Bank-specific and macroeconomic determinants of bank profitability: Malaysian evidence during the 2007-2009 global financial crisis

This study investigates bank-specific and macroeconomic determinants of bank profitability in Malaysia for the period 2006 to 2012, besides examining whether 2007-2009 global financial crisis affects bank profitability.In addition, this study tests whether there is significant difference between foreign and local banks in the aspect of profitability, as generally, foreign banks have larger capital than that of local banks.The findings show that bank capital, bank size, and credit risk determine bank profitability in Malaysia.For macroeconomic variable, inflation exhibits a positive and significant relationship with return on asset (ROAA), indicating that economic condition play a role in influencing bank profitability in Malaysia.Interestingly, the results suggest that the 2007-2009 global financial crisis does not give an impact on Malaysian bank profitability.The results also do not support that foreign banks are more profitable than that of local banks.