CAPITAL DETERMINANTS OF ISLAMIC BANKS IN QISMUT COUNTRIES

Authors

  • NUR SYAHIRAH ROKEMAN MARA University of Technology image/svg+xml
  • WAHIDA AHMAD Arshad Ayub Graduate Business School, Universiti Teknologi MARA, Malaysia
  • NUR HAZIMAH AMRAN Arshad Ayub Graduate Business School, Universiti Teknologi MARA, Malaysia

DOI:

https://doi.org/10.24191/s8hfwx85

Keywords:

Capital buffer, Capital adequacy ratio, Capital risk, Islamic banks, QISMUT

Abstract

Insufficient capital buffers put banks at risk, jeopardizing their stability and potentially leading to bankruptcy. A reduced capital adequacy ratio raises concerns among depositors about the bank's long-term viability, eroding depositors’ trust and confidence in the bank's sustainability. Therefore, the study intends to investigate the causal factors of capital decisions in Islamic banks within QISMUT countries using unbalanced panel data from 2007 to 2022. The study utilized a fixed-effect model with cluster regression to rectify the heteroscedasticity and serial correlation problems in the data sample. The findings uncover that credit risk and profitability are positively significant with the capital buffer. On the other vein, liquidity level, bank size, and business cycles are discovered to be inversely related with the capital buffer. Intriguingly, the capital buffer of QISMUT Islamic banks is found to be significantly lower in times of crises compared to non-crisis periods. This data proves that an Islamic bank’s capital buffer is negatively affected during a recession. Hence, QISMUT regulators must take severe measures to address the moral hazard issue that is prevalent among larger Islamic banks. The study suggests that Islamic banks reserve a high amount of capital buffer at all times while prudently managing their liquidity level. Islamic banks also need to boost more capital, particularly in good times when the cost is cheaper, to be consumed later when the economy is doing poorly.

Author Biographies

  • NUR SYAHIRAH ROKEMAN, MARA University of Technology

    Nur Syahirah Rokeman is currently a full-time postgraduate student under the Faculty of Business and Management (FBM), Universiti Teknologi MARA (UiTM) Shah Alam, Selangor (ORCID: https://orcid.org/0009-0009-0362-2204). Her main research interest is in the field of banking and finance. She has published several papers on these field such as the Global Business and Management Research: An International Journal and Environment-Behaviour Proceedings Journal. She can be reached through her email at syahirah35@gmail.com.

  • WAHIDA AHMAD, Arshad Ayub Graduate Business School, Universiti Teknologi MARA, Malaysia

    Wahida Ahmad is an Associate Professor of Finance at Arshad Ayub Graduate Business School (AAGBS), Universiti Teknologi MARA, Malaysia (ORCID: https://orcid.org/0000-0002-8874-8229). She earned her doctoral degree (PhD) in 2013 in economics and finance from La Trobe University, Australia. Her main research interest is in the area of finance, banking, productivity, sustainability and financial behaviour. She has published in various journal, among others; Management Accounting Review, The Singapore Economic Review, Global Business and Management Research: An International Journal, Journal of Entrepreneurship, Business and Economics, Information Management and Business Review, Social and Management Research Journal and Jurnal Intelek. She can be reached through her email at wahida@uitm.edu.my.

  • NUR HAZIMAH AMRAN, Arshad Ayub Graduate Business School, Universiti Teknologi MARA, Malaysia

    Nur Hazimah Amran is a Senior Lecturer at Arshad Ayub Graduate Business School (AAGBS), Universiti Teknologi MARA, Malaysia (ORCID: https://orcid.org/0000-0002-3700-3091. She earned her doctoral degree (PhD) in 2022 from Universiti Teknologi MARA. She also holds position as the coordinator of e-Learning of Arshad Ayub Graduate Business School, Universiti Teknologi MARA. Her main research interest is in the area of banking, risk, finance, financial management, financial behaviour and Islamic finance. She has published several journal articles, among others; Management Accounting Review, International Journal of Economics and Management, and Malaysian Journal of Consumer and Family Economics. She can be reached through her email at hazimahamran@uitm.edu.my.

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Published

2026-10-31

Issue

Vol. 14 No. 2 (2026): October 2026

Section

Archives

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Copyright (c) 2026 NUR SYAHIRAH ROKEMAN, WAHIDA AHMAD, NUR HAZIMAH AMRAN

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This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

How to Cite

CAPITAL DETERMINANTS OF ISLAMIC BANKS IN QISMUT COUNTRIES (N. S. ROKEMAN, W. AHMAD, & N. H. AMRAN, Trans.). (2026). Journal of Academia, 14(2), 105-118. https://doi.org/10.24191/s8hfwx85

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