Do macroeconomic factors affect the credit risk of islamic banks? evidence from Malaysia

Safeza Sapian and Abul Masih

MPRA Paper from University Library of Munich, Germany

Abstract: This paper makes an attempt to investigate whether the macroeconomic factors contribute to the credit risk exposure and non-performing financing (NPF) of Islamic banks. Malaysia is taken as a case study. The standard time series techniques are used to analyze the issue. The variables that have been chosen for the study are gross domestic product (GDP), Non-Performing Financing rate, Islamic financing rate (IFR) and unemployment rate (UMPT). The findings tend to indicate that Islamic Financing rate (IFR) stands out as the only factor that had a significant impact on the credit risk exposure and non-performing financing as well as the performance of Islamic banks in the context of Malaysia.

Keywords: Islamic Banks; Credit Risk; Non-performing Financing; Time Series Analysis; Malaysia (search for similar items in EconPapers)
JEL-codes: C22 C58 E44 G21 (search for similar items in EconPapers)
Date: 2018-11-25
New Economics Papers: this item is included in nep-fdg, nep-isf, nep-mac, nep-rmg and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:100719

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