Macro and bank specific determinants that affect profitability of commercial bank in Malaysia from period 2007 to 2016

• Main Authors: Anitha, Ramachandran, Foon, Pui She, Ng, Ben Choy, Ngo, See Huei, Ong, Jia Huey
• Format: Final Year Project / Dissertation / Thesis
• Published: 2019
• Subjects: HG Finance
• Online Access: http://eprints.utar.edu.my/3555/1/fyp_BF_2019_AR.pdf; http://eprints.utar.edu.my/3555/

Bank profitability is an important issue to several sectors which including domestic economists, commercial banker, shareholders and government since it is helpful for them. The reasons are not only country profitability was tied up with bank profitability, thus it can also affect the country economy but also help banker in bank business operation like risk management. There are numbers of past literature have conducted to determine the impact on bank profitability by using different macroeconomic and microeconomic factors. In the view of better understanding on bank profitability, this study is being aim to more accurately investigate how the economic and banking activities in Malaysia affect the ROE. This research involved five macroeconomic and bank specific variables including inflation rate, gross domestic product, unemployment rate, net interest income margin and non-performing loans; thus it is aiming to investigate how each of the variables influences ROE respectively. Moreover, this research contained eight commercial banks in Malaysia including Public bank, Maybank, CIMB bank, Hong Leong bank, RHB bank, AmBank, Alliance bank and Affin bank. We used secondary data to conduct the study by obtaining the macroeconomic variables data from World Bank from period 2007 to 2016 while the microeconomic variables data of 8 commercial banks from the annual report start from year 2007 until 2016. All these analysis are conducted by using E-Views 10 to investigate the relationship of independent variables (Inflation Rate, Gross Domestic Product, Unemployment Rate, Net Interest Income Margin and Non-Performing Loans) and dependent variable (Return on Equity). Based on the finding of study, theoretical and practical implications were presented in the study. In a nutshell, the analysis on the major findings, implications of the research, limitations for the study, and recommendations for future research are discussed in the end of this study.