The Moderating Effect of Board Capital on the Relationship between Product Diversification and Islamic Banks’ Performance : Insight from Malaysia

Msellek, Wissal (2020) The Moderating Effect of Board Capital on the Relationship between Product Diversification and Islamic Banks’ Performance : Insight from Malaysia. Masters thesis, Universiti Malaysia Sarawak (UNIMAS).

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Abstract

The aims of this research are to investigate the moderating role of the board capital in the relationship between the products diversification and the Islamic banks performance of all the listed Islamic banks in Malaysia and to examine the accuracy of the board capital theory and the knowledge transfer theory. This study has used many other independent variables to determine the effect on the relationship such as non-performing loan (NPL), loan to deposit (LTD), leverage and bank’s size and two dependent variables which are the return on assets (ROA) and Zakat as determinant of Islamic bank performance. The sample of this study is the 16 Islamic Banks listed in Malaysia for a period of 5 years. This study is using the PLS regression model as a methodology. Based on the Breusch-Pagan LM test, the Fixed model is the most appropriate model to use in this research. Based on the fixed model, the Islamic bank financial performance (ROA) is affected by the majority of the independent variables which are the product diversification, the board capital, NPL, leverage and bank’s size, while the Islamic bank Shariaa performance (ZAKAT) is affected by NPL, LTD, and bank’s size only.

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