Determinants of bank's profitability: the case of foreign banks in Malaysia / Noorfatin Najiihah Muhammad Fadzil

In accounting theory, profitability shows a surplus of profit over expense for a specified period of time that represent earning of banks that contribute to the Malaysian economic. The foreign bank's profitability also contribute to the Malaysian economic. Besides that, profitability shows the relationship of the absolute amount of the revenue that indicate the ability of a bank to raise its loans to its customers and boost their profit. Although a profit ability is efficiency improvement indicator, there are some number of factors that can affect the profitability of bank. The previous researches have study the determinants of banking sector and commercial bank's profitability but not on the foreign banks. So, this study is to find the determinants that affect the foreign bank's profitability. This study will use a panel data that consist of 10 foreign banks in Malaysia for 6 years from 2010 until 2015. This data will be analyze using the E-views software. Panel data analysis will be used to study the relationship between the internal determinants and foreign banks' profitability. The findings in this study shows that only two variables have a significant relationship with the profitability which are capital adequacy and bank size. The operating efficiency variable is found to not have a significant relationship with the profitability.