Profitability Determinants of Islamic Banks in ASEAN Countries
August 27th, 2021
By Nur’adlinaMahzir, Nur Aqilah Mohammad Khairri Najah Mokhtar,Syukriah Aliand KartiniKasim
The aim of this study is to identify the determinants of profitability of Islamic Banks in ASEAN countries which covers Malaysia, Indonesia, Brunei and Thailand from year 2011 to 2015. Independent variables are divided into two broad categories which are bank specific and macroeconomic factors. The profitability as measured by Return on Asset (ROA) was analyzed against four variables which are Equity Assets Ratio (EAR), Loans to Total Assets (LTA), Gross Domestic Product (GDP) and Inflation (INF). Based on Wald test and Hausman test, Fixed Effect model is appropriate for this study.The findings from fixed effect panel regression technique show that EAR and INF are significant determinants of Islamic banks’ profitability while NLTA and GDP are insignificant.