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Econometric study of the effect of deposits on Islamic Banks profitability: Evidence from Malaysia

Author

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  • Roukia Bouhider

    (University of Jijel)

Abstract

The main objective of this paper is to analyze the relationship between the deposit and the profitability of fourteen Malaysian Islamic banks over the period 2010-2019, using a fixed effect panel data analysis and the least squares method. The findings of this study have reported a strong positive relationship between the bank deposits assets ratio and profitability. Moreover, the Capital adequacy and the Financing to Deposits Ratio have shown a significant positive impact on profitability. The Gross Domestic Product, Inflation, and The exchange rate, have shown a significant negative impact. However, the Risk-Weighted Assets, the Total Asset, the Operating Cost Ratio, the Market Share and the Deposit interest rate have no significant impact on the ROA. The study recommended Islamic banks in Malaysia to embark on a serious effort to develop their own instruments to mobilize the deposits, and to use them in order to foster economic and social development, which increases its future profitability and reduces its costs

Suggested Citation

  • Roukia Bouhider, 2021. "Econometric study of the effect of deposits on Islamic Banks profitability: Evidence from Malaysia," Economics Bulletin, AccessEcon, vol. 41(3), pages 1292-1302.
    • Handle: RePEc:ebl:ecbull:eb-21-00829
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    References listed on IDEAS

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    More about this item

    Keywords

    Deposits; Islamic banks; Profitability; Malaysia; Panel data.;
    All these keywords.

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • G2 - Financial Economics - - Financial Institutions and Services

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