Abstract
The paper assessed whether the bank-specific factors (internal) and economic (external factors) determine the financial performance of Jaiz bank Nigeria as an Islamic bank. Secondary data from the bank’s financial statements and world banks Development indicators were extracted for the period of 8 years (2011 to 2018). After description analysis, OLS regression was utilized to determine the effect of independent variables (GDP, Inflation, Interest, capital adequacy, credit risk, deposit ratio, and cost efficiency) have on the dependent variables (ROA, ROE, and ROI) financial performance. It was established that; GDP as an external factor has a significant positive association with financial performance, cost efficiency was discovered to have a weak positive relationship with the financial performance, while inflation rate, interest rate, capital adequacy, deposit ratio, and credit risk were found to have no significant effect on the bank’s financial performance. It was recommended that; Islamic banks need to give more consideration to the economic factors in their policies and programs as they may influence their profitability. More studies are also needed to compare the determinants of Islamic banks with that of Money Deposit Banks.
Highlights
Jaiz Bank Plc was the first Islamic bank established in Nigeria
The results indicate return on assets (ROA) to be the most prepared measure of profitability. profitability of Islamic Banks in Bangladesh was significantly affected by the firm-specific variables of bank size, equity capitalization, investment, and cost efficiency and On the risk ratios, it was found that the profitability of the banks is positively influenced by the rate of loan ratio, cost efficiency and credit risk management, while the negative association was discovered with equity capitalization
To determine the factors that influence the financial performance of Jaiz bank limited, the performance ratios of ROA, return on equity (ROE) and Return on Investment (ROI) were considered as dependent variables, while credit risk, capital adequacy, cost efficiency, deposit ratio, Gross Domestic Product (GDP), Interest Rate and Inflation as independents variables, which were presented in 6 econometric models as follows;
Summary
Jaiz Bank Plc was the first Islamic bank established in Nigeria. The bank was license on 11th November 2011 as a foundation trust to operate only in the northern region with majority Muslims, later upgrade to a full nation bank with branches in all the geopolitical zone of the country on the 12th of May 2016. Notwithstanding these remarkable growth and performance shown by the bank, the bank similar to other financial institutions is bound to face several issues and challenges that include; management strategic planning, performance improvement, upward and downward movement in the economy, monetary and fiscal policies, wining more deposits and dealing with competitors. Makes it important to appreciate the relevant internal (bank-specific) characteristic or external (environmental) factors that might determine the performance of the bank and use as ingredients for mitigation of the effect of these (economic, policies and competitors) challenges. This study was justified by the absence of studies on the issue of determinants of performance of Jaiz bank in Nigeria as well as its importance to the growth, development, and survival of the bank
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