The comparison of performance islamic and conventional banks based on internal and external determinant focus: evidence from local banks Malaysia / Dzawin Najaa Bungsu @ Aziz

The investigation is to figure out the gaps that exist between two contradict banking system that can be trace in their profitability which are the performance of Islamic banking system and Conventional banking system within Malaysia. The aim of this study is to determine the different level of efficiency based on the selected variables. The aggregate resource have been obtained from DataStream of 8 Islamic banks and 8 Conventional banks from Malaysia as well as the yearly annual report of each bank, both banking system have been filtered to only focusing on local banks in Malaysia from 2007 until 2016. Return On Asset is chosen as a proxy to utilized as an intermediary in measuring the Islamic banks' productivity. The interior factors that also be counted as independent variables are bank size, capital adequacy, operating expenses, whereas the external factors that act as an intermediaries are inflation but using Consumer Price Index as a proxy and Gross Domestic Product (GDP). The observational discoveries recommend that all the determinant factors have a measurably altogether affect on bank’s earning. The overall finding reveal that Islamic banking system performance is more better as compared to conventional banks.