The impact of globalization towards Islamic bank performance in Malaysia

• Main Author: Premenath, Subramaniam
• Format: Thesis
• Language: English; English; English
• Published: 2019
• Subjects: HF5001-6182 Business
• Online Access: https://etd.uum.edu.my/8230/1/S822788_01.pdf; https://etd.uum.edu.my/8230/2/DEPOSIT%20PERMISSION_s822788.pdf; https://etd.uum.edu.my/8230/3/822788%20REFERENCES.docx; https://etd.uum.edu.my/8230/

The purpose of this study is to understand the relationship between globalization and performance of the Islamic banking system in Malaysia. This study uses the bank characteristic determinants (internal factors), macroeconomic determinants (external factors) and three different types of globalization including economic globalization, social globalization and political globalization to explain local Islamic bank performance in Malaysia. This study uses regression analysis based on the secondary data for local Islamic banks in Malaysia. The period for this secondary data is 5 years which is from the year 2013 till 2017. This study indicates that there is strong evidence stating both economic and politic globalization shows a negative significant effect on the Islamic bank performance in Malaysia. Meanwhile, social globalization shows an insignificant result on this. As for bank characteristics variables, credit risk shows a negative significant result towards Islamic bank performance in Malaysia while bank size shows a positive and significant result towards Islamic bank performance in Malaysia. The macroeconomic variable which is GDP does not show any significant result towards the Islamic bank performance in Malaysia. Therefore, central bank of Malaysia should give some incentive training for local bankers on how to adopt new supervision and risk management. This will give the local bankers some new knowledge to handle better risk management and directly boost the bank performance. Besides that, banks should develop their credit risk management to overcome any default loans and for better financial performances. Islamic banks in Malaysia also need to expand their businesses as larger banks gives a larger facility which directly boots the bank performance. It is also recommended for Malaysian Islamic banks to improve their forecasting of macroeconomic fluctuations in future to achieve greater efficiency levels.