{"id":6788,"date":"2021-10-06T10:57:20","date_gmt":"2021-10-06T02:57:20","guid":{"rendered":"https:\/\/www.ukm.my\/jem\/?post_type=article&#038;p=6788"},"modified":"2022-07-27T06:39:18","modified_gmt":"2022-07-26T22:39:18","slug":"the-impact-of-financing-contracts-on-the-profitability-of-islamic-banks","status":"publish","type":"article","link":"https:\/\/www.ukm.my\/jem\/article\/the-impact-of-financing-contracts-on-the-profitability-of-islamic-banks\/","title":{"rendered":"The Impact of Financing Contracts on the Profitability of Islamic Banks"},"content":{"rendered":"<p><em>This paper investigates the impact of financing contracts on Net Profit Margin (NPM) of the Islamic banks. Focussing on two financing contracts of Bai\u2019 Bithaman Ajil (BBA) and Al-Ijarah Thumma Al-Bai\u2019 (AITAB), the paper employs static panel data of Malaysian banks over 2008 to 2018. Controlling for bank and market-specific factors, the results indicated that AITAB exerted significant impact on the NPM. The paper further found that risk aversion, operating cost, liquidity and asset quality improves the NPM. In addition, the results show that the market structure influence the level of NPM. The Islamic banks may control these variables in setting for their preferred NPM level. Finally, the banks may need to carefully examine the types of financing contracts offered as they have different characteristics and may affect NPM.<\/em><\/p>\n","protected":false},"template":"","tags":[1361,1360,754,753,1016],"jel-code":[1362,1363,1364],"article-type":[1329],"class_list":["entry","author-asriwn","post-6788","article","type-article","status-publish","tag-al-ijarah-thumma-al-bai","tag-bai-bithaman-ajil","tag-islamic-bank","tag-net-profit-margin","tag-profitability","jel-code-g000","jel-code-g200","jel-code-g210","article-type-normal-article"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Impact of Financing Contracts on the Profitability of Islamic Banks | Jurnal Ekonomi Malaysia<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ukm.my\/jem\/article\/the-impact-of-financing-contracts-on-the-profitability-of-islamic-banks\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Impact of Financing Contracts on the Profitability of Islamic Banks | Jurnal Ekonomi Malaysia\" \/>\n<meta property=\"og:description\" content=\"This paper investigates the impact of financing contracts on Net Profit Margin (NPM) of the Islamic banks. Focussing on two financing contracts of Bai\u2019 Bithaman Ajil (BBA) and Al-Ijarah Thumma Al-Bai\u2019 (AITAB), the paper employs static panel data of Malaysian banks over 2008 to 2018. Controlling for bank and market-specificContinue Reading\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.ukm.my\/jem\/article\/the-impact-of-financing-contracts-on-the-profitability-of-islamic-banks\/\" \/>\n<meta property=\"og:site_name\" content=\"Jurnal Ekonomi Malaysia\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Jurnal-Ekonomi-Malaysia-JEM-104142808087485\" \/>\n<meta property=\"article:modified_time\" content=\"2022-07-26T22:39:18+00:00\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:site\" content=\"@EkonomiJurnal\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.ukm.my\\\/jem\\\/article\\\/the-impact-of-financing-contracts-on-the-profitability-of-islamic-banks\\\/\",\"url\":\"https:\\\/\\\/www.ukm.my\\\/jem\\\/article\\\/the-impact-of-financing-contracts-on-the-profitability-of-islamic-banks\\\/\",\"name\":\"The Impact of Financing Contracts on the Profitability of Islamic Banks | Jurnal Ekonomi Malaysia\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.ukm.my\\\/jem\\\/#website\"},\"datePublished\":\"2021-10-06T02:57:20+00:00\",\"dateModified\":\"2022-07-26T22:39:18+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.ukm.my\\\/jem\\\/article\\\/the-impact-of-financing-contracts-on-the-profitability-of-islamic-banks\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.ukm.my\\\/jem\\\/article\\\/the-impact-of-financing-contracts-on-the-profitability-of-islamic-banks\\\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.ukm.my\\\/jem\\\/article\\\/the-impact-of-financing-contracts-on-the-profitability-of-islamic-banks\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.ukm.my\\\/jem\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Articles\",\"item\":\"https:\\\/\\\/www.ukm.my\\\/jem\\\/article\\\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"The Impact of Financing Contracts on the Profitability of Islamic Banks\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.ukm.my\\\/jem\\\/#website\",\"url\":\"https:\\\/\\\/www.ukm.my\\\/jem\\\/\",\"name\":\"Jurnal Ekonomi Malaysia\",\"description\":\"Universiti Kebangsaan Malaysia\",\"publisher\":{\"@id\":\"https:\\\/\\\/www.ukm.my\\\/jem\\\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.ukm.my\\\/jem\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\\\/\\\/www.ukm.my\\\/jem\\\/#organization\",\"name\":\"Jurnal Ekonomi Malaysia\",\"url\":\"https:\\\/\\\/www.ukm.my\\\/jem\\\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/www.ukm.my\\\/jem\\\/#\\\/schema\\\/logo\\\/image\\\/\",\"url\":\"https:\\\/\\\/www.ukm.my\\\/jem\\\/wp-content\\\/uploads\\\/2021\\\/05\\\/cropped-browser-icon-letter-1.png\",\"contentUrl\":\"https:\\\/\\\/www.ukm.my\\\/jem\\\/wp-content\\\/uploads\\\/2021\\\/05\\\/cropped-browser-icon-letter-1.png\",\"width\":512,\"height\":308,\"caption\":\"Jurnal Ekonomi Malaysia\"},\"image\":{\"@id\":\"https:\\\/\\\/www.ukm.my\\\/jem\\\/#\\\/schema\\\/logo\\\/image\\\/\"},\"sameAs\":[\"https:\\\/\\\/www.facebook.com\\\/Jurnal-Ekonomi-Malaysia-JEM-104142808087485\",\"https:\\\/\\\/x.com\\\/EkonomiJurnal\"]}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"The Impact of Financing Contracts on the Profitability of Islamic Banks | Jurnal Ekonomi Malaysia","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.ukm.my\/jem\/article\/the-impact-of-financing-contracts-on-the-profitability-of-islamic-banks\/","og_locale":"en_US","og_type":"article","og_title":"The Impact of Financing Contracts on the Profitability of Islamic Banks | Jurnal Ekonomi Malaysia","og_description":"This paper investigates the impact of financing contracts on Net Profit Margin (NPM) of the Islamic banks. 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