The Impact of Ijarah/Lease Financing on Malaysian Islamic Bank Performance

Abstract

Ijarah (lease contract) is one of the essential financing contracts offered by Islamic banking institutions to meet the demand of the clients. This study investigates the impact of Ijarah financing on Islamic bank performance in Malaysia for the period from 2004-2018 using Fixed and Random Effect Models. Ijarah financing (IJFA) which becomes the focus variable of this study with other six independent variables; operating efficiency (EXTA), bank size (LTA), total financing (TFTA), base rate (BR), consumer price index (CPI) and gross domestic product (GDP) were regressed against return on asset (ROA) and net profit margin (NPM). The results show that Ijarah financing has a positive and significant impact on NPM. The findings suggest that Islamic banks should increase their portfolio of Ijarah financing and this is also support the concentration strategy used by banks in improving Islamic bank performances. An increase in demand for Ijarah financing will increase Islamic banks performance and this reflects that Ijarah financing as an asset creation tool that banks prefer particularly for generating income.

Exploring the development of Islamic banking in Nigeria using an actor-network theory perspective

“…For instance, one article informed Nigerians that Islamic banking is for anyone who does not want to pay any interest, not only Muslims – it is only called “Islamic banking” because it is a non-interest banking system guided by Islamic legal principles and economics (Newswatch Nigeria, 2011). Other articles highlighted the acceptance of Islamic banking in other countries such as the United Kingdom (Yusuf, 2011; Gabriel, 2011; Jason, 2011). Jaiz Bank Plc began operation on 6 January 2012 through three branches: two located in the northern states of Kano and Kaduna and the third located in the Nigerian Federal Capital Territory, Abuja.…”

Pengaruh Faktor Internal Dan Faktor Eksternal Terhadap Non Performing Financing (NPF) Pada Pembiayaan Bank Umum Syariah

“…Berdasarkan hasil penelitian dapat dilihat bahwa pada NPF pembiayaan ijarah tidak dipengaruhi oleh faktor eksternal dan faktor internal. Hasil penelitian tersebut menunjukkan terdapat perbedaan hasil dalam penelitian (Yusuf & Isa, 2021).…”