The determinant of profitability of foreign commercial banks in Malaysia

This research is conducted to determine the profitability of foreign commercial banks in Malaysia based on five factors which are bank size, loan to asset ratio, inflation rate, interest rate, and the Gross Domestic Product, (GDP). An intensive desk research is conducted as measure to determine the...

Full description

Saved in:

Bibliographic Details
Main Author:	Theyvi, Atchuthan
Format:	Thesis
Language:	eng eng
Published:	2018
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/7805/1/s820230_01.pdf https://etd.uum.edu.my/7805/2/s820230_02.pdf
Tags:	Add Tag No Tags, Be the first to tag this record!

id	my-uum-etd.7805
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Murugiah, Logasvathi
topic	HG Finance
spellingShingle	HG Finance Theyvi, Atchuthan The determinant of profitability of foreign commercial banks in Malaysia
description	This research is conducted to determine the profitability of foreign commercial banks in Malaysia based on five factors which are bank size, loan to asset ratio, inflation rate, interest rate, and the Gross Domestic Product, (GDP). An intensive desk research is conducted as measure to determine the present issue related to foreign commercial bank profitability in Malaysia. It is found that as of January 2018, there are 28 commercial banks in Malaysia. Nevertheless, this research focused on ten foreign commercial banks operating in Malaysia. Furthermore, this study utilise secondary data as the main source of information in conducting the analysis in this research. The data are extracted mainly from the income statement and also balance sheet in the annual report of each respective foreign commercial bank operating in Malaysia for the period of 2007 to 2016. Based on the analysis computed via SPSS statistical software application, this study suggested that the profitability of foreign commercial banks in Malaysia is influenced by bank-specific determinants which is bank size, loan to asset ratio, and interest rate while the macroeconomic determinants which is GDP and Inflation rate are considered as not significant towards return on asset of the foreign commercial banks.
format	Thesis
qualification_name	masters
qualification_level	Master's degree
author	Theyvi, Atchuthan
author_facet	Theyvi, Atchuthan
author_sort	Theyvi, Atchuthan
title	The determinant of profitability of foreign commercial banks in Malaysia
title_short	The determinant of profitability of foreign commercial banks in Malaysia
title_full	The determinant of profitability of foreign commercial banks in Malaysia
title_fullStr	The determinant of profitability of foreign commercial banks in Malaysia
title_full_unstemmed	The determinant of profitability of foreign commercial banks in Malaysia
title_sort	determinant of profitability of foreign commercial banks in malaysia
granting_institution	Universiti Utara Malaysia
granting_department	Othman Yeop Abdullah Graduate School of Business
publishDate	2018
url	https://etd.uum.edu.my/7805/1/s820230_01.pdf https://etd.uum.edu.my/7805/2/s820230_02.pdf
_version_	1747828267744755712
spelling	my-uum-etd.78052021-08-11T07:46:36Z The determinant of profitability of foreign commercial banks in Malaysia 2018 Theyvi, Atchuthan Murugiah, Logasvathi Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HG Finance This research is conducted to determine the profitability of foreign commercial banks in Malaysia based on five factors which are bank size, loan to asset ratio, inflation rate, interest rate, and the Gross Domestic Product, (GDP). An intensive desk research is conducted as measure to determine the present issue related to foreign commercial bank profitability in Malaysia. It is found that as of January 2018, there are 28 commercial banks in Malaysia. Nevertheless, this research focused on ten foreign commercial banks operating in Malaysia. Furthermore, this study utilise secondary data as the main source of information in conducting the analysis in this research. The data are extracted mainly from the income statement and also balance sheet in the annual report of each respective foreign commercial bank operating in Malaysia for the period of 2007 to 2016. Based on the analysis computed via SPSS statistical software application, this study suggested that the profitability of foreign commercial banks in Malaysia is influenced by bank-specific determinants which is bank size, loan to asset ratio, and interest rate while the macroeconomic determinants which is GDP and Inflation rate are considered as not significant towards return on asset of the foreign commercial banks. 2018 Thesis https://etd.uum.edu.my/7805/ https://etd.uum.edu.my/7805/1/s820230_01.pdf text eng public https://etd.uum.edu.my/7805/2/s820230_02.pdf text eng public masters masters Universiti Utara Malaysia Aburime, T. U. (2008). Determinants of bank profitability: company-level evidence from Nigeria. Deakin University Working Paper. Abduh, Muhamad & Idrees, Yameen (2013). Determinants of Banking Profitability in Malaysia. Australian Journal of Basic and Applied Sciences, 7 (2). pp. 204-210. ISSN 1991-8178. Ahmad, R., Arrif, M., & Skully, M. (2007). Factors determining mergers of banks in Malaysia's banking sector reform. Multinational Finance Journal. Mar-Jun 2007 issue, [On-line] Retrieved on: 12 January 2018, Retrieve from: http://findarticles.com/p/articles/mi_qa5503/is_200703/. Alexiou, C., & Sofoklis, V. (2009). Determinants of bank profitability: Evidence from Greek banking sector. Economic Annals, 54(182), 93-118. Ali, K., Akhtar, M. F., & Ahmed, H. Z. (2011). Bank-Specific and macroeconomic indicators of profitability - Empirical evidence from the commercial banks of Pakistan. International Journal of Business and Social Science, 2(6), 235-242. Alkassim, F. A. (2015). The profitability of Islamic and conventional banking in the GCC countries: A comparative study: Dubai. Allen, A. J., Shaik, S., Myles, A. E., & Yeboah, O. A. (2011). Determinants of profitability performance: An analysis of class i railroads in the United States. Alper, D., & Anbar, A. (2011). Bank specific and macroeconomic determinants of commercial bank profitability: empirical evidence from Turkey. Business and Economics Research Journal, 2(2), 139-152. Amare, B.T. (2012). Determinants of commercial banks profitability: An empirical evidence from the commercial banks of Ethiopia. Addis Ababa University. Angbazo, L. (2014). Commercial bank net interest margins, default risk, interest-rate risk, and off-balance sheet banking. Journal of Banking & Finance, 21(1), 55-87. Aremu, M. A., Ekpo, I. C., & Mustapha, A. M. (2013). Determinants of banks’ profitability in a developing economy: Evidence from Nigerian banking industry. Interdisciplinary Journal of Contemporary Research in Business, 4(9), 155-181. Atemnkenf, T., & Joseph, N. (2006). Market structure and profitability performance in the banking industry of CFA Countries: the case of commercial banks in Cameroon. Athanasoglou, P., Delis, M. & Staikouras, C., (2006). Determinants of Bank profitability in the Southern Eastern European Region. Bank of Greece Working Paper, No. 47. Bektas, E. (2006). Test of market structure and profitability in liberalizing the deposit market: the case of North Cyprus. Problems and Perspectives in Management 4(2), 62-67. Athanasoglou, P. P., Brissimis, S. N., & Delis, M. D. (2008). Bank-specific, industry-specific and macroeconomic determinants of bank profitability. Journal of International Financial Market and Institution and Money, 18, 121-136. Bashir, A. (2000). Determinants of profitability and rates of return margins in Islamic Banks: some evidence from the Middle East. Economic Research Forum (ERF) Seventh annual conference, Amman, Jordan, 26-29. Bashir, A. M., & Hassan, M. K. (2003). Determinants of Islamic banking profitability. Economic Research Forum (ERF) 10th Annual Conference, Marrakesh–Morocco. Berger, A. N., & Humphrey, D. B. (1997). Efficiency of financial institutions: international survey and directions for future research. European Journal of Operational Research, 98(2), 175-212. Bessis, J. (2012). Risk Management in Banking, John Willey & Sons. Inc., New York. Boahene, S. H., Dasah, J., & Agyei, S. K. (2012). Credit Risk and Profitability of Selected Banks in Ghana. Research Journal of Finance and Accounting, 3(7), 6-14. Bolt, W., Haan, L., Hoeberichts, M., Oordt, R. C., & Swank, J. (2012). Bank profitability during recessions. Journal of Banking and Finance, 36, 2552- 2564. Bowen, A. G. (2009). Document analysis as a qualitative research method. Qualitative Research Journal, 9(2), 27-40. Boyd, J. H., & Runkle, D. E. (2013). Size and performance of banking firms: Testing the predictions of theory. Journal of Monetary Economics, 31(1), 47-67. Camilleri, S. J. (2005). Analysis of the profitability, risk and growth indicators of banks operating in Malta. Bank of Valletta Review, 31, 32-48. Claessens, S., Demirguc-Kunt, A., & Huizinga, H. (2001). How does foreign entry affect domestic banking markets? Journal of Banking and Finance, 25(5), 891-911. Demirguc, A., Huizinga, H., (1999). Determinants of Commercial bank interest margins and profitability: some international evidence. World Bank Economic Review 13 (2), 379-408. Demirguc-Kunt, A., Laeven, L. & Levine, R. (2004). Regulations, Market structure, institutions and the cost of financial intermediation. Journal of Money, Credit and Banking, 36, 593-626. Desa, K. A. (2003). An analysis of the determinants of commercial banks profitability in Malaysia, Universiti Utara Malaysia, Sintok, Kedah. Dietrich, A. & Wanzenried, G. (2009). What determines the profitability of commercial banks? New evidence from Switzerland. 12th Conference of the Swiss Society for Financial Market Researches, Geneva. Fraser, D. R., Philips, Jr. & Rose, P. S. (1974). A canonical analysis of bank performance. Journal of Financial and Quantitative Analysis, 9, 287-295. Fraser, D. R. & Peter S. R. (1971). More on Banking structure and performance: the evidence from Texas. Journal of Financial and Quantitative Analysis, 6(January), 601-611. Fraser, D. R. & Peter S. R. (1972). Bank entry and bank performance. Journal of Finance, 21(1), 65-78. Goddard, J., Molyneux, P. & Wilson, O. S. (2004a). Dynamics of growth and profitability in banking. Journal of Money, Credit and Banking, 36, 1069- 1090. Goddard, J., Molyneux, P., & Wilson, O. S. (2004b). The profitability of European banks: a cross-sectional and dynamic panel analysis. The Manchester School, 72(3), 363–381. Golin, J. (2010). Bank Credit Analysis Handbook: A Guide for Analysts, Bankers and Investors. Gul, S., Irshad, F. & Zaman K. (2011). Factors affecting bank profitability in Pakistan. Romanian Econ. Journal, 14(39), 61-87. Guru, B.K., Staunton, J. and Balashanmugam (1999). Determinants of Commercial Bank Profitability in Malaysia.Paper presented at the 12th Annual Finance and Banking Conference, December 16-17, 1999, Sydney, Australia. Hanweck, G. A. & Kilcollin, T. E. (2014). Bank profitability and interest rate risk. Journal of Economics and Business, 36(1), 77-84. Iloska, N. (2014). An analysis of bank profitability in Macedonia. Journal of Applied Economics and Business, 2(1), 31-50 Ismail, A. & Sulaiman, A. (2002). Cyclical patterns in profits, provisioning and lending of banks and procyclicality of the new Basel capital requirements. BNL Quarterly Review, 221, 277-292. Jamal, A. A. A.,& Karim, M. R. A.,&Hamidi, M. (2012).Determinants of Commercial Banks’ Return on Asset:PanelEvidence from Malaysia.International Journal of Commerce, Business and Management. Vol. 1,No.9. Joel, B. (2012). Risk management in banking. Wese Sussex: John Wiley & Sons. Karim, M., Chan, S. G. & Hassan, S. (2010). Bank efficiency and non-performing loans: evidence from Malaysia and Singapore. Prague Economic Papers, 2, 118-132. Khrawish, H. A. (2011). Determinants of commercial banks performance: evidence from Jordan. International Research Journal of Finance and Economics, 81, 1450-2887. Kosmidou, K., Pasiouras, F., & Tsaklanganos, A. (2007). Domestic and multinational determinants of foreign bank profits: the case of Greek banks operating abroad. Journal of Multinational Financial Management, 17(1), 1-15. Masood, O. & Ashraf, M. (2012). Bank-specific and macroeconomic profitability determinants of Islamic banks. Qualitative Research in Financial Markets, 2(3), 255-268. Molyneux, P. & Thornton, J. (1992). Determinants of European bank profitability: a note. Journal of Banking and Finance, 16(6), 1173-1178. Olweny, T. & Shipho, T. M. (2011). Effects of banking sectoral factors on the profitability of commercial banks in Kenya. Economics and Finance Review, 1(5), 1-30. Omotayo A.A.(2016). The effect of banks profitability on Economic Growth in Nigeria. IOSR Journal of Business and Management (IOSR-JBM) artment of Accountancy, The Polytechnic, Ibadan, Oyo State, Nigeria. Perry, P. (2012). Do banks gain or lose from inflation. Journal of Retail Banking, 14(2), 25-30. Ramlall, I. (2009). Bank-specific, industry-specific and macroeconomic determinants of profitability in Taiwanese banking system: under panel data estimation. International Research Journal of Finance and Economics, 34, 160-167. Rao, K. M., & Lakew, T. B. (2012). Determinants of profitability of commercial bank in a developing country: evidence from Ethiopia. International Journal of Accounting and Financial Management Research, 2(3), 1-20. Rasiah, D. (2010). Theoretical framework of profitability as applied to commercial banks in Malaysia. European Journal of Economics, Finance and Administrative Sciences, 19, 1450-2275. Roulet, C. (2012). Empirical essays on bank liquidity creation and maturity transformation risk: implications for prudential regulation. Atelier national de reproduction des thèses. Shehzad, C. T., De Haan, J., & Scholtens, B. (2013). The relationship between size, growth and profitability of commercial banks. Applied Economics, 45, 1752-1765. Staikouras, C. K., & Wood, G. E. (2004). The determinants of European bank profitability. International Business and Economic Research Journal, 3(6), 57-68. Sufian, F. (2009). Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia. Research in International Business and Finance, 23, 54-77. Sufian, F. (2011). Profitability of the Korean banking sector: panel evidence on bank-specific and macroeconomic determinants. Journal of Economics and Management, 7(1), 43-72. Sufian, F., & Akbar. M. (2012). Determinants of bank performance in a developing economy: does bank origins matters? Global Business Review, 13(1), 1–23. Sufian, F. & Chong, R. R. (2008). Determinants of bank profitability in a developing economy: empirical evidence from the Philippines. Asian Academy of Management Journal of Accounting and Finance, 4(2), 91- 112. Vejzagic, M. &Zarafat, H. (2013). An Analysis of Macroeconomic Determinants of Commercial Banks Profitability in Malaysia for the Period 1995-2011. Journal of Asian Economy and Financial Review, 4(1). Yilmaz, A. A. (2013). Profitability of banking system: evidence from emerging markets. WEI International Academic Conference Proceedings.

The determinant of profitability of foreign commercial banks in Malaysia

Similar Items