Profitability and liquidity: an empirical investigation of Islamic banks in Malaysia and United Kingdom

The banking sector plays a significant role in the economy of a country, Islamic banking has proven itself to be feasible and sustainable during the last decades. However, with the uncertainties that the world economies are facing in the last few years, the feasibility and sustainability of Islamic...

Full description

Saved in:

Bibliographic Details
Main Author:	Dabiri, Mohammad Alfurqan Olamilekan
Format:	Thesis
Language:	eng eng eng
Published:	2020
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/9418/1/s96181_01.pdf https://etd.uum.edu.my/9418/2/s96181_02.pdf https://etd.uum.edu.my/9418/3/s96181_references.docx
Tags:	Add Tag No Tags, Be the first to tag this record!

id	my-uum-etd.9418
record_format	uketd_dc
spelling	my-uum-etd.94182023-04-10T01:55:45Z Profitability and liquidity: an empirical investigation of Islamic banks in Malaysia and United Kingdom 2020 Dabiri, Mohammad Alfurqan Olamilekan Mohd Yusof, Rosylin Abd-Wahab, Norazlina Awang Had Salleh Graduate School of Arts & Sciences Awang Had Salleh Graduate School of Arts & Sciences HG Finance The banking sector plays a significant role in the economy of a country, Islamic banking has proven itself to be feasible and sustainable during the last decades. However, with the uncertainties that the world economies are facing in the last few years, the feasibility and sustainability of Islamic banking finance remains debatable. Hence this study aims to investigate macroeconomic and bank-specific factors that affect the Islamic banks profitability and liquidity in United Kingdom and Malaysia. The bank-specific indicators include capital adequacy, asset quality, liquidity, bank size; while the macroeconomic factors are GDP growth rate, inflation rate and lending rate. The study utilized balanced data between 2006 and 2018 of 12 Malaysian Islamic banks 4 UK Islamic banks. Panel Autoregressive Distributive Lag and Panel Vector Autoregressive models were employed to estimate indicators effects and relationship among variables. Impulse Response Function and Toda-Yamamoto were used to assess the impact of global financial crisis and causal relationships among the variables. The study reveals that capital adequacy has negative influence and asset quality has moderate negative effect on profitability of Islamic banks in both countries and global financial crisis was found to have no significance effect. Furthermore, profitability causes GDP and lending rate and Liquidity causes GDP and inflation rate while there exists a bidirectional relationship between liquidity and lending rate. This study also supports earlier studies that indeed, Islamic banks to a certain extent are also insulated against the financial crisis. The implication of our finding is that Islamic banks do not require high capital and asset quality to be liquid and profitable and thus for sustainability. Bank Negara and Bank of England may formulate policies that will facilitate new entries into Islamic banking since they are found to be less affected by financial crises 2020 Thesis https://etd.uum.edu.my/9418/ https://etd.uum.edu.my/9418/1/s96181_01.pdf text eng public https://etd.uum.edu.my/9418/2/s96181_02.pdf text eng public https://etd.uum.edu.my/9418/3/s96181_references.docx text eng public other doctoral Universiti Utara Malaysia
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng eng
advisor	Mohd Yusof, Rosylin Abd-Wahab, Norazlina
topic	HG Finance
spellingShingle	HG Finance Dabiri, Mohammad Alfurqan Olamilekan Profitability and liquidity: an empirical investigation of Islamic banks in Malaysia and United Kingdom
description	The banking sector plays a significant role in the economy of a country, Islamic banking has proven itself to be feasible and sustainable during the last decades. However, with the uncertainties that the world economies are facing in the last few years, the feasibility and sustainability of Islamic banking finance remains debatable. Hence this study aims to investigate macroeconomic and bank-specific factors that affect the Islamic banks profitability and liquidity in United Kingdom and Malaysia. The bank-specific indicators include capital adequacy, asset quality, liquidity, bank size; while the macroeconomic factors are GDP growth rate, inflation rate and lending rate. The study utilized balanced data between 2006 and 2018 of 12 Malaysian Islamic banks 4 UK Islamic banks. Panel Autoregressive Distributive Lag and Panel Vector Autoregressive models were employed to estimate indicators effects and relationship among variables. Impulse Response Function and Toda-Yamamoto were used to assess the impact of global financial crisis and causal relationships among the variables. The study reveals that capital adequacy has negative influence and asset quality has moderate negative effect on profitability of Islamic banks in both countries and global financial crisis was found to have no significance effect. Furthermore, profitability causes GDP and lending rate and Liquidity causes GDP and inflation rate while there exists a bidirectional relationship between liquidity and lending rate. This study also supports earlier studies that indeed, Islamic banks to a certain extent are also insulated against the financial crisis. The implication of our finding is that Islamic banks do not require high capital and asset quality to be liquid and profitable and thus for sustainability. Bank Negara and Bank of England may formulate policies that will facilitate new entries into Islamic banking since they are found to be less affected by financial crises
format	Thesis
qualification_name	other
qualification_level	Doctorate
author	Dabiri, Mohammad Alfurqan Olamilekan
author_facet	Dabiri, Mohammad Alfurqan Olamilekan
author_sort	Dabiri, Mohammad Alfurqan Olamilekan
title	Profitability and liquidity: an empirical investigation of Islamic banks in Malaysia and United Kingdom
title_short	Profitability and liquidity: an empirical investigation of Islamic banks in Malaysia and United Kingdom
title_full	Profitability and liquidity: an empirical investigation of Islamic banks in Malaysia and United Kingdom
title_fullStr	Profitability and liquidity: an empirical investigation of Islamic banks in Malaysia and United Kingdom
title_full_unstemmed	Profitability and liquidity: an empirical investigation of Islamic banks in Malaysia and United Kingdom
title_sort	profitability and liquidity: an empirical investigation of islamic banks in malaysia and united kingdom
granting_institution	Universiti Utara Malaysia
granting_department	Awang Had Salleh Graduate School of Arts & Sciences
publishDate	2020
url	https://etd.uum.edu.my/9418/1/s96181_01.pdf https://etd.uum.edu.my/9418/2/s96181_02.pdf https://etd.uum.edu.my/9418/3/s96181_references.docx
_version_	1776103729233133568

Profitability and liquidity: an empirical investigation of Islamic banks in Malaysia and United Kingdom

Similar Items