Determinants of credit risks in Islamic banks in Malaysia

The concept of risk was well known to most of us. It has become an important tool in making decision when it is possible to measure it and to assign values to different situations. However the changes in the global finance environment has make Islamic banking institutions are more vulnerable to risk...

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Main Author:	'Azraa Arrmyza, Razif
Format:	Thesis
Language:	eng eng
Published:	2015
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/4596/1/s815311.pdf https://etd.uum.edu.my/4596/2/s815311_abstract.pdf
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id	my-uum-etd.4596
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Ahmad Razimi, Mohd Shahril
topic	HG Finance
spellingShingle	HG Finance 'Azraa Arrmyza, Razif Determinants of credit risks in Islamic banks in Malaysia
description	The concept of risk was well known to most of us. It has become an important tool in making decision when it is possible to measure it and to assign values to different situations. However the changes in the global finance environment has make Islamic banking institutions are more vulnerable to risks. Many theoretical studies on Islamic banking were conducted with the focus on Islamic modes of financing and their ability to perform financial intermediation for catering to the needs of people. This paper examines the determinants of credit risk in Islamic banks in Malaysia. The study uses secondary data obtained from the annual report of selected Islamic banks during the period from 2008 to 2013. Al the selected banks were local Islamic banks in Malaysia. This study uses non-performing financing (NPFs) as a proxy for credit risk which is dependent variable. The independent variables consists of three macroeconomic variables Gross Domestic Product (GDP), Base Financing Rate (BFR) and Consumer Price Indicator (CPI). There are also six other variables (bank specific) that are used as internal variables. These are Bai’ Bithaman Ajil (BBA), Murabahah, al-Ijarah Thumma al-Bai’ (AITAB), total assets, other contract (OCONT) and Profit Margin (PM). In this study it has been found that GDP is significant and negatively related to credit risk, making the finding similar with past studies.
format	Thesis
qualification_name	masters
qualification_level	Master's degree
author	'Azraa Arrmyza, Razif
author_facet	'Azraa Arrmyza, Razif
author_sort	'Azraa Arrmyza, Razif
title	Determinants of credit risks in Islamic banks in Malaysia
title_short	Determinants of credit risks in Islamic banks in Malaysia
title_full	Determinants of credit risks in Islamic banks in Malaysia
title_fullStr	Determinants of credit risks in Islamic banks in Malaysia
title_full_unstemmed	Determinants of credit risks in Islamic banks in Malaysia
title_sort	determinants of credit risks in islamic banks in malaysia
granting_institution	Universiti Utara Malaysia
granting_department	Othman Yeop Abdullah Graduate School of Business
publishDate	2015
url	https://etd.uum.edu.my/4596/1/s815311.pdf https://etd.uum.edu.my/4596/2/s815311_abstract.pdf
_version_	1747827761836195840
spelling	my-uum-etd.45962021-03-18T00:11:43Z Determinants of credit risks in Islamic banks in Malaysia 2015 'Azraa Arrmyza, Razif Ahmad Razimi, Mohd Shahril Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HG Finance The concept of risk was well known to most of us. It has become an important tool in making decision when it is possible to measure it and to assign values to different situations. However the changes in the global finance environment has make Islamic banking institutions are more vulnerable to risks. Many theoretical studies on Islamic banking were conducted with the focus on Islamic modes of financing and their ability to perform financial intermediation for catering to the needs of people. This paper examines the determinants of credit risk in Islamic banks in Malaysia. The study uses secondary data obtained from the annual report of selected Islamic banks during the period from 2008 to 2013. Al the selected banks were local Islamic banks in Malaysia. This study uses non-performing financing (NPFs) as a proxy for credit risk which is dependent variable. The independent variables consists of three macroeconomic variables Gross Domestic Product (GDP), Base Financing Rate (BFR) and Consumer Price Indicator (CPI). There are also six other variables (bank specific) that are used as internal variables. These are Bai’ Bithaman Ajil (BBA), Murabahah, al-Ijarah Thumma al-Bai’ (AITAB), total assets, other contract (OCONT) and Profit Margin (PM). In this study it has been found that GDP is significant and negatively related to credit risk, making the finding similar with past studies. 2015 Thesis https://etd.uum.edu.my/4596/ https://etd.uum.edu.my/4596/1/s815311.pdf text eng public https://etd.uum.edu.my/4596/2/s815311_abstract.pdf text eng public masters masters Universiti Utara Malaysia Ahmad, N., & Abu Bakar, A. (2008). Risk Management Practises Of Islamic Banks In Malaysia. 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Impact of Global Financial Crisis on IDB Member Countries: The case of Gulf Cooperation Council and Sub-Saharan Africa. The Pakistan Development Review, 47:4 Part II (Winter 2008) Pp. 583-601. Kahf, M. (2005). Basel II: Implications for Islamic Banking. Paper Presented at The 6th International Conference On Islamic Economics and Banking. Khan, M., & Bhatti, M. (2008). Development In Islamic Banking. A Financial Risk Allocation Approach, 9(1), 40-51.Laldin, A. (2008). The Islamic Financial System : The Malaysian Experience And The Way Forward. Humanomics, 24(3), 217-238. Knight, Frank (1921), Risk Uncertainty and Profits, New York: Harper & Row. Laabas, B. and Limam I. (2002). Are GCC Countries Ready For Currency Union? Arab Planning Institute, Kuwait. Makiyan, S. N. (2008). Risk Management and Challenges in Islamic Banks. Journal of Islamic Economics, Banking and Finance 4(3). Matthews, K. and Thompson J. The Economics of Banking. (2008) Chichester: Wiley, Chapter 2 and Chapter 9, Section 9.2. Nuxoll, D. (2003). The Contribution Of Economic Data To Bank Failure Models. Federal Deposits Insurance Corporation. Said et al. (2000). Draft Risk Management Guidelines for Islamic Banking Institutions state. Bank of Pakistan, Islamic Banking Department. www.sbp.org.pk. Sundarajan, V. (2005). Risk Measurement And Disclosure In Islamic Finance And The Implications Of Profit Sharing Investment Accounts. Proceedings Of The 6th International Conference On Islamic Economics And Finance. Tafri, F., Rahman, R., & Omar, N. (2011). Empirical Evidence On The Risk Management Tools Practised In Islamic And Conventional Banks. Qualitative Research In Financial Markets, 3(2), 86-104.

Determinants of credit risks in Islamic banks in Malaysia

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