Determinants of selected risks toward profitability performance of Bank Islam Malaysia Berhad

Islamic banking industry is being acceptable in this country. This can be seen when most of the conventional banks started to produce interest-free products and services to their customers. However, there might be different type of risks which need to be faced by Islamic banks as compared to conventional banks. The purpose of conducting this study is to determine the implication of selected risks toward profitability performance of Bank Islam Malaysia Berhad. This is because, there is no previous studies which only focused on the performance of Bank Islam Malaysia Berhad. The independent variables are Credit Risk, Liquidity Risk and Operational Risk. The dependent variable is Return on Assets. It covers the period of 1986 until 2016 which means it consist of 31 observations. Ordinary least square method is being used in this study. It consists of single linear regression and multiple linear regressions and the result from both type of regressions are being compared. The findings found out that only Liquidity Risk has significant relationship with Return on Assets of Bank Islam Malaysia Berhad. From the adjusted R 2 value, single linear regression is being selected because it shows highest value. Therefore, single linear regression is more preferable in this study rather than multiple linear regressions.