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

Authors : Mohammed Alı MALEK, G. Vidyasagar RAO

Pages : 57-77

Doi:10.54427/ijisef.1027563

View : 9 | Download : 6

Publication Date : 2022-03-25

Article Type : Research Paper

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 insert ignore into journalissuearticles values(macroeconomic); factors on the profitability of Islamic banking using data of select Islamic banks from Asia insert ignore into journalissuearticles values(Bahrain, Iran, Turkey and Malaysia); in the period of 2011– 2020. Panel data method is used in the empirical analysis. Return on Average Assets insert ignore into journalissuearticles values(ROAA); and Return on Average Equity insert ignore into journalissuearticles values(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 insert ignore into journalissuearticles values(LQR); and Operating Expenses Ratio insert ignore into journalissuearticles values(OER);. In addition, there is a negative correlation between Bank Age insert ignore into journalissuearticles values(BA); and Inflation Growth Rate insert ignore into journalissuearticles values(IGR);. According to the test findings, Bank Size insert ignore into journalissuearticles values(BS); and Equity Ratio insert ignore into journalissuearticles values(ER); have statistically positive significant impact on profitability; while Bank Age insert ignore into journalissuearticles values(BA); has statistically negative significant impact on profitability of select Islamic banks. Inferentially, it is revealed that external insert ignore into journalissuearticles values(macroeconomic); variables viz., GDP Growth Rate insert ignore into journalissuearticles values(GDPGR);, Inflation Growth Rate insert ignore into journalissuearticles values(IGR); and Type of Banking System insert ignore into journalissuearticles values(TBS); have non-significant impact on profitability of select Islamic banks.
Keywords : Islamic Banking, Profitability, Return on Average Assets, Return on Average Equity, Internal and External Variables, Macroeconomic