Selecting The Most Significant Determinants that contributes to Islamic banks profitability using Principal Component Analysis
Journal Title: International Journal of Academic Research in Business and Social Sciences - Year 2018, Vol 8, Issue 12
Abstract
The existence of Islamic banks that grow rapidly in every corner of the world has caused strong competition among them and other conventional banks in Malaysia. This requires the banks management to choose wisely on the determinants that make them to remain strong and relevant in the Islamic banking sector. The main purpose of this study is to determine internal and external significant determinants for Islamic banks in Malaysia using Principal Component Analysis (PCA). The Kaiser-Meyer-Olkin (KMO) was applied in this study to measure the data sampling is acceptable and adequate. While, and Bartlett’s Test is used to validate the internal and external component. The significant banking determinants selected for the study include deposit ratio, operating efficiency and market concentration. The result shows that the internal and external significant determinants are Bank Size and Gross Domestic Product. The study utilized secondary data from year 2010 until year 2016 for 13 Islamic banks in Malaysia.
Authors and Affiliations
Rashidah Ismail, Nur Huda Nabihan Md Shahri, Nur Liyana Basir
Keywords
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- EP ID EP584616
- DOI 10.6007/IJARBSS/v8-i12/5085
- Views 83
- Downloads 0
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