The impact of financing contracts on the profitability of Islamic banks
This paper investigates the impact of financing contracts on Net Profit Margin (NPM) of the Islamic banks. Focussing on two financing contracts of Bai’ Bithaman Ajil (BBA) and Al-Ijarah Thumma Al-Bai’ (AITAB), the paper employs static panel data of Malaysian banks over 2008 to 2018. Controlling for...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Penerbit Universiti Kebangsaan Malaysia
2021
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| Online Access: | http://journalarticle.ukm.my/18805/ http://journalarticle.ukm.my/18805/1/jeko_553-11.pdf |
| _version_ | 1848814671554936832 |
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| author | Maisyarah Stapah @ Salleh, Bayu Taufiq Possumah, Nizam Ahmat, |
| author_facet | Maisyarah Stapah @ Salleh, Bayu Taufiq Possumah, Nizam Ahmat, |
| author_sort | Maisyarah Stapah @ Salleh, |
| building | UKM Institutional Repository |
| collection | Online Access |
| description | This paper investigates the impact of financing contracts on Net Profit Margin (NPM) of the Islamic banks. Focussing on two financing contracts of Bai’ Bithaman Ajil (BBA) and Al-Ijarah Thumma Al-Bai’ (AITAB), the paper employs static panel data of Malaysian banks over 2008 to 2018. Controlling for bank and market-specific factors, the results indicated that AITAB exerted significant impact on the NPM. The paper further found that risk aversion, operating cost, liquidity and asset quality improves the NPM. In addition, the results show that the market structure influence the level of NPM. The Islamic banks may control these variables in setting for their preferred NPM level. Finally, the banks may need to carefully examine the types of financing contracts offered as they have different characteristics and may affect NPM. |
| first_indexed | 2025-11-15T00:37:48Z |
| format | Article |
| id | oai:generic.eprints.org:18805 |
| institution | Universiti Kebangasaan Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T00:37:48Z |
| publishDate | 2021 |
| publisher | Penerbit Universiti Kebangsaan Malaysia |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | oai:generic.eprints.org:188052022-06-23T08:48:37Z http://journalarticle.ukm.my/18805/ The impact of financing contracts on the profitability of Islamic banks Maisyarah Stapah @ Salleh, Bayu Taufiq Possumah, Nizam Ahmat, This paper investigates the impact of financing contracts on Net Profit Margin (NPM) of the Islamic banks. Focussing on two financing contracts of Bai’ Bithaman Ajil (BBA) and Al-Ijarah Thumma Al-Bai’ (AITAB), the paper employs static panel data of Malaysian banks over 2008 to 2018. Controlling for bank and market-specific factors, the results indicated that AITAB exerted significant impact on the NPM. The paper further found that risk aversion, operating cost, liquidity and asset quality improves the NPM. In addition, the results show that the market structure influence the level of NPM. The Islamic banks may control these variables in setting for their preferred NPM level. Finally, the banks may need to carefully examine the types of financing contracts offered as they have different characteristics and may affect NPM. Penerbit Universiti Kebangsaan Malaysia 2021 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/18805/1/jeko_553-11.pdf Maisyarah Stapah @ Salleh, and Bayu Taufiq Possumah, and Nizam Ahmat, (2021) The impact of financing contracts on the profitability of Islamic banks. Jurnal Ekonomi Malaysia, 55 (3). pp. 149-164. ISSN 0127-1962 https://www.ukm.my/jem/issue/v55i3/ |
| spellingShingle | Maisyarah Stapah @ Salleh, Bayu Taufiq Possumah, Nizam Ahmat, The impact of financing contracts on the profitability of Islamic banks |
| title | The impact of financing contracts on the profitability of Islamic banks |
| title_full | The impact of financing contracts on the profitability of Islamic banks |
| title_fullStr | The impact of financing contracts on the profitability of Islamic banks |
| title_full_unstemmed | The impact of financing contracts on the profitability of Islamic banks |
| title_short | The impact of financing contracts on the profitability of Islamic banks |
| title_sort | impact of financing contracts on the profitability of islamic banks |
| url | http://journalarticle.ukm.my/18805/ http://journalarticle.ukm.my/18805/ http://journalarticle.ukm.my/18805/1/jeko_553-11.pdf |