It has become firmly established the productivity is the real source of and important for economic growth of any country; it has an essential role in the economies of developed and developing countries alike. It allows the nation to raise its standard of living, to support such social goals as education and health care, and to contribute to other aspects of the general welfare; it is an essential underpinning of the nation's security (Stupak and Leitner, 2001). Increased productivity is the key to economic progress, where the standard of living of communities and income levels depend on the progress of the level of productivity; higher levels of productivity in economies lead to increased rates of growth and prosperity (Seid, 1996).

This paper investigates the impact of the factors of the optimum currency area and some financial variables on exchange rate volatility by means of a newly developed bounds testing approach to cointegration. Using annual data for a sample of developed and developing countries, our results show that these factors explain the variability of exchange rate in only two developing countries. 

Abstract

This paper is conducted to compare the determinants of profitability of the domestic and foreign Islamic banks operating in Malaysia. The Generalized Least Square (GLS) is employed with unbalanced panel data on seventeen Islamic banks, using quarterly data for the period of 2007 to 2010. In order to find out the differences in the profitability determinants, the sample of banks is divided into two sub-samples (domestic and foreign). The results reveal that domestic Islamic banks are more profitable than foreign Islamic banks. The results also show that the profitability determinants of domestic banks are different from those of foreign banks. The overhead expenses, loans, efficiency, gross domestic product growth rate and bank size have a significant effect in determining banks’ profitability, in which case applicable to the domestic banks only. In turn, the gross domestic product per capita has a significant effect in determining banks’ profitability of only the foreign banks. The study finds that, deposits, capital and reserves, inflation and banks’ age have a significant effect in determining banks’ profitability of both domestic and foreign banks. Meanwhile, liquidity and concentration are not able to explain the variability of domestic and foreign Islamic banks’ profitability. The findings indicate that the profitability of domestic banks is affected by the global financial crisis while, the profitability of foreign banks is not affected.

Abstract

This paper is conducted to identify the determinants of profitability of Islamic banks operating in Malaysia and examine the effect of the global financial crisis on the profitability of these banks. Panel data estimation is employed with unbalanced data on seventeen Islamic banks, using quarterly data for the period of 2007 to 2010. The random effect model was specifically used to achieve the study objectives. The empirical results indicate that overhead expenses ratio, loans ratio, deposits ratio, technical efficiency and bank size have a positive significant effect in determining banks’ profitability. Meanwhile, the inflation rate has a negative significant effect in determining banks’ profitability. The findings of study indicate that capital and reserves, liquidity ratio, banks’ age, gross domestic product growth rate, Gross domestic product per capita and concentration ratio are not able to explain the variability of profitability of Islamic banks. The study also reveals that the profitability of Islamic banks is negatively affected by the global financial crisis. Keywords: Islamic Banks, Bank profitability, Malaysia, global financial crisis, panel data 

ABSTRACT

This paper aims to identify the determinants of efficiency of Islamic banks operating in Malaysia. Panel regression analysis is employed with unbalanced data on seventeen Islamic banks, using quarterly data for the period of 2007 to 2010. In addition to that, this study uses the Data Envelopment Analysis (DEA) approach to estimate the technical efficiency as the dependent variable. Also, Tobit multiple regression which allows limited dependent variables is used to analyze the factors that influence banks’ efficiency. The empirical results indicate that bank specifics and financial structure determinants are able to explain a significant part of efficiency of Islamic banks in Malaysia. The study reveals that domestic and foreign Islamic banks have different efficiency. The efficiency of Islamic banks is not affected by the global financial crisis