full report Nia

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

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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

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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 .............................................................