Open AccessExamination of Bank-Specific and Macroeconomic Determinants of Islamic Banks Profitability in Bangladesh: A Panel Data Approach
Author(s) -
Muhammad Enamul Haque,
Nusrat Farzana
Publication year - 2018
Publication title -
asian journal of empirical research
Language(s) - English
Resource type - Journals
eISSN - 2306-983X
pISSN - 2224-4425
DOI - 10.18488/journal.1007/2018.8.11/1007.11.405.417
Subject(s) - profitability index , net interest margin , panel data , market liquidity , return on assets , islam , investment (military) , economics , business , return on equity , monetary economics , equity (law) , capital adequacy ratio , financial system , finance , econometrics , microeconomics , law , philosophy , theology , politics , political science , profit (economics)
Islamic banks have continued to demonstrate tremendous growth over the last decade as reflected by its increasing market shares in terms of deposits and investments compared to the total banking system. This study makes an effort to examine the bank-specific and macroeconomic determinants of eight full-fledged Islamic banks profitability in Bangladesh applying two static linear panel data approaches. The study uses return on assets, return on equity and net investment margin as measures of profitability. The results indicate that bank-specific variables such as capital to risk based assets, liquidity, bank size, and operating efficiency are highly correlated with Islamic banks profitability. Both the macroeconomic variables are found to be statistically nugatory and do not have any influence to affect the Islamic bank profitability.