The determinants of the profitability of Islamic banks: a cross-sectional study from Asia and Africa

Mohammad Ashraful Chowdhury and Mohamed Shah

International Journal of Business and Globalisation, 2015, vol. 15, issue 3, 375-388

Abstract: Studies on Islamic banks' profitability are important towards improving performance, evaluating bank operations and determining management plan to survive in competitive markets. The present study seeks to fill a gap by providing new empirical evidence on the factors that influence the profitability of the Islamic banks. The ordinary least square method is employed using annual data of 2013 on 44 Islamic banks from Asian and African region. The findings reveal that bank-specific factors such as the operating efficiency ratio are negatively and statistically significant to the profitability of the Islamic banks, while equity financing is positive and statistically significant to the profitability. The credit risks and liquidity risks factors are insignificant on the performance of the Islamic banks. On the other hand, macroeconomic factors such as inflation have a positive and significant impact on the profitability whereas GDP growth rate has no significant impact on the profitability of Islamic banks.

Keywords: bank profitability; Islamic finance; macroeconomics; determinants; Islamic banks; credit risks; liquidity risks; GDP growth rate; inflation; banking industry; Asia; Africa; ordinary least squares; OLS; operating efficiency ratio; equity finance. (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.inderscience.com/link.php?id=71913 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:ijbglo:v:15:y:2015:i:3:p:375-388

Access Statistics for this article

More articles in International Journal of Business and Globalisation from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().