Title: Determinates of Islamic banking profitability: an evidence from Gulf Cooperation Council (GCC) (2011-2014)

Authors: Qasim Mousa Abu Eid; Hussein Mohammad Salameh

Addresses: Amman Training College – UNRWA, P.O. Box 270, Al Muqablein, Amman, 1163, Jordan ' College of Administrative and Financial Sciences, King Khalid University, P.O. Box 3247, Abha, Abha, 61471, Saudi Arabia

Abstract: Islamic banking is attracting the attention of the economic and finance people alike. This paper analyses micro models, micro and macro models of Islamic banking profitability in Gulf Cooperation Council (GCC) during 2011-2014. The results show that overheads divided by total assets (OVRHD) negatively affect profitability whether at micro level model or micro and macro level model. In addition, annual growth rate of real gross domestic product per capita (GDPPC) positively affect profitability represented by ROA at the micro and macro model. While the ratio of non-interest earning assets divided by total asset (NIEATA) negatively affect profitability represented by ROE at the micro and macro model. Finally, there is no effect of the other variables on the profitability in the four models. As a continuation of this study, further research should be carried out using other Islamic demographic determinants as the adjusted R-square in our model is low.

Keywords: Islamic banking; GCC; Gulf Cooperation Council; ROA; return on assets; ROE; return on equity.

DOI: 10.1504/AJFA.2017.086096

American Journal of Finance and Accounting, 2017 Vol.5 No.1, pp.1 - 19

Received: 13 Dec 2016
Accepted: 05 May 2017
Published online: 24 Aug 2017 *

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