Factors Determine Islamic Banking Performance in Malaysia: a multiple Regression Approach

Model Coefficient 

Beta 

t 

Sig. 

ROA (Constant) 

LLPTA 

NLTA 

TOTA 

SER 

BS 

GDP 

INF 

0.316 

0.332 

-0.035 

-0.719 

-0.109 

-0.050 

0.038 

-0.048 

0.215 

7.763 

-0.631 

-9.241 

-1.223 

-0.535 

0.858 

-1.238 

0.830 

0.000 

0.531 

0.000 

0.227 

0.595 

0.395 

0.221 

ROE (Constant) 

LLPTA 

NLTA 

TOTA 

SER 

BS 

GDP 

INF 

42.253 

-0.957 

0.081 

-0.060 

-0.036 

-0.126 

0.001 

-0.102 

1.580 

-20.655 

1.329 

-0.709 

-0.377 

-1.234 

0.023 

-2.441 

0.120 

0.000 

0.190 

0.482 

0.708 

0.223 

0.081 

0.018 

 

Conclusion 

This study is intended to find the factors determining the performance of Islamic 

banking in Malaysia for the period of 2006 to 2010. There are fifteen Islamic banks 

included in the analysis; furthermore, correlation analysis and multiple regression 

analysis are used as the method of analysis. ROA and ROE are the dependent variables 

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Journal of Islamic Banking and Finance Jan.- March. 2014 

53

 

 

while LLPTA, NLTA, TOTA, SER and BS used as internal independent variables and 

GDP and Inflation as the external independent variables. 

For model 1, whereby the ROA is the dependent variable, LLPTA and TOTA came 

as the significant variables in predicting the ROA. However, the relationship shown 

between LLPTA and ROA is against the hypothesis drawn in this study. Meanwhile, for 

model 2 where ROE is the dependent variable, LLPTA and Inflation appear to be the 

most important variables in predicting the ROE level. The relationship shown between 

LLPTA and ROE as well as between Inflation and ROE are in favor of hypotheses drawn 

in this study.