Determinants of Commercial Banks' Profitability in Malaysia

Ivan D. Trofimov (), Nazaria MD Aris () and Jovena Kho YING Ying ()
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Ivan D. Trofimov: Kolej Yayasan Saad (KYS) Business School, Malaysia
Nazaria MD Aris: University of Malaysia – Sarawak, Malaysia
Jovena Kho YING Ying: University of Malaysia – Sarawak, Malaysia

Management and Economics Review, 2018, vol. 3, issue 1, 85-101

Abstract: This study aims to examine the relationship between non-performing loans (NPLs) and commercial banks' performance in Malaysia, alongside other factors. It considers the effect of NPLs, cost efficiency and bank size on commercial banks' profitability by using panel data regression (Pooled OLS model), covering the period of 2010-2015. The findings of the study show that NPLs and cost efficiency have a significant negative relationship with commercial banks' performances in Malaysia. On the other hand, bank size is found to have a significant positive relation with commercial banks' performances in Malaysia. Several policy and strategic implications are outlined: the continuing need to manage credit risk, reduction of non-core lending activities, improvement of systems transparency, cost control, and more lenient competition and anti-trust policies.

Keywords: bank; non-performing loan; profitability. (search for similar items in EconPapers)
JEL-codes: C23 G21 G28 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:rom:merase:v:3:y:2018:i:1:p:85-101

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