Determinants of Islamic bank financing in Malaysia

Abstract

This study examines the determinants of Islamic bank financing in Malaysia using panel data from 16 full-fledged Islamic banks over 2014–2024. The study evaluates the roles of Base Financing Rate (BFR), money supply, liquidity, and bank size using panel regression analysis. The reported coefficients show that bank size has the largest positive coefficient (1.0835), followed by liquidity (0.7508) and money supply (0.4469), while BFR has a negative coefficient (−0.0915). These estimates indicate the direction and relative magnitude of the relationships; statistical significance is not inferred because the available regression output does not report p-values or t-statistics. The study contributes by integrating monetary-policy and bank-specific determinants within a recent Malaysian Islamic banking panel and provides implications for financing affordability, liquidity management, and sustainable financing growth.