Evaluating and Comparing the Financial Performance of the Banking Systems of Iran and Malaysia

Mohagheghnia, Mohammad Javad; Alijani, Parnian; Valimoradi, Mahsa

doi:10.22034/jifb.2023.389241.1448

Evaluating and Comparing the Financial Performance of the Banking Systems of Iran and Malaysia

Document Type : Original Article

Authors

Mohammad Javad Mohagheghnia ¹

Parnian Alijani ²

Mahsa Valimoradi ²

¹ banking and finance Departement allameh tabatabayi university

² Allameh Tabataba'i University

https://doi.org/10.22034/jifb.2023.389241.1448

Abstract

Given the increasing progress of the banking industry and the increasing impact of this industry on economic growth and development, examining various aspects of how banks perform helps in identifying problems and managing them better. As the value of bank assets of Iran and that of Malaysia are similar, and since the Islamic banking system of Malaysia operates on a global and comprehensive scale, the present research evaluates and compares the banking systems of Iran and Malaysia based on sixteen performance indicators, introduced in the Research Center of the Islamic Consultative parliament from 2015 to 2019. The data were collected from the financial statements of 27 Iranian banks and 49 Malaysian banks. The Kolmogorov-Smirnov test revealed a normal distribution of the sampled data. To analyze the hypotheses, the researchers ran a t-test on the two independent data samples. The results showed that the Malaysian banks have performed better in terms of capital quality, profitability, and employee efficiency in managing bank debts and using the bank capacity to generate income and increase profitability for the shareholders. On the other hand, Iranian banks have performed better in terms of leverage ratios, interests paid to deposits, operating margin, loans to assets ratio, and attracting time deposits.

Keywords

Comparison of financial performance

Malaysian banking system

Iranian Banking system