Ahmad, Nor Hayati and Haron, Sudin
The existence of conventional banking profitability theories in the Islamic banking system.
Analisis, 5 (1&2).
This study verifes the existence of profitability theories applied to conventional banks in Islamic banking. With some adjustments to Bourke's methodology, we find that determinants such as capital ratio, liquidity, interest rate and money supply have a similar effect on Islamic banks. There are also differences which could be used as
evidence that Islamic banks are, in fact, distinct from conventional banks. Support is found for the risk-aversion theory and no evidence is found for the efficient-structure
and expense-preference theories.
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