Macroeconomic and bank-specific determinants of different categories of non-performing financing in Islamic banks: Evidence from Malaysia

Isaev, Mirolim and Masih, Mansur (2017): Macroeconomic and bank-specific determinants of different categories of non-performing financing in Islamic banks: Evidence from Malaysia.

Abstract

This paper explores the factors propelling Islamic bank’s non-performing financing in Malaysia for the period of 2010Q4 and 2016Q3. Dynamic OLS is employed to examine the effects of macroeconomic and bank specific variables on each financing categories (mortgage, business and consumer financing). The findings tend to indicate that macroeconomic variables, particularly, the unemployment rate, have strong impact on the level of non-performing financing for each financing portfolio. Adoption of effective risk management policy may ensure to mitigate the systematic risks derived from macroeconomic changes and enhance the level of quality of asset.

• Item Type: MPRA Paper
• Language: English
• Keywords: non-performing financing, Malaysian Islamic banking system, Dynamic OLS, risk management
• Subjects: C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C58 - Financial Econometrics; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy; G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages

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