Bank-specific & macroeconomic determinants of commercial banks profitability in Malaysia / Zahirah Jala Musa

This paper studies on the bank-specific and macroeconomic determinants of commercial banks profitability in Malaysia. This paper consists of 4 types of independent variables which are capital adequacy, bank size, inflation rate, and interest rate spread. Capital adequacy and bank size is the bank-specific determinants, while inflation rate and interest rate spread is macroeconomic determinants. In term of dependent variable it focus on return on assets. Data comprises of 6 years which is from 2007 until 2012 and consists of 13 commercial banks that will be involved in this study. Based on the finding, only capital adequacy shows significant relationship with return on assets. However, bank size shows insignificant relationship with return on asset. Other than that, inflation rate and interest rate spread shows insignificant relationship with return on assets. Capital adequacy, bank size and interest rate spread also shows positive relationship with return on asset. However, inflation rate shows the negative relationship with return on asset. In conclusion, only capital adequacy reject the hypothesis null according to the finding. While bank size, inflation rate and interest rate spread failed to reject hypothesis null.