RISK TAKING BEHAVIOR AND MACROECONOMIC INDICATORS OF ISLAMIC BANKS PROFITABILITY IN MALAYSIA

Mohammad Taqiuddin Mohamad; Husni Hasbulah Muhamad; Mohd Izuan Razali

doi:10.29121/granthaalayah.v3.i2.2015.3035

Authors

Mohammad Taqiuddin Mohamad Senior Lecturer, Department of Shariah and Economics, Academy of Islamic Study, University of Malaya, Kuala Lumpur, Malaysia.
Muhamad Husni Hasbulah Department of Economics, Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Bangi, Selangor, Malaysia
Mohd Izuan Razali Center Study of History, Politics and Strategy, Faculty of Social Sciences and Humanities, Universiti Kebangsaan Malaysia, Bangi, Selangor, Malaysia

DOI:

https://doi.org/10.29121/granthaalayah.v3.i2.2015.3035

Keywords:

Profitability, Risk Taking, Monetary policy, Islamic Bank and Macroeconomics

Abstract [English]

Purpose: The purpose of the study is to examine the profitability indicators of full-fledged Malaysia Islamic explored in 1994-2013.

Design/methodology/approach:The return on assets (ROA) is used asprofitability measures to determine the effect of Risk Taking Behavior, transmission of monetary policy and macroeconomic conditions indicators on profitability.The descriptive, correlation and panel regression analysis results are derived with the help of Limdep 9.0 software.

Findings:The retained profit, return on equity, money supply and economic growth establish positive and significant relation with profitability models. Otherwise, the highest credit risk taking and loan loss provision lead tolower profitability measured by return on assets (ROA).

Originality/value:The main objective of the study is providing empirical evidence on indicators of profitability in case of seventeen full-fledged Malaysia Islamic Bank to fill a demanding gap in the literature.

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