Economic Journal of Emerging Markets
Volume 11 Issue 2, 2019

Do bankruptcy profiles of Islamic banks differ across organizational structure? evidence from Malaysia

Nik Nurul Hidayah Nik Zainudin (Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Malaysia)
S. Shahida (Center for Inclusive and Sustainable, Development, Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Malaysia)
Ahmad Azam Sulaiman@Mohamad (Department of Syariah and Economics, Academy of Islamic Studies, Univeristy of Malaya, Malaysia)



Article Info

Publish Date
31 Oct 2019

Abstract

Malaysian Islamic banks operate in different organizational structures, namely domestic, locally foreign incorporated, and development financial institutions which may have an influence on their stability. This research evaluates the bankruptcy profiles of 19 selected Malaysian Islamic banks from 2010 to 2017 and analyses the insolvency risk associated with the three different organizational structures. Using the Altman’s Z-Score Model (2000), a stability test was conducted. Findings/Originality: the paper finds that, on average, the development financial institutions were the most stable banks, followed by foreign Islamic banks. It also finds that bigger domestic Islamic banks were situated in the safe zone as they had high Z-score values. Furthermore, asset quality ratio contributed to higher Z-score values. An appropriate asset-liability management therefore helps ensure the stability of Islamic banks in Malaysia. An effective macroprudential supervisory regime must also be in place to increase the resilience of the financial system.

Copyrights © 2019






Journal Info

Abbrev

JEP

Publisher

Subject

Economics, Econometrics & Finance

Description

The Economic Journal of Emerging Markets (EJEM) is a peer-reviewed journal which provides a forum for scientific works pertaining to emerging market economies. Published every April and October, this journal welcomes original research papers on all aspects of economic development issues. The journal ...