ISSN: 2225-8329
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The Organisation of Islamic Countries was established by the Islamic Development Bank in the 1970s. Subsequently, Islamic finance has started to grow rapidly. Such growth contributed to the development of Malaysia’s Islamic financial sector where the number of Islamic banks increased from two to fifteen by 2011. Despite good performance, the banks faced various challenges that could affect their commendable achievement. This study seeks to identify internal and external factors of the Malaysian Islamic bank’s financial performance. Data were collected from the published annual report data for 10 years. All fifteen Islamic banks were selected. The financial performance was measured by Return on Assets. Capital Adequacy, Bank Size, Growth Domestic Product, and Inflation Rate were the investigated factors. Other sources of data were the statistical bulletin and Data Stream. A descriptive and regression analysis were used. This study finds three factors are having significant relations with the Islamic bank’s financial performance. To improve financial performance, Malaysian Islamic banks can focus on bank size because the bigger the bank size, the bank is financially stronger. However, they should be tactful when designing any strategy involving capital adequacy as this study suggests it is negatively related to the bank’s financial performance.
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In-Text Citation: (Ibrahim et al., 2023)
To Cite this Article: Ibrahim, S. N. S., Omar, N., & Arshad, Y. (2023). External and Internal Determinants of Islamic Bank’s Financial Performance in Malaysia. International Journal of Academic Research in Accounting Finance and Management Sciences, 13(2), 390–398.
Copyright: © 2023 The Author(s)
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