24x7 Service; AnyTime; AnyWhere

The impact of Ijarah/lease financing on Malaysian Islamic bank performance

Yusuf, Mohamud Said and Isa, Mohamad Yazid (2021) The impact of Ijarah/lease financing on Malaysian Islamic bank performance. International Journal of Islamic Business (IJIB), 6 (1). pp. 49-58. ISSN 0127- 662X

[thumbnail of IJIB 06 01 2021 49-58.pdf] PDF - Published Version
Restricted to Registered users only

Download (804kB) | Request a copy


Ijarah (lease contract) is one of the essential financing contracts offered by Islamic banking institutions to meet the demand of the clients. This study investigates the impact of Ijarah financing on Islamic bank performance in Malaysia for the period from 2004-2018 using Fixed and Random Effect Models. Ijarah financing (IJFA) which becomes the focus variable of this study with other six independent variables; operating efficiency (EXTA), bank size (LTA), total financing (TFTA), base rate (BR), consumer price index (CPI) and gross domestic product (GDP) were regressed against return on asset (ROA) and net profit margin (NPM). The results show that Ijarah financing has a positive and significant impact on NPM. The findings suggest that Islamic banks should increase their portfolio of Ijarah financing, and this is also support the concentration strategy used by banks in improving Islamic bank performances. An increase in demand for Ijarah financing will increase Islamic banks performance and this reflects that Ijarah financing as an asset creation tool that banks prefer particularly for generating income.

Item Type: Article
Uncontrolled Keywords: Ijarah Financing, Islamic Banks, Bank Performance, Return on Asset, Net Profit Margin
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HG Finance
Divisions: Islamic Business School
Depositing User: Mrs Nurin Jazlina Hamid
Date Deposited: 01 Nov 2022 02:42
Last Modified: 01 Nov 2022 02:42

Actions (login required)

View Item View Item