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The impact of internal and external factors on profit efficiency of islamic banks in Malaysia

Siti Maizatul Shima, Yusoff (2021) The impact of internal and external factors on profit efficiency of islamic banks in Malaysia. Masters thesis, Universiti Utara Malaysia.

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Abstract

The sustainability of the banking system depends on the profit efficiency of the banks. The profit efficiency of Islamic banks in Malaysia shows a fluctuating trend from the period of 2014 to 2018. This study aims to analyse the post Global Financing Crises (GFC) period and examines the impact of external and internal factors on the profit efficiency of Islamic banks in Malaysia covering the period of 2014 to 2018. In this study, profit efficiency was measured using net income (NI). The secondary data involved 320 observations on 16 Islamic banks in Malaysia. The external factors tested in this study were Gross Domestic Product (GDP) and Inflation (INF), while the internal factors were Loan Loss Provision (LLP), Net Interest Margin (NIM) and Staff Efficiency (STAFFX). This study used panel data obtained from Fitch Connect database. The results of the study found that INF, LLP and STAFFX showed a significant negative effect while NIM showed a positive and significant effect on profit efficiency of Islamic banks in Malaysia. GDP was found to be insignificant towards profit efficiency. Findings from this study provides a better understanding of the impact of external and internal factors on the profit efficiency of Islamic banks that is useful for policy makers and banks management. This study is important as to determine the impact of these external and internal factors on banking system, in particular Islamic banks which possibly affects the banks performance and generally on the economic growth in Malaysia.

Item Type: Thesis (Masters)
Supervisor : Abdul Majid, Nurul Huda
Item ID: 9660
Uncontrolled Keywords: Profit efficiency, Islamic banks, external and internal factors
Subjects: H Social Sciences > HD Industries. Land use. Labor. > HD28-70 Management. Industrial Management
H Social Sciences > HD Industries. Land use. Labor. > HD58.9 Organizational Effectiveness.
H Social Sciences > HG Finance
Divisions: Islamic Business School
Date Deposited: 27 Jul 2022 08:13
Last Modified: 27 Jul 2022 08:13
Department: Islamic Business School
Name: Abdul Majid, Nurul Huda
URI: https://etd.uum.edu.my/id/eprint/9660

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