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

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  • Isaev, Mirolim
  • Masih, Mansur

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.

Suggested Citation

  • Isaev, Mirolim & Masih, Mansur, 2017. "Macroeconomic and bank-specific determinants of different categories of non-performing financing in Islamic banks: Evidence from Malaysia," MPRA Paper 79719, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:79719
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    References listed on IDEAS

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    More about this item

    Keywords

    non-performing financing; Malaysian Islamic banking system; Dynamic OLS; risk management;
    All these keywords.

    JEL classification:

    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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