Download this Paper Open PDF in Browser

Estimating the Profitability of Islamic Banking: Evidence from Bank Muamalat Indonesia

Review of Islamic Economics, Vol. 11, No. 2, pp. 17-29, 2007

13 Pages Posted: 6 Jan 2011  

Mehmet Asutay

Durham Business School

Hylmun Izhar

Islamic Research & Training Institute, Islamic Development Bank

Date Written: 2007

Abstract

The primary goal of this paper is to empirically analyze the performance of Bank Muamalat Indonesia (BMI) in terms of its ROA. Utilizing regression analysis, the paper estimates the internal determinants; taken from the bank financial structure as well as its external determinant. It is found that profit has been dominantly generated from financing activities. On the other hand, service activities have not contributed significantly to the profitability of BMI. The paper also indicates that, during 1996-2001, BMI’s portfolio has been greatly biased towards short-term based financing. The result of the paper also confirms the hypothesis of the positive relationship between inflation and profitability measure.

Suggested Citation

Asutay, Mehmet and Izhar, Hylmun, Estimating the Profitability of Islamic Banking: Evidence from Bank Muamalat Indonesia (2007). Review of Islamic Economics, Vol. 11, No. 2, pp. 17-29, 2007. Available at SSRN: https://ssrn.com/abstract=1735651

Mehmet Asutay (Contact Author)

Durham Business School ( email )

Mill Hill Lane
Durham, Durham DH1 3LB
United Kingdom

Hylmun Izhar

Islamic Research & Training Institute, Islamic Development Bank ( email )

P.O. Box. 9201
Jeddah 21413
Saudi Arabia

Paper statistics

Downloads
760
Rank
26,287
Abstract Views
2,151