Dissertations for Finance

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Browsing Dissertations for Finance by Author "Al Malkawie, Dia'"

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    Bank-Specific and Macroeconomic Determinants of Islamic Banks Profitability: The Case of GCC Countries
    (The British University in Dubai (BUiD), 2020-05) Al Malkawie, Dia'
    Generally, profitability for a business firm is the primary factor to survive. It helps the organization to grow, compete and remain attractive to investors as well as analysts. The purpose of the present study is to research in the bank-specific as well as macroeconomic determinants of Islamic banks in a region that’s consider to play an important role in Islamic finance development, namely the GCC region. The study used 28 Islamic banks operating in the GCC stock exchanges as a sample for the time of period from 2011 up to 2016, namely Boursa Kuwait, Abu Dhabi Securities Exchange, Doha Securities Market, Bahrain Stock Exchange, Saudi Stock Exchange, Muscat Securities Market, and Dubai Financial Market. Pooled OLS regression is used to estimate the empirical model. The bank’s profitability is measured by the return on asset (ROA), whereas the independent variables that tested are capital adequacy ratio, operational efficiency, assets quality, financial leverage, bank size, liquidity risk, GDP growth, and inflation rate. The regression results indicate that bank-specific determinants including capital adequacy ratio, financial leverage, and operational efficiency are statistically significant and have negative relationship with the Islamic bank’s profitability. However, the bank size is the only tested variable that’s have a positively and significantly relationship with the banks’ profitability. Whereas, the study proves that there is nonlinear relationship between bank’s size and profitability. On the other hand, assets quality and liquidity risk are found to be insignificant determinants for Islamic banks’ profitability. Regarding the macroeconomic variables, GDP growth is the only variable shown that it is relating positively to Islamic banks profitability, whilst the inflation rate has no association with the Islamic banks profitability for the sample studied. These findings provide valuable policy implications which may assist Islamic banks operating in the GCC region to improve their performance and increase their profitability.