Authors : Ahmed Nazri Wahidudin, Ulaganathan Subramanian and Pg. Abd. Mutalib Pg. Kamaluddin
Abstract: The aim of this study is to find differences in determinants of profitability between Islamic and conventional banks in Asean countries. The profit and loss sharing system allows bank to share risk with client in Islamic banks. Moreover, Islamic banks are required to operate as per Islamic Rules and principles. Unlike Islamic banks, conventional banks operate based on interest. The income of conventional banks is the difference between interest paid to depositors and interest paid by borrowers. This is the common banking system around the world. This study analyzes determinants of profitability in Islamic banks compared to conventional banks in Asean countries. This study presents an empirical investigation on Asean Islamic and conventional banks. The study of profitability looks at different banking characteristics such as short term fund management, source management, capitalization, liquidity, size and macro-economic conditions. The study uses generalized method of moments technique to analyze the data. Many of the bank level factors are similar in both types of banks. But macro-economic variables affect differently on the profitability of the Islamic and conventional banks.
Ahmed Nazri Wahidudin, Ulaganathan Subramanian and Pg. Abd. Mutalib Pg. Kamaluddin, 2017. Determinants of Profitability a Comparative Analysis of Islamic Banks and Conventional Banks in Asean Countries. Journal of Engineering and Applied Sciences, 12: 1245-1249.