Determinants of credit risk in Malaysian Islamic banks

Abstract

Credit risk is the oldest form of risk in the financial markets and has been receiving great attention mainly in the banking institutions. According to the Basel Committee on Banking Supervision (2000), credit risk continues to be the leading source of problems in banking institutions all over the world. In the context of Malaysia, Central Bank of Malaysia (2001) had announced that credit risk continues to remain the largest source of risk for banking institutions in Malaysia due to the fact that a banking institution's financing portfolio is typically the largest asset and the major source of revenue.