UPSI Digital Repository (UDRep)
Start | FAQ | About

QR Code Link :

Type :article
Subject :HG Finance
Main Author :Mohd Faizal Basri
Additional Authors :Amirul Afif Muhamat
Mohamad Nizam Jaafar
Title :A descriptive study on bank performance in Malaysia: domestic vs. foreign Islamic Banks
Place of Production :Tanjong Malim
Publisher :Fakulti Pengurusan dan Ekonomi
Year of Publication :2019
Corporate Name :Universiti Pendidikan Sultan Idris
PDF Guest :Click to view PDF file

Abstract : Universiti Pendidikan Sultan Idris
Malaysia’s determination to become a hub for Islamic banking in Southeast Asia has led the Central Bank of Malaysia to grant licenses to foreign Islamic banks to operate in the country. Due to the intense competition among Islamic banks, the introduction of more innovative products is projected to tap investment opportunities not only for Malaysia but also for the rapidly growing Southeast Asian region. This paper assesses the performance of Malaysian Islamic banking industry since the introduction of the first Islamic bank two decades ago by using financial ratios. The ratios are divided into four categories; profitability, liquidity, risk and solvency, and commitment to economy and Muslim community. All 16 Islamic banks as listed by Bank Negara Malaysia were selected in the sample and to get the maximum number of observations, the period of 2005 to 2012 is selected. The chosen financial ratios indicated that domestic Islamic banks performed better during the 2005 to 2012 period in terms of profitability, but the foreign Islamic banks excelled in terms of liquidity, risk, and solvency ratios.

References

1. Bank Negara Malaysia. (2010). Financial Stability and Payment Systems Report 2009. Kuala Lumpur: Bank Negara Malaysia. Retrieved from http://www.bnm.gov.my/files/publication/fsps/en/2010/fs2010_book.pdf.

2. Bank Negara Malaysia. (2015). Financial Stability and Payment Systems Report 2014. Kuala Lumpur: Bank Negara Malaysia. Retrieved from http://www.bnm.gov.my/files/publication/fsps/en/2014/fs2014_book.pdf.

3. Bashir, A. H. M. (2001). Assessing the performance of Islamic banks: Some evidence from the Middle East. Paper presented at the American Economic Association Annual Meeting, New Orleans, Louisiana.

4. Chen, S. H., and Liao, C. C. (2011). Are foreign banks more profitable than domestic banks? Homeand host-country effects of banking market structure, governance, and supervision. Journal of Banking & Finance, 35(4), 819-839.

5. Demirguc-Kunt, A., and Huizinga, H. (2001). Financial structure and bank profitability. In A. DemirgucKunt and R. Levine (Eds.), Financial Structure and Economic Growth: A Cross-Country Comparison of Banks, Markets and Development (pp. 243-262). Cambridge, MA: MIT Press.

6. Flamini, V., McDonald, C. A., and Schumacher, L. (2009). The determinants of commercial bank profitability in Sub-Saharan Africa IMF Working Paper 09/15 (pp. 1-30). Washington: International Monetary Fund.

7. Haslem, J. A. (1969). A statistical estimation of commercial bank profitability. The Journal of Business, 42(1), 22-35.

8. Islam, K. A., Alam, I., and Hossain, S. A. (2014). Examination of profitability between Islamic banks and conventional banks in Bangladesh: A comparative study. Research in Business and Management, 1(1), 78-89.

9. Malaysia International Islamic Financial Centre (MIFC) Official Website. Retrieved 1 August 2015, from www.mifc.com

10. Micco, A., Panizza, U., and Yañez, M. (2004). Bank ownership and performance. IDB Working Paper No. 429.

11. Ongore, V. O., and Kusa, G. B. (2013). Determinants of financial performance of commercial banks in Kenya. International Journal of Economics and Financial Issues, 3(1), 237-252.

12. Sabi, M. (1996). Comparative analysis of foreign and domestic bank operations in Hungary. Journal of Comparative Economics, 22(2), 179-188.

13. Samad, A., and Hassan, M. K. (1999). The performance of Malaysian Islamic bank during 1984-1997: An exploratory study. International Journal of Islamic Financial Services, 1(3), 1-14.

14. Samat, Z. (2010). Islamic banking: The lessons and challenges in Malaysia & beyond. Retrieved 1 August 2015, from http://www.bankislam.com.my/en/Documents/shariah/PresentationtoFSTEPDSZ.pdf

15. Sufian, F. (2006). The efficiency of Islamic banking industry in Malaysia: Foreign versus domestic banks. Review of Islamic Economics, 10(2), 27-53.

16. Zeb, A. (2015). Comparative analysis of performance of Islamic vis a vis conventional banking of Pakistan during global financial crisis. Journal of Islamic Banking and Finance, 32(1), 45-55.

 

 


This material may be protected under Copyright Act which governs the making of photocopies or reproductions of copyrighted materials.
You may use the digitized material for private study, scholarship, or research.

Back to previous page

Installed and configured by Bahagian Automasi, Perpustakaan Tuanku Bainun, Universiti Pendidikan Sultan Idris
If you have enquiries with this repository, kindly contact us at pustakasys@upsi.edu.my or Whatsapp +60163630263 (Office hours only)