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Financing Structure and Insolvency Risk Exposure of Islamic
Banks in Malaysia Using Hausman Test
Siti Nurhidayat Binti Musa
Supervisor: Dr. Chee Chew Seng
Bachelor of Science (Financial Mathematics)
School of Informatics and Applied Mathematics
Risk management has become an important function in the operations of the bank as
there are some banking crises nowadays. However, we find few studies on risk
management and lack of empirical investigation on factors affecting the risk of Malaysian
banks. Therefore, this study analyzes the impact of financing structure on Islamic banks’
insolvency risk exposure and to identify the factors that affecting the risk of Islamic banks
in Malaysia. In this study, two models are tested that is fixed effects model and random
effects model. Besides, to apply the likelihood ratio test and the Hausman test. Hausman
test are used to test economic models based on the comparison of two different
estimators of model parameters. The result shows that factors that influence the risk
exposure of Islamic banks in Malaysia are real estate sector, inflation, index of
specialization and others.
890 | UMT UNDERGRADUATE RESEARCH DAY 2018