Comparison on Stability Between Islamic and

Conventional Banks in Malaysia

Siti Rohaya Mat Rahim1
Roza Hazli Zakaria2
Abstract
Islamic banks were relatively unaffected during the recent financial meltdown. This has
raised the possibility that financial institutions, operating on Islamic principles are more
stable compared to their conventional counterparts. This motivates us to undertake to examine
relative stability between Islamic and conventional banks. Z-score and NPL are used as
proxies for bank stability. Computation of Z-score and NPL suggest that on average Islamic
banks are relatively more stable than their conventional counterparts. Standard panel data
analysis suggests that factors affecting both Islamic and conventional banks stability are
similar, except for the degree of diversification in income. Stability is not a function of income
diversification for Islamic banks but it is in the case of conventional banks. This explained
why during recent crisis, when various sources of bank income was adversely affected,
Islamic banks remained stable as opposed to the conventional banks.
Keywords: Islamic banks; Conventional banks; Stability; Z-score; Panel Data.
JEL specification: G21

1.0

Introduction

The global financial crisis that started in 2007 has led to renewed interest on Islamic
banking. Lack of stability corresponds with the financial instability situation or
financial crisis (Hussein, 2010). Several research done by (Venardos, 2010; Imam and
Kpaodar, 2010) briefly discuss regarding financial stability. This is as evidenced
during the liquidity crisis and sub-prime mortgage crisis in United States. When the
1

SITI ROHAYA MAT RAHIM, Lecturer, Department of Economics Faculty of Business and
Finance, Universiti Tunku Abdul Rahman (Perak Campus), Jalan Universiti,Bandar
aratKampar 31900. Perak, Malaysia. Tel: 6005-4688888 ext 4380 HP: 60012-8355082
Email: rohaya@utar.edu.my
2
ROZA HAZLI ZAKARIA, Senior Lecturer. Department of Economics, Faculty of
Economics and Administration, University of Malaya, 50603 Kuala Lumpur, MALAYSIA
Email: roza@um.edu.my

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Journal of Islamic Economics, Banking and Finance, Vol. 9 No. 3, July - Sep 2013

US bank Lehman Brothers went bankrupt on 15 September 2008, banks in the United
States and Europe were equally affected, as well as all financial institutions.
Studies and reports highlight the relatively better performance of the Islamic and
conventional banks. More recently, Alaro and Hakeem (2011) provide some evidence
that Islamic banking is more stable than conventional banks in term of risk
management. In addition to that, Financial Stability Report 2011 documents that
countries that practice Islamic banking is more stable than others that rely on
conventional banking, where Saudi Arabia (rank 1) ranked as the most stable as
opposed to United States (rank 41) and United Kingdom (rank 42).
The observation that Islamic banks were relatively unaffected by the crisis as
compared to their conventional counter parts highlight the strength of the Islamic
banking system as a possible alternative to replace the existing interest based
financial system. However, this requires more researches in breadth and depth to
examine issues surrounding Islamic banks stability as esxiting available researches is
rather limited. This is what motivate us to undertake this study. It aims to fill in the
gap by providing some sound evidence the stability issues of Islamic and
conventional banks during recent crisis. Besides, our study will also examine factors
that underlie bank stability in order to get some insight on the differences, if there is
any. Malaysia provides a good avenue for case study given that both types of banks,
Islamic and conventional work hand in hand in the economy under the dual banking
system. Hence, they are subjected to similar macroeconomic conditions.
The following of this paper is structured as follows; 2.0 details literature reviews on
banking stability, 3.0 discuss the methodology, followed by 4.0 in which the
empirical results are described. Finally, 5.0 conclude this paper along with policy
implications.

2.0

Why Islamic banks could be more stable?

Islamic banks are unique or different from their conventional counterparts in terms of
their underlying modus operandi. Guarded with the belief that interest or riba is
totally unacceptable, Islamic banks operation is based on Shariah compliance
principles such as profit sharing basis, real asset transactions and strict adherence to
no speculative element. With these differences on the three basic principles, Islamic
banks portray different response during the recent financial meltdown.
A review of past studies related to the issue of banking sector stability show that there
are at least three explanations on the relative stability. Firstly, banks operates under
Islamic possess greater liquidity holdings relative to conventional ones. Partly, this is
due to the relatively limited availability of investment avenues that are Shariah

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133

compliance. This is in accordance with Hadeel Abu Loghod (2010), who found
attractiveness of Islamic banks products such as Mudaraba, Musharakah, Murabahah,
Ijarah, and profit and loss investment was the main reason behind the greater liquidity
holdings.
Secondly, Islamic banks focused on profit sharing investment and financing, in which
there is mutual risk sharing. For instance, Rahman (2011) details that Islamic banks in
Bangladesh currently adopt sophisticated qualitative and quantitative techniques to
overcome the credit risk problems.
In addition to that, Islamic banks are different in their business model as well as
financing or equity participation.. This led them to channel their investment more in
less risky investment sectors. For instance, Hasan and Dridi (2010), reports that
Islamic banks successfullly maintained stronger credit growth. His research proved
Islamic asset growth and bank credit was double than those conventional banks
during 2007-2009.
Thirdly, Islamic banks are less affected with many conventional banks because
Islamic banks were prohibited in any speculative practices and excessive leveraging,
which were root causes of the recent global financial crisis.

3.0

Methodology

3.1

Model Specification

A model is proposed to estimate what explains bank stability. In general, bank

stability depends on both external and internal factors. The external factors refer to
macroecnomic development while internal factors refer to bank specific
characteristics. Several variables that influenced bank stability has been identified
through literature review. The external factors refer to macroecnomic variables such
as market share (SHARE), inflation (INF) and real GDP (GDP).
Market share (SHARE) is an important determinant of bank stability, and its
relationship has been fairly agreed in the academic literature. Beck et al., (2010)
found that higher market shares of Islamic leads to stability, in contrast conventional
banks tend to be more cost-effective but less stable. Inflation rate (CPI) positively to
the profitability and stability of the banking sector, (Chapra, 2000) and (El-Gamel,
2000). (GDP) real gross domestic products measure total economic activity in a one
country. Bekaert et al., (2007) show that real (GDP) growth rate significantly affect
banking system and equity markets. Therefore in this research, we include (GDP)
real gross domestic products and we expect that economic growth has positive
impacts on financial stability.

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Journal of Islamic Economics, Banking and Finance, Vol. 9 No. 3, July - Sep 2013

Internal factors such as loan asset ratio (LAR),cost income ratio (CIR), log total
assets (LTA), and Herfindahl Index (HI). Bank liquidity is measured as loan assets
ratio, (LAR). Higher value of this ratio indicate that high risky a bank bear since it
shows a bank is loaned up to much and its liquidity is quite low. This is supported by
(Agusman et al., 2008). In our model, we hypothesize that loan-to-asset ratios are
negatively related to bank stability. According to Hassan (2010), higher loan-to-asset
ratio negatively impacts bank stability.
Efficiency element measured by cost income ratio (CIR). The ratio gives investors a
clear view of how efficiently the bank is being run; the lower it is, the more profitable
the bank will be. The hypotheses assume that higher cost income ratios negatively
related with Z-scores. Several studies claim that less efficient banks may tempt to
take on additional risk to increase their financial performance, similar finding also
noticed by (Kwan and Eisenbeis, 1997).
Bank size (LTA) measured log of total assets. We assume that as the bank size
becomes larger, bank would be more stable. Herfindahl Index (HI) measure of
concentration index.
Therefore, estimated model could be written as:

BankStability

1 LARit

6 SHARE it

3.2

2 CIRit

7 INFit

3 LTAit

8 GDPit

4 IDit

5 HI it

it

Variables Description

The variable of interest is bank stability. To ensure robustness, we employ two

definitions of bank stability, that is Z-Score (following Cihak and Hesse, (2008);
Demirguc-Kunt, Detragiache, and Thiesel (2008); Maechler, Mitra, and Worrell,
(2005) and NPL (following Ariff (2007); Madura et al., (1994).
Z-score test measure risk is recommended by many researches in the field, directly
relates to the bank s insolvency. Z-score represents number of standard deviations by
which the returns on asset have to decrease in order to incur a loss (a negative return).
Higher Z-score value indicates a lower probability of default.
Whereas, non-performing loans (NPL) is the most important factors causing
reluctance for the banks to provide credit. High level of NPL requires banks to raise
provision for loan loss. Action of this bank decreases banks revenue by cutting down
the funds for new lending.

Islamic Finance in India: A Study on the Perception of College Teachers in Chennai

135

Where:
Dependent Variables
ZSCORE
NPL

Definition
Z = (ROA+CAP)/ (ROA)
NPL = mon-performing loans/ total loans

Independent ariables

Definition

LAR

Loans Assets Ratio

LAR = Total Loans/ Total Assets

CIR

Cost Income Ratio

CIR = Total Costs/ Total Income

LTA

In(Assets)

In (Total assets) of a bank (RM million)

ID

Income Diversity

Net interest income Other operating income)

1 - ----------------------------------------------------Total Operating Income

HI

Herfindahl Index

Herfindahl Index =

(market share n) 2

SHARE Market Share

Market Share of banks (per year)

INF

Inflation

CPI index (%)

GDP

Real GDP

Growth rate of real GDP

Error term

Error term that are not captured by the model

it

Table 1.0: Summary of Dependent and Independent Variables

3.3 Data Sources

Data is gathered from the bank s annual reports, and consolidated and unconsolidated
statement bank statement for various financial institution in Malaysia which is
sourced online as well as from published copies. The period of analysis spans from
year 2005-2010. Macroeconomics data were gathered through online database
Monthly Statistical Bulletin of Bank Negara Malaysia (BNM). Data were collected
from all 17 Islamic banks and 21 conventional banks in Malaysia. During this period
of study, there had been a few mergers and acquisitions of conventional banks,
affecting those banks which operate on Islamic window basis. Particularly, in 2008
Malaysia Islamic banking has observed some structural change since those banks that
operate under Islamic banking windows, has been transformed to full-fledge banks. In
the case of mergers have taken place within the sample banks, this study proceeds by
using the data of anchor bank prior to merger. Meanwhile, the new Islamic banks
upgraded from their Islamic banking operations are treated as a continuation from
Islamic banking operations or windows. Thus, this study includes both full fledge and
Islamic banking operations.

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Journal of Islamic Economics, Banking and Finance, Vol. 9 No. 3, July - Sep 2013

4.0

Findings

4.1

Normality Test

Jarque-Bera test (assume under the null hypothesis of a normal distribution, is

distributed as 2 with 2 degrees of freedom. Since the probability of Jarque-Bera
statistic less than 0.05, normal distribution can be rejected. Mostly our probability of
Jarque-Bera statistic is less than 0.05 (Table 2.0), therefore we conclude that our
sample is not normal distribution.

4.2

Correlation Coefficient

To check whether multicollinearity appears or not in the model the simple correlation
coefficients in Table 3.0 between the explanatory variables have been examined. The
pairwise correlations among the explanatory variables (LAR, CAR, LTA, ID, HI,
SHARE, INF and GDP) are particularly strong (r < 0.50 in each case). This shows
that the variables are not correlated among each other. As a conclusion multi-co
linearity problem does not appear in this study.

4.3

Unit Root Test

The p-values reported in Table 4.0, each of data series suggest that we fail to reject a
unit root test at least at the 1 % level and 5 % level at 1 st differences. As can be
readily seen, all time series at level contain unit roots according to ADF unit root test
and Levin, Lin & Chu (2002) at level except for cost income ratio, In (total assets),
income diversity and Herfindahl Index. We conclude that ADF unit root tests in first
differences show all variables are stationary.

Islamic Finance in India: A Study on the Perception of College Teachers in Chennai

137

DESCRIPTIVE STATISTICS
ZSCORE

NPL

LAR

CIR

In(TA)

ID

HI

SHARE

INF

GDP

Mean

0.722368

0.690204

0.432368

1.076924

14.41387

0.536328

6.160500

5.108904

2.726667

4.616667

Median

0.330000

0.286812

0.510000

0.290000

16.27373

0.550000

0.870000

0.930000

2.530000

5.600000

Maximum

23.67000

39.05209

0.940000

22.80000

21.45330

1.630000

74.20190

73.50000

5.400000

7.200000

Minimum

1.960000

1.501443

0.780000

1.420000

1.540000

0.470000

0.780000

0.670000

0.600000

-1.700000

Std. Dev.

2.029177

2.657692

0.256597

10.38575

6.015925

0.384194

1143.691

13.44865

1.537723

2.936986

Skewness

8.331474

3.156460

-0.580081

14.94308

-1.820843

0.387167

6.518537

5.279181

0.402549

-1.507184

Kurtosis

84.20247

10.83223

2.098793

224.8461

4.757063

2.760985

44.08796

32.54685

2.210679

3.722992

Jarque-Bera

45.03935

20.50241

1279.605

155.3169

6.238846

1762.77

88.99084

12.07650

91.28674

Prob

0.000000

0.029174

0.000035

0.000000

0.000000

0.044183

0.000000

0.000000

0.002386

0.000000

Sum

164.7000

348.8842

98.57982

245.5386

3286.362

122.2829

117.0459

116.4830

621.6800

1052.600

Sum Sq. Dev.

934.6861

503.4312

14.94613

24485.09

8215.436

33.50639

212.6785

169.5040

536.7627

1958.077

228

228

228

228

228

228

228

228

228

228

No of banks

Table2.0: Descriptive Statistics

CORRELATION MATRIX
Correlation

ZSCORE

NPL

LAR

CIR

LTA

ID

HI

SHARE

INF

GDP

ZSCORE

1.000000

NPL

0.260348

1.000000

LAR

-0.131501

0.039276

1.000000

CIR

0.280227

0.024748

-0.098776

1.000000

LTA

0.075817

0.042823

0.672384

0.070399

1.000000

ID

-0.065527

0.084176

0.273420

-0.090543

0.051834

HI

0.247156

-0.004028

-0.132856

0.423686

0.183455 -0.076547

1.000000

SHARE

0.202214

0.112992

-0.032567

0.403106

0.298628 -0.033122

0.175314

1.000000

INF

0.039093

0.059654

-0.041761

0.037241

-0.053387

0.029037 -0.002152

-0.002136

1.000000

GDP

0.041271

0.016871

-0.137644

0.029387

-0.094316 -0.013087 -0.000553

-0.003305

0.049644 1.000000

1.000000

Table 3.0: Correlation Matrix

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Journal of Islamic Economics, Banking and Finance, Vol. 9 No. 3, July - Sep 2013

UNIT ROOT TESTS (LEVIN, LIN & CHU) AND (ADF TEST)
1ST DIFFERENCES

LEVEL

Variables
Levin, Lin & Chu

ADF

Levin, Lin & Chu

ADF

statistics

Probabilit
y

statistics

Probability

statistics

Probability

statistics

Probability

(1)Z-score

-5.16530

0.1365

16.0765

0.4034

-1.90110

0.0000***

8.91494

0.0013**

(2)NPL

-9.90068

0.7685

63.3617

0.7008

-9.83040

0.0000***

68.1719

0.0005**

(1) Cost Income Ratio

-50.1936

0.0000***

39.5321

0.0000***

-61.5416

0.0000***

28.3889

0.0004**

(2)In (Total Assets)

-1.81761

0.0346**

53.0892

0.0196**

4.59864

0.0000***

3.45482

0.0009**

(3)Loans Assets Ratio

-1.44237

0.7460

34.1149

0.6422

-1.92920

0.0269**

10.0626

0.0105**

(4)Income diversify

-1.47450

0.0022**

64.4860

0.0012**

-1.17393

0.0120**

40.2925

0.0001**

(5)Herfindahl Index

-1.09632

0.0000***

72.2052

0.0001**

-0.06135

0.0000***

14.4515

0.0272**

(1)Market Share

-2.05664

0.1909

35.3794

0.4029

-1.44358

0.0007**

13.6358

0.0001**

(2)Real GDP Growth

-2.84655

0.7022

28.0980

0.7517

-1.6980

0.0454**

9.31677

0.0232**

(3)Inflation

-4.65016

0.6201*

41.4589

0.1774

-2.76261

0.0029**

14.6326

0.0000***

Dependent

Bank specific

Macroeconomics

Table 4.0: Unit Root tests and ADF test

values in parentheses.
significant level at 10% (*), 5% (**), 1% (***)

Islamic Finance in India: A Study on the Perception of College Teachers in Chennai

4.4

139

Selection Procedures for Best Model

Using E-Views 6, we run panel data for several specifications to gather the results.
Test of Generalized Least Square (GLS) was done in order to test bank stability. The
estimation proceeds as follows; firstly, model is estimated via ordinary least squares
(OLS). This estimation methods assumes that all banks have the same behaviour in
which it is assumed that the intercepts for the banks are identical, it= . Since the
initial findings of the data set indicate the non-normality distributions, thus
Generalized Least Squares (GLS) estimation is likely to produce better estimation
results.
Secondly, this study proceeds with both fixed effect and random effects models. The
result show that the null hypothesis is rejected that is the individual effect associated
with the independent variables. The result of Hausman test statistics suggests that
fixed effects model (FEM) is the appropriate panel data estimator for this study. By
looking at chi-square statistic, Z-scores of the conventional banks sample with (117, 8
degree of freedom) were ( 2=6.970100) and having a low-p-value (0.0000), lead to
suggestion that the corresponding effect are statistically significant at 1 %
significance level. In summary, based on the result of specification test; the fixed
effects model (FEM) appears to be the best model based on the Likelihood Ratio and
Hausman test.
Dependent Variables: Z-score

Chi-Square

df

Probability

(1) Islamic Banks

2.891050

(93, 8)

0.0000

(2) Conventional banks

6.970100

(117, 8)

0.0000

Dependent Variables: NPL

Chi-Square

df

Probability

(1) Islamic Banks

2.890808

(93, 8)

0.0000

(2) Conventional banks

7.998643

(117, 8)

0.0000

Table 5.0: Correlated Fixed Effect: Hausman Test

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Journal of Islamic Economics, Banking and Finance, Vol. 9 No. 3, July - Sep 2013

STEP 1: Pool vs. FE

Econometrics Estimation

(1)

(2)
(2)

Fixed Effect (FE)

POOL OLS

Decision based on:

Redundant Fixed Effect: Chow-Test

Select
Fixed Effect

STEP 2: FE vs. RE

(FE)

(2)
Fixed Effect

(3)
Random Effect (RE)

(FE)

Decision based on:

Correlated Random Effect: Hausman Test

STEP 3: BEST MODEL: FE

Select
Fixed Effect (FE)

Figure 1.0: Selection Procedures for Best Model

Islamic Finance in India: A Study on the Perception of College Teachers in Chennai

Independent Variables

Constant

Z-score (Panel A)

141

NPL (Panel B)

Islamic

Conventional

Islamic

Conventional

(1)

(2)

(3)

(4)

0.680897

0.133812

0.908503

-1.611173

(0.0000)***

(0.0000)***

(0.0000)****

(0.0273)**

Bank Specific

-0.147068

-0.098306

1.476797

-1.314981

(1) LAR

(0.0195)**

(0.0634)*

(0.0000)***

(0.0842)*

(2) CIR

0.038518

0.011706

-0.013158

0.214108

(0.0000)***

(0.2011)

(0.0579)*

(0.7478)

0.022055

0.022765

0.022248

0.020201

(0.0003)**

(0.0000)***

(0.0000)***

(0.0002)***

-0.102110

0.040185

0.208662

0.854856

(0.3095)

(0.0000)***

(0.5209)

(0.0001)**

0.000500

0.000453

-0.000534

-0.000778

(0.0113)**

(0.1723)

(0.0336)**

(0.9221)

Macroeconomics

-0.011792

-0.021459

0.059340

0.705656

(1) SHARE

(0.1479)

(0.0000)***

(0.2800)

(0.0066)**

(2) INF

0.004880

0.002287

-0.053276

0.075542

(0.0433)**

(0.1802)

(0.0000)***

(0.3739)

0.004544

0.000799

0.042137

0.042138

(0.0002)***

(0.0430)**

(0.0000)***

(0.0177)**

0.0000

0.0000

0.0000

0.0000

R-squared

0.300331

0.331482

0.287459

0.209929

Adjusted R-squared

0.223093

0.211926

0.237426

0.206712

S.E.of Regression

1.414270

0.107905

1.863612

2.108415

F-statistic

15.79718***

14.68524***

10.61011***

10.28964***

Sum squared residual

154.0123

140.1772

267.4247

431.2051

Durbin-Watson stat

1.992206

1.872072

2.009188

1.995492

Observations

102

126

102

126

(3) LTA
(4) ID
(5) HI

(3) GDP
Fixed Effect:
Chow-Test (p-value)

Table 6.0: Fixed Effects Panel Model, 2005-2010

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Journal of Islamic Economics, Banking and Finance, Vol. 9 No. 3, July - Sep 2013

The regression results of Z-score and NPL have been identified as the dependent
variable as a proxy of measuring risk shown in Table 6.0. The diagnostics test
statistics show no evidence of misspecification, no serial correlation, no
multicollinearity and no heterokedasticity. Table 6.0 reported that for the first set of
regressions, the R-squared for Islamic banks were 30.03% while 33.14% for the
conventional banks. These results identify that factors that are significant in
determining Z-score for conventional banks are loan asset ratio, cost income ratio,
total asset, income diversity, Herfindahl Index, market share and real GDP.
Meanwhile, factors that influence Z-score for Islamic banks are cost income ratio,
total assets, Herfindahl Index, market share, inflation and real GDP. To ensure
robustness, we used another proxy for bank stability that is NPL. The results shows,
independent variables that are significant in determining NPL for conventional banks
are loan asset ratio, cost income ratio, total asset, income diversity, Herfindahl Index,
market share and real GDP.
Findings that contradict our initial assumptions are the relationship between size of
the bank and bank stability for conventional banks. The positive relationship implies
that a larger bank is linked with higher NPL, lower bank stability. This findings deny
the too big to fail hypothesis, and is consistent with previous work such as by
Ebrahim (2008) and Berger et al., (1997). Nevertheless, for the Islamic banks, our
result seems to be consistent with the previous findings, which indicate total assets,
confirm positive and significant effect on NPL at 1% significant level. It indicates
that 1% increase in total assets will increase NPL by 0.022%. This positive
relationship between bank size and bank stability indicate that solvency risks obtain
from impairment of assets.
Finally, looking at the macroeconomics perspectives for the Islamic banks, the result
of economic growth has a positive and significant effect on Z-score at 5% significant
level. It indicates that one percent increase in economic growth will increase Z-score
by 0.0045%. According to Shayegani and Arani (2012) real GDP is one of
macroeconomic variable contributing to financial stability. Our result is in line with
the previous research which claims, during economic boom, higher real GDP lead to
higher Z-score and a more stable Islamic bank.

Islamic Finance in India: A Study on the Perception of College Teachers in Chennai

4.5

Average Z-score and NPL Volatility, 2005-2010

The Average Z-score of the Conventional Banks and Islamic

Banks, 2005-2010
2.28
Islamic Bank
1.67

0.82
0.44

0.34

2005

2006

0.64
0.42

0.38

2007

2008

0.62
0.45

0.60
0.49

2009

2010

The Average NPL of the Conventional Banks

and Islamic Banks, 2005-2010
3.76
3.37
2.88

2.67
2.10
1.89
1.73

1.54

2.02
1.57

1.24

1.43

Islamic Bank
Conventional Bank

2005

2006

2007

2008

2009

Chart 1.0: Average Z-score and NPL, 2005-2010

2010

143

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Journal of Islamic Economics, Banking and Finance, Vol. 9 No. 3, July - Sep 2013

Higher Z-score obtained for Islamic banks is mainly due to higher return and equity
of Islamic banks as compared to those of conventional banks. Higher Z-score
indicates that Islamic banks are less risky (lower probability to defaults) than
conventional banks. During the year of 2006-2007, the trend shows that Islamic banks
are more resistant during crisis compared to conventional banks.
On examination of NPL, conventional banks have higher NPL than Islamic banks
which indicate that conventional banks have higher risk (higher probability to default)
as compared to Islamic banks. During the year of 2005-2006, the trend shows that
conventional banks are less resistant during crisis due to the higher NPL compared to
Islamic banks. The same results also appears during the crisis 2007-2010, which also
shows that conventional banks have higher NPL (higher probability to default) as
compared to Islamic banks.

5.0

Conclusion

This study examines stability between Islamic and conventional banks from banks
specific and macroeconomics perspectives by focusing on Malaysia scenario. The
findings of the study show that variables that have been identified as the significant
factors towards risk (probability to defaults) for Islamic banks were cost income ratio,
total assets, Herfindahl Index, market share, inflation and real GDP while
conventional bank stability were influence by loan asset ratio, cost income ratio, total
assets, income diversity, Herfindahl Index, market share and real GDP.
In future more comprehensive and effective research on relationships among
variables for both banks needs to be conducted to study the stability of Islamic and
conventional banks from Malaysia banking landscape after financial crisis 2008.
Large pools of secondary data should be collected from all Islamic and conventional
banks in Malaysia in order to have a better representative of our conclusions.

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145

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APPENDIX
1.0

List of Islamic Bank in Malaysia

No

Name

Ownership

Local Islamic Banks

1.

Affin Islamic Bank Berhad

Local

2.

Alliance Islamic Bank Berhad

Local

3.

AmIslamic Bank Berhad

Local

4.

Bank Islam Malaysia Berhad

Local (Full-fledged)

5.

Bank Muamalat Malaysia Berhad

Local (Full-fledged)

6.

CIMB Islamic Bank Berhad

Local

7.

EONCAP Islamic Bank Berhad

Local

8.

Hong Leong Islamic Bank Berhad

Local

9.

Maybank Islamic Berhad

Local

10.

Public Islamic Bank Berhad

Local

11.

RHB Islamic Bank Berhad

Local

Foreign Islamic Banks

1.

Al Rajhi Banking & Investment Corporation

Foreign

(Malaysia) Berhad
2.

Asian Finance Bank Berhad

Foreign

3.

HSBC Amanah Malaysia Berhad

Foreign

4.

Kuwait Finance House (Malaysia) Berhad

Foreign

5.

OCBC Al-Amin Bank Berhad

Foreign

6.

Standard Chartered Saadiq Berhad

Foreign

Sources: Bank Negara Malaysia (2011)

Islamic Finance in India: A Study on the Perception of College Teachers in Chennai

2.0

List of Conventional Bank in Malaysia

No

Name

Ownership

Local Conventional Banks

1.

Affin Bank Berhad

Local

2.

Alliance Bank Malaysia Berhad

Local

3.

AmBank (M) Berhad

Local

4.

CIMB Bank Berhad

Local

5.

EON Bank Berhad

Local

6.

Hong Leong Bank Berhad

Local

7.

Malayan Banking Berhad

Local

8.

Public Bank Berhad

Local

9.

RHB Bank Berhad

Local

Foreign Conventional Banks

1.

Bangkok Bank Berhad

Foreign

2.

Bank of China (Malaysia) Berhad

Foreign

3.

Bank of Tokyo-Mitsubishi UFJ (Malaysia) Berhad

Foreign

4.

Citibank Berhad

Foreign

5.

Deutsche Bank (Malaysia) Berhad

Foreign

6.

HSBC Bank Malaysia Berhad

Foreign

7.

Industrial

and

Commercial

Bank

of

China

Foreign

(Malaysia) Berhad

8.

OCBC Bank (Malaysia) Berhad

Foreign

9.

Standard Chartered Bank Malaysia Berhad

Foreign

10. The Bank of Nova Scotia Berhad

Foreign

11. The Royal Bank of Scotland Berhad

Foreign

12. United Overseas Bank (Malaysia) Bhd.

Foreign

Sources: Bank Negara Malaysia (2011)

149