Factors determinants the banks profitability in Malaysia : Case of islamic banking / Faridah Sukiman

There are a lot of studies that have been conducted by previous researchers to
investigate the determinant of profitability of a conventional banking. Because of there
is too much studies on conventional banking, a less studies made on Islamic banking.
Thus , the objective of this study is to determine the factors of the profitability of
Islamic banking in Malaysia, through the period of 2010 to 2017. To determined the
profitability, there are two factors, which are internal factors and external factors.
Researcher will use the first one, internal factors, which is bank-specific determinant
which include capital ratio, liquidity, and financial risk. To measure the profitability of
Islamic banking, researcher use return on assets (ROA) indicator since it shows the
profitability of an assets after deducting all the expenses and taxes. In this research
paper, researcher used panel data by Stata software to run the data. For the unit root
test, researcher used three types of tests, which are Levin-Lin-Chu (LLC) test,
Breitung test, and Im-Pesaran-Shin (IPS) test. Based on that, the result shows that
capital ratio and liquidity have a positive relationship towards bank’s profitability, while
there is negative relationship between financial risk and profitability of banks. A little
recommendation for future researcher to study on more determinants so that there will
be produce a valuable research with a new result.