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Bankruptcy Profile of Foreign vs. Domestic Islamic Banks of Malaysia: A Post Crisis period Analysis

Jan, Amin and Marimuthu, Maran (2015) Bankruptcy Profile of Foreign vs. Domestic Islamic Banks of Malaysia: A Post Crisis period Analysis. [Citation Index Journal] (Unpublished)

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Abstract

Abstract After the (2007-2008) subprime financial crisis considering bankruptcy evaluation for the banking industry becomes a paramount. In line of that, this study aims to analyze the bankruptcy profile of foreign vs. domestic Islamic banks in Malaysia. This study predicted 40 percent and 75 percent bankruptcy in the subjected samples of foreign and domestic Islamic banks of Malaysia respectively. However, the specific reason behind this variation in their bankruptcy rates is tagged with the significant difference in their liquidity ratio i.e. (1.59) by foreign and (0.41) by the domestic Islamic banks sample. The ANOVA results revealed that, the sample of foreign and domestic Islamic banks of Malaysia do differ significantly on bankruptcy rates as well as on the top bankruptcy’s predictors namely liquidity, profitability, and insolvency. However, the sample does not vary on productivity with regards to bankruptcy exposure. Furthermore, the regression results revealed that, liquidity, profitability, and insolvency ratios in the sample of domestic Islamic banks, while only insolvency ratio in the sample of foreign Islamic banks have a significant positive relationship with bankruptcy in Islamic banking industry of Malaysia. Moreover, in the context of identified bankruptcy rates, the analysis here is viable to witness the sustainability ratings possessed by the sample of foreign and domestic Islamic banks of Malaysia. Key words: Bankruptcy, Sustainability, Foreign Islamic Banks, Domestic Islamic Banks, Financial Characteristics JEL classification: A10, C01, C12, C33, C50, C53

Item Type:Citation Index Journal
Subjects:H Social Sciences > HA Statistics
H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Academic Subject One:Academic Department - Management And Humanities - Business and Marketing
Departments / MOR / COE:Departments > Management & Humanities
ID Code:11743
Deposited By: Dr Maran Marimuthu
Deposited On:07 Oct 2016 01:42
Last Modified:07 Oct 2016 01:42

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