçeğe göre değişken getiri altında ortalama etkinliğin ise, %84-89'a ulaştığı görülmüştür. En verimli banka GE Money Bank, en düşük verimli banka ise Československá obchodní bank olmuştur Moualhı (2015). MENA bölgesinde faaliyet gösteren 33 İslami banka üzerine yaptığı araştırmada, 2006-2012 yıllarına ait verileri kullanmıştır.…”