The Impact Of Financial Ratios On Bank's Profitability In Malaysia

Chua, Xiao Nee (2014) The Impact Of Financial Ratios On Bank's Profitability In Malaysia. [Final Year Project Report] (Unpublished)

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Abstract

This study is aimed to investigate the impact of independent variables such as size of bank, tax ratio and total debt ratio on dependent variable such as return on assets. The objective of this study is to determine whether the financial ratios have the impact on profitability in Malaysia banking industry. This paper provides new empirical result on factors that determine the firm’s profitability in Malaysia banking sector. There are 8 local banks in Malaysia over 12 years which is from 2001 to 2012 have been used in this study. The data of this study are extracted from the annual report of sample companies. The methods that have been used in this study are the descriptive statistics, correlation coefficient test, granger causality test, Pooled OLS model, Random Effect model, Breush and Pagan Lagrangian multiplier test. The empirical result shows that size of bank (SZ) and return on asset (ROA) is insignificant but positive correlated to each other at five percent significant levels while tax ratio (TR) and total debt ratio (TD) are positive significant relationship to return on assets (ROA) at five percent significant levels.

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