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Roukia Bouhider
''Econometric study of the effect of deposits on Islamic Banks profitability: Evidence from Malaysia''
( 2021, Vol. 41 No.3 )
The main objective of this paper is to analyze the relationship between the deposit and the profitability of fourteen Malaysian Islamic banks over the period 2010-2019, using a fixed effect panel data analysis and the least squares method. The findings of this study have reported a strong positive relationship between the bank deposits assets ratio and profitability. Moreover, the Capital adequacy and the Financing to Deposits Ratio have shown a significant positive impact on profitability. The Gross Domestic Product, Inflation, and The exchange rate, have shown a significant negative impact. However, the Risk-Weighted Assets, the Total Asset, the Operating Cost Ratio, the Market Share and the Deposit interest rate have no significant impact on the ROA. The study recommended Islamic banks in Malaysia to embark on a serious effort to develop their own instruments to mobilize the deposits, and to use them in order to foster economic and social development, which increases its future profitability and reduces its costs.
Keywords: Deposits; Islamic banks; Profitability; Malaysia; Panel data.
JEL: L2 - Firm Objectives, Organization, and Behavior: General
G2 - Financial Institutions and Services: General
Manuscript Received : Sep 06 2021 Manuscript Accepted : Sep 06 2021

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