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Effect Of Capital Adequacy, Earnings Quality And Leverage On Islamic Banking Profitability: A Case Of Bangladesh

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  • N. M. Minhajul Haque Chowdhury
  • Ayesha Siddiqua
  • A.S. M. M. H. Chowdhury
  • Md. Mainuddin

Abstract

The development of the economic system of a nation is closely related with the banking system of that nation. Islamic banking system has been introduced in every Muslim country. As a Muslim country Bangladesh was started practicing this non-interest bearing banking in 1983. This study focused on the determinants like capital adequacy, earnings quality and leverage those affect the profitability of Islamic banking. For this study researchers selected five Islamic banks and collected secondary data from the financial statements of the banks during 2011-2014. The study showed that capital adequacy and leverage were positively related with profitability but there was a negative correlation between cost to income ratio and return on asset (ROA) of the selected bank during that period. It is also found that the independent variables were sufficient to explain the changes of dependent variable ROA.

Suggested Citation

  • N. M. Minhajul Haque Chowdhury & Ayesha Siddiqua & A.S. M. M. H. Chowdhury & Md. Mainuddin, 2017. "Effect Of Capital Adequacy, Earnings Quality And Leverage On Islamic Banking Profitability: A Case Of Bangladesh," International Journal of Science and Business, IJSAB International, vol. 1(1), pages 41-46.
    • Handle: RePEc:aif:journl:v:1:y:2017:i:1:p:41-46
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    References listed on IDEAS

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    1. K.K. Siraj & P. Sudarsanan Pillai, 2012. "Comparative Study on Performance of Islamic Banks and Conventional Banks in GCC region," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 2(3), pages 1-6.
    2. Ahmad Aref Almazari, 2014. "Impact of Internal Factors on Bank Profitability: Comparative Study between Saudi Arabia and Jordan," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 4(1), pages 1-7.
    3. Ahsan, Mohammad Kamrul, 2016. "Measuring Financial Performance Based on CAMEL: A Study on Selected Islamic Banks in Bangladesh," Asian Business Review, Asian Business Consortium, vol. 6(1), pages 47-56.
    4. Ali Said, 2013. "Risks and Efficiency in the Islamic Banking Systems: The Case of Selected Islamic Banks in MENA Region," International Journal of Economics and Financial Issues, Econjournals, vol. 3(1), pages 66-73.
    5. Samih Azar & Ali Bolbol & Alexandre Mouradian, 2016. "Profitability of Banks in Lebanon: Some Theoretical and Empirical Results," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(7), pages 233-233, July.
    6. N. M. Minhajul Haque Chowdhury & Ayesha Siddiqua & A.S. M. M. H. Chowdhury & Md. Mainuddin, 2017. "Effect Of Capital Adequacy, Earnings Quality And Leverage On Islamic Banking Profitability: A Case Of Bangladesh," International Journal of Science and Business, IJSAB International, vol. 1(1), pages 41-46.
    7. Vincent Okoth Ongore & Gemechu Berhanu Kusa, 2013. "Determinants of Financial Performance of Commercial Banks in Kenya," International Journal of Economics and Financial Issues, Econjournals, vol. 3(1), pages 237-252.
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    1. N. M. Minhajul Haque Chowdhury & Ayesha Siddiqua & A.S. M. M. H. Chowdhury & Md. Mainuddin, 2017. "Effect Of Capital Adequacy, Earnings Quality And Leverage On Islamic Banking Profitability: A Case Of Bangladesh," International Journal of Science and Business, IJSAB International, vol. 1(1), pages 41-46.

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