The Profitability of Commercial Banks in Malaysia

Abstract

This study investigate son the factors affecting the profitability of commercial banks in Malaysia during the period of 2011-2017. The samples were taken based on the historical accounting data from annual reports of the banks. It is used to measure the internal determinants whether had direct impact toward the bank profitability measured by Return on Asset (ROA). This paper utilized quantitative methodology in ascertaining the relationship between the factors and profitability of the commercial bank. The results stated that bank size, liquidity and deposit ratio had a significant and positive relation with return on asset (ROA) except for GDP is significant but negative relationship. Although there were relationships among bank size, liquidity and deposit ratio but inflation rate did not have a significant influence on the profitability of the banks. The importance of the study is to improve the financial performance of Malaysian banking for investment and finance and to improve the Malaysia banks' operations.