Predict bankruptcy level among Malaysian islamic banking: using Z-Score model / Mohd Sharamadan Aqmal Mat Saat

Malaysian Islamic Banking can be classified as one of the emerging market as same as in the UAE which is characterized by a high-risk profile compared with Conventional Banks. The purpose of this study was to predict bankruptcy level among the Malaysian Islamic Banks using the Z-Score model as to measure their current status. At the same time, this study conducted as to examine any significant different between Z-score of pre crisis and after crisis among the Malaysian Islamic Banks from 2007 until 2011. The methods have been used are Z-Score model which developed by Edward Altman in 1968 and T-test. All 10 Islamic Banks in Malaysia which the local Islamic banks have been as the sample. This research referred to annual reports for all 10 Islamic Bank in Malaysia for 5 years (2007-2011). The expected bindings would be Islamic banks in Malaysia are by and large financially sound and healthy. This research will help Malaysian Islamic banks to identify and predict what their bankruptcy level is. The output of this study could be considered as a warning bell for the Islamic banks in Malaysia as to estimate the financial distress that they might face in the future.