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Macroeconomic and bank-specific determinants of different categories of non-performing financing in Islamic banks: Evidence from Malaysia

Mirolim Isaev and Abul Masih ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper explores the factors propelling Islamic bank’s non-performing financing in Malaysia for the period of 2010Q4 and 2016Q3. Dynamic OLS is employed to examine the effects of macroeconomic and bank specific variables on each financing categories (mortgage, business and consumer financing). The findings tend to indicate that macroeconomic variables, particularly, the unemployment rate, have strong impact on the level of non-performing financing for each financing portfolio. Adoption of effective risk management policy may ensure to mitigate the systematic risks derived from macroeconomic changes and enhance the level of quality of asset.

Keywords: non-performing financing; Malaysian Islamic banking system; Dynamic OLS; risk management (search for similar items in EconPapers)
JEL-codes: C58 E44 G15 G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac, nep-rmg and nep-sea
Date: 2017-06-13
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