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  • i

    THE DETERMINANTS OF FOREIGN ISLAMIC

    BANKS PROFITABILITY IN MALAYSIA FROM 2008

    TO 2013

    SENIA AK SCHWEITZER BETTIE

    (2012990595)

    BACHELOR OF BUSINESS ADMINISTRATION

    (HONS) FINANCE

    FACULTY OF BUSINESS ADMINISTRATION

    JUNE 2015

  • ii

    DECLARATION OF ORIGINAL WORK

    BACHELOR OF BUSINESS ADMINISTRATION

    (HONS.) FINANCE

    FACULTY OF BUSINESS MANAGEMENT

    DECLARATION OF ORIGINAL WORK

    I, Senia Anak Schweitzer Bettie, (I/C Number: 910521-13-6310)

    Hereby, declare that:

    This work has not previously been accepted in substance for any degree, locally

    or overseas, and is not being concurrently submitted for this degree or any other

    degrees.

    This project-paper is the result of my independent work and investigation,

    except where otherwise stated.

    All verbatim extracts have been distinguished by quotation marks and sources of

    my information have been specifically acknowledged.

    Signature: ______________________ Date: _______________________

  • iii

    LETTER OF SUBMISSION

    17th July, 2015

    Madam Norzaihan Binti Hashim

    Head of Programme,

    Bachelor of Business Administration (Hons.) Finance

    Universiti Teknologi MARA

    Jalan Meranek

    94300 Kota Samarahan

    Sarawak.

    Dear Madam,

    SUBMISSION OF FINAL PROJECT PAPER REPORT (FIN 668)

    Here, I would like to enclosure the final project paper with the title The Determinants of

    Foreign Islamic Banks Profitability in Malaysia From 2008 to 2013 for your perusal and

    consideration.

    With the submission of this report, I hope it will meet the requirement as a part to

    complete Bachelor Degree in Business Administration (Hons.) Finance.

    Thank you.

    Yours Sincerely,

    SENIA ANAK SCHWEITZER BETTIE

    MATRIX NO: 2012990595

  • iv

    ACKNOWDEGEMENT

    Firstly, I praising and worshiping of God for allowing me to complete this paper. A lot

    of praise for God to spirit me up as well as inspiring me to figure out all problem that I faced

    before.

    In the first place, I would like to express my deepest sense of sincere gratitude to

    both of my advisor, Mr. Ambi Kun and Madam Erimalida Yazi for the valuable assistance

    and advises. Moreover, they have never failed to go through my research paper and make

    correction as needed. Their excellent patience and guidance have provided me an

    excellent atmosphere for doing my dissertation. I am truly appreciated the time and effort

    from both of them.

    In addition, all thanks to Madam Norzaihan binti Hashim, the Head of Bachelor of

    Business Administration programme, for her encouragement and support. To Universiti

    Teknologi Mara, fellow lecturers and staffs, thank you for all of the help and knowledge

    that I have gained. All of you have really encouraged me towards the completion of this

    study.

    Last but not least, I would like to express my thankful to my family especially my

    parents, Mr. Schweitzer Bettie Anak Tedong and Madam Siti Anak Ungong for motivating

    and pushing me. Without their love and support, none of this dissertation would have

    been possible.

    Sincerely,

    Senia Anak Schweitzer Bettie

  • v

    TABLE OF CONTENTS

    TITLE PAGES

    Acknowledgment .......................................................................................................... iv

    Table Of Contents ......................................................................................................... v

    List Of Figure ............................................................................................................... viii

    List Of Table ................................................................................................................. viii

    List Of Equations .......................................................................................................... Viii

    List Of Abbreviations ................................................................................................... ix

    Abstract ......................................................................................................................... x

    CHAPTER .................................................................................................................... 1

    INTRODUCTION ........................................................................................................ 1

    1.0 Background Of Study ...................................................................................... 2

    1.1 Problem Statement ................................................................................. 3

    1.2 Research Objective .................................................................................. 4

    1.3 Research Question ................................................................................... 4

    1.4 Scope Of Study ........................................................................................ 5

    1.5 Conclusion ............................................................................................... 5

    CHAPTER 2 .......................................................................................................... 6

    LITERATURE REVIEW ......................................................................................... 6

    2.0 Introduction ............................................................................................. 6

    2.1 Review Of Literature ............................................................................... 6

    2.2 Foreign Islamic Bank .............................................................................. 7

    2.3 Related Literature Review of Return on Asset ........................................ 7

    2.4 Related Literature Review of Risk-Weighted Capital Ratio ..................... 8

    2.5 Related Literature Review of Overhead Cost ......................................... 9

  • vi

    2.6 Related Literature Review of Gross Domestic Product ...........................10

    2.7 Related Literature Review of Inflation Rate ............................................11

    2.8 Hypothesis ................................................................................................. 12

    2.9 Conclusion ................................................................................................. 13

    CHAPTER 3 ............................................................................................................. 14

    DATA METHODOLOGY ........................................................................................... 14

    3.0 Introduction ................................................................................................. 14

    3.1 Theoretical Framework ............................................................................... 15

    3.2 Data Description ......................................................................................... 16

    3.3 Target Population ........................................................................................ 17

    3.4 Data Analysis .............................................................................................. 18

    3.5 Model Specification ...................................................................................... 19

    3.6 Diagnostic Test ............................................................................................. 20

    3.6.1 Coefficient of Determinant (R) .......................................................... 20

    3.6.2 Coefficient Estimate (t-stats) ............................................................... 20

    3.6.3 F-statistics ........................................................................................... 21

    3.7 Conclusion .................................................................................................... 22

    CHAPTER 4 ............................................................................................................... 23

    FINDING AND ANALYSIS .......................................................................................... 23

    4.0 Introduction .................................................................................................. 23

    4.1 Descriptive Statistic ..................................................................................... 24

    4.2 Correlation Coefficient Test .......................................................................... 25

    4.3 Multiple Regression Analysis ..............................................................;........ 26

    4.3.1 Coefficient of Determinant (R) ......................................................... 27

    4.3.2 Coefficient Estimate (t-stats) ............................................................. 27

    4.3.3 Hypothesis Testing (F-statistics) ........................................................ 29

  • vii

    4.4 Conclusion .................................................................................................... 30

    CHAPTER 5 ................................................................................................................ 31

    CONCLUSION AND RECOMMENDATION .............................................................