DETERMINANTS OF ISLAMIC BANK'S FINANCIAL PERFORMANCE IN MALAYSIA

Islamic banking is one of the well known financial institutions in Malaysia. The financial performance of Islamic banks is critical to their sustainability and expansion as Islamic banking has grown significantly in Malaysia. The purpose of this study to investigate the determinants of Islamic bank’s financial performance. Specifically, this study aims to examine the relationship of capital adequacy, liquidity, bank size, gross domestic product, and interest rate with Islamic bank’s financial performance of ROA in Malaysia. The data was collected from the annual report of thirteen Islamic banks in Malaysia from 2017 until 2021 that listed in Bursa Malaysia and analyzed using SPSS. The result of the regression analysis indicates that capital adequacy, liquidity, and bank size have a significant relationship with the bank’s financial performance. Meanwhile, the findings reveal that GDP and interest rate have no relationship with Islamic bank’s financial performance.