Managing Financing Risk in Islamic Banks Across ASEAN: The Role of Financial Performance and Macroeconomic Factors
Abstract
This study examines the impact of Financial Performance and Macroeconomic Factors on the financing risk of Islamic banks in ASEAN. The analysis uses panel data from five countries—Indonesia, Malaysia, Brunei Darussalam, Thailand, and the Philippines—over the 2010–2019 period. A dynamic panel regression approach with the Arellano-Bond Generalized Method of Moments (GMM) is employed. The findings reveal that Liquidity Risk (LRISK), Profitability (ROE), and Good Governance (GGV) significantly increase financing risk, while the Capital Ratio (CAR) significantly reduces it. However, Economic Growth (GDP) does not have a significant effect. Additionally, financing risk is influenced by its value in the previous period (RISKt-1), highlighting its dynamic nature. These results underscore the importance of effective internal bank management in mitigating financing risks through improved capital adequacy, liquidity management, and the implementation of good governance practices. This study aims to contribute to enhancing risk management strategies for Islamic banks in the ASEAN region
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References
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DOI: https://doi.org/10.24952/tijaroh.v10i2.14418
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