Financial Performance of Islamic Banks in Malaysia during the Covid-19 Pandemic

Abstract

The purpose of this study is to examine the financial performance of Islamic banks in Malaysia during the Covid-19 pandemic. The methodology of the study are data from the annual reports of 15 Islamic banks in Malaysia that were collected for the years 2019, 2020, and 2021. The banks’ performance was evaluated based on financial ratios consisting of profitability ratios, liquidity ratios, solvency ratios, and efficiency ratios. Findings of the study is the Islamic banks were able to manage their liquidity positions during the years 2019, 2020, and 2021. This study extends the literature by examining the financial performance of Malaysian Islamic banks before and during the Covid-19 pandemic. Islamic banks can improve their performance by becoming more competitive in the current environment of the financial industry. They need to take preventive measures in all their activities to prevent any unprecedented events in the future. More importantly, Islamic banks need to uphold Islamic ethics throughout their business operations to ensure compliance with Shariah. This study also provides practical implications for regulators and policymakers in the context of unprecedented uncertainty resulting from the Covid-19 pandemic. This is a pioneer empirical study that focuses on the financial performance of Malaysian Islamic banks before and during the Covid-19 pandemic.