Overview

Original Research

THE IMPACT OF CREDIT RISK ON PROFITABILITY OF ISLAMIC BANKS (CASE STUDY: BASED ON MENA REGION)

MOHAMMAD ALQSASS 1, and HAKAM MAALI 2.

Vol 18, No 02 ( 2023 )   |  DOI: 10.17605/OSF.IO/DW2G3   |   Author Affiliation: lecturer, Accounting Department, Faculty Of Business, Applied Science Private University, Jordan 1; Business Department, Al Istiqlal University, Jericho, Palestine 2.   |   Licensing: CC 4.0   |   Pg no: 389-400   |   Published on: 14-02-2023

Abstract

The purpose of current study is to investigate whether a relationship exists between credit risk and Islamic banks’ profitability in the MENA region. For this purpose, the sample selected is obtained from 12 MENA countries covering 20 Islamic banks as panel data over ten years period from 2011 till 2020. The fixed effect models were relied upon to analysis data. This study discusses the results of two profitability measures (ROA and ROE) to explain how they are distinct from each other. Using credit risk as independent variable. The results show that credit risk has a significant negative impact on the profitability of Islamic banks measured by ROA and ROE.

Keywords

Islamic Banks, Profitability, Return on Assets (ROA), Return on Equity (ROE), Panel Data, MENA Region Countries.