Determinant of Islamic banking instituitions' profitability in Malaysia / Nurul Najwa Yahya

The aim of this study is to examine the Islamic bank‟s profitability in Malaysia
over the time period from 2012 to 2015 which is 4 years period of study. This paper was
selected 10 Islamic banks in Malaysia. The bank profitability is measured by Return on
Equity (ROA) which is to look at the profitability of the bank. There have five selected
independent variables in this study that consist of bank size, operational efficiency,
liquidity, credit risk and capital adequacy.This study used multiple regression model
represented by the ordinary least squares (OLS) since the result shows it better then panel
data regression model as the technique to look factor that affect the Islamic Bank‟s
profitability in Malaysia. The result shows that only bank size and operational efficiency
have a positive relationship and significant effect on bank probability. Therefore, another
independent variable shows negative relationship and not significant. These results
suggest that banks can improve their profitability through increasing bank asset and
decreasing loan to debt and credit risk.