A descriptive study on bank performance in Malaysia: domestic vs. foreign Islamic Banks

Mohd Faizal Basri

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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

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.

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