Ultimate Ownership and Performance of Islamic Financial Institutions in Malaysia

Asian Finance Association Conference, July 2009

25 Pages Posted: 24 Apr 2009  

Shamsuwatd Zuha Mohd Abbas

affiliation not provided to SSRN

Rashidah Abdul Rahman

Universiti Teknologi Malaysia (UTM) - Bureau of Research and Consultancy (BRC)

Sakthi Mahenthrian

Butler University

Date Written: April 21, 2009

Abstract

This paper examines the ultimate ownership structure on accounting performance of 31 Islamic financial institutions (IFIs) in Malaysia. The IFIs include the commercial banks, merchant banks, discount houses and development financial institutions (Bank Simpanan Nasional and Bank Pertanian Malaysia or currently Agro Bank) listed by Bank Negara for the year 2000 to 2006. The ownership structure is measured by the identity of the top 10 ultimate owners of the financial institutions. Performance is measured by the return on equity (ROE) and Non-Performing Loans (NPLs). Results of the study show that the ultimate owner of the majority of IFIs in Malaysia is the government. This is followed by foreign, family and institutional ownership. The statistical mean for the government ownership for the top 10 of the IFIs is about 36%. We find evidence that government, family and institutional ownership have significantly positive influence on ROE whereas none of the ownership investigated in this paper influence NPLs.

Keywords: Islamic Financial Institutions, Ownership of Malaysian Banks, Bank Performance

JEL Classification: G21, G32

Suggested Citation

Mohd Abbas, Shamsuwatd Zuha and Abdul Rahman, Rashidah and Mahenthrian, Sakthi, Ultimate Ownership and Performance of Islamic Financial Institutions in Malaysia (April 21, 2009). Asian Finance Association Conference, July 2009 . Available at SSRN: https://ssrn.com/abstract=1392833

Shamsuwatd Zuha Mohd Abbas

affiliation not provided to SSRN ( email )

Rashidah Abdul Rahman

Universiti Teknologi Malaysia (UTM) - Bureau of Research and Consultancy (BRC) ( email )

40450 Shah Alam
Malaysia
+03 55442090 (Phone)

Sakthi Mahenthrian (Contact Author)

Butler University ( email )

4600 Sunset Avenue
Indianapolis, IN 46208
United States

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