Credit Risk And Profitability Performance Of Malaysian Local Commercial Banks For The Period 2005 – 2012

• Main Author: Lee, Kelvin Yong Ming.
• Format: Final Year Project Report
• Language: English
• Published: Universiti Malaysia Sarawak (UNIMAS) 2014
• Subjects: HG Finance
• Online Access: http://ir.unimas.my/id/eprint/24765/1/Kelvin.pdf; http://ir.unimas.my/id/eprint/24765/
• Institution: Universiti Malaysia Sarawak

This paper examines the relationship between credit risk and profitability performance of the Malaysian local commercial banks. All the local commercial banks in Malaysia (Maybank, CIMB Bank, Hong Leong Bank, Public Bank, RHB Bank, AmBank, Alliance Bank, and Affin Bank) are the samples used in this study and the sample period covering the period from 2005 to 2012. The empirical tests employed in this study are Descriptive Statistics, Ordinary Least Square (OLS) regression analysis, Hausman test, Diagnostic Testing and Granger causality test. The findings show that the non-performing loan to total loan ratio (NPL/LA) and the ratio of loan loss provision to total loan (LLP/LA) negatively affect the profitability performance that measured by return on asset (ROA); meanwhile the total loan to total deposit ratio (LA/TD) found to be positively affect the return on asset (ROA).