Net Profit Margin Determinants of Islamic Subsidiaries of Conventional Banks in Malaysia. Jurnal Ekonomi Malaysia, 52 (2). pp. 163-173. ISSN 2716-6058 (2018)
Abstract
This study investigates the determinants of Net Profit Margin (NPM) in Malaysia’s Islamic banking system for the period
of 2011-2015 by using static panel data analysis. In Malaysia, conventional banks through its Islamic subsidiary banks
are dominating the Islamic banking system in terms of total assets, total loans and total deposits. Therefore this paper
attempts to investigate the impact of these Islamic subsidiaries of conventional banks towards the NPM. In relation
to that, the impact of the conventional parent banks’ Net Interest Margin (NIM) towards its Islamic subsidiary banks’
NPM is also investigated. For the first objective, the displayed results shows positive relationship indicating that the
Islamic subsidiaries of conventional banks’ NPM is higher than the full-fledge Islamic banks’ NPM. While the empirical
results on the banks’ specific variables suggest that size, risk aversion and operating cost are positively related to
NPM. However, credit risk tends to reduce NPM. Besides that, this study also finds that market concentrations and GDP
growth will influence NPM in negative ways whilst inflation and Islamic stock market developments will increase NPM.
Liquidity however is found insignificant to NPM. As for the second objective, the Islamic subsidiaries of conventional
banks’ NPM is observed as being independent from its conventional parent banks’ NIM.
| Item Type: | Article |
|---|---|
| Keywords: | Net profit margin, Islamic bank, parent bank, subsidiary bank |
| Taxonomy: | By Subject > Business & Management > Finance |
| Local Content Hub: | Subjects > Business & Management |
| Depositing User: | Eza Eliana Abdul Wahid |
| Date Deposited: | 01 Aug 2021 13:48 |
| Last Modified: | 01 Aug 2021 13:48 |
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