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Most of the Islamic Banks were established in the Middle East, Pakistan, Malaysia, Indonesia and many other

Muslim majority countries. Along with this development many banks, developed countries have started to emphasis on the massive demand for financial products of Islamic Banks (Sufian, 2007) [3]. It has been reported that the fully functional Islamic banks were more efficient and more effectivethan the bank containing the separate Islamic windows [4, 13]. These types of banks are even less efficient than the conventional banks for the period of 1997-2003. (Mokhtar, Abdullah and Alhabshi ,2008) [4]. Additionally, in 2009, Sufian and Noor discovered that the administration of the Islamic banks are not strong enough to make proper use of their resources to the optimum extent [7]. However recently it has been reported that the authors found significant variation and diverse prototypes in inefficiency levels across the banking systems. On the other hand they found that small and home private banks are more efficient in fact [8].

Previously, in 2008 Siddiquievaluated characteristics of Islamic finance and examined their risk features of Islamic banking. They investigated all these characteristics of Meezan Bank and Al-Baraqa Bank of Pakistan. They compared a few phenomenon like range of earning, liquidity, profitability and capital adequacy ratios and contrasted with scheduled banks ratios. They conclude that Islamic banks in Pakistan were more motivated in the direction of employing projects with long term financing and found to had enhanced profitability than conventional banks [5].

The determinants ofcommercial banks in the United Arab Emiratswere studied by Al-Tamimi in 2005 through a contrast between National and Foreign banks in UAE

for the period of 1987-2002. They have analyzed these determinates by using two regression models. The outcome of this study proved that the bank portfolio combination and bank size have strongly significant relation with return on assets and return on equity for the National banks performance [1].

Bashir studied the determinants of profitability in Islamic Banks in 2003. They mainly investigated the cross-country analysis. In order to do so they collected income statements from 8 different countries. They analyzed the data of 14 Islamic bankswithin the period of 1993 - 1998. They have used Return on asset (ROA) and Return on equity (ROE) as the dependent variables the regression reported that profitability indicators positively react to enhance in loan ratios and capital [2].

In 2009 Sufian and Parmanstudied the profitability of non-commercial banks and financial institutes (NCBFIs) of Malaysia. They investigated these phenomena with the macroeconomic and bank-specific factors that influenced their profitability for the period of 2000-2004. They determined the NCBFIusing ordinary least square model.The results reveal that high credit risk and loan intensity tend to show lesser profitability level and NCBFI with highoperational expenses and level of capitalization tend to show higher profitability level [6].

It has been acknowledged that banks are more capable to make the most of their resources with respect to their potentiality to make profit and earn revenues. This outcome has been achieved through the study among 11 international Organization of Islamic Conference (OIC) nations for the period 1990-2005 [9].

Different group of researchers have focused on the effect of different variables affecting efficiency of the different banks around the globe. They have analyzed these effects by using different methodologies. Sufian and Habibullah studied the efficiency of the banking sector of Thailand for period 1999-2008 extensively using DEA model and multivariate regression analysis. They have concluded that higher efficiency levels are revealed by banks with large capitalization and higher loans intensity. [10].

Very recently Akhtar, Ali and Sadaqat focused on the effect of size and networking capital on the risk management practices of Islamic banks. They mainly investigated the bank-specific and macroeconomic determinants of profitability for commercial banks of Pakistan. They have considered data of four years to investigate the affect of capital adequacy ratio, credit risk, assetmanagement, GDP and consumer price index with profitability when measure with return on assets (ROA) and significant relation of operating efficiency, asset management and GDP with profitabilitywhen measured with return on equity (ROE) [11].

In 2011, Ali, Akhtar and Sadaqat examined the financial and non-financial risk dimension for the commercial banks of Pakistan. Their sample consist of data from 28 commercial banks of Pakistan. They used linear regression models fot their analysis. To ensure the gaps for knowledge on the profitability of Islamic banks [12].

Among the other factors S. Zulaiha focuses on the investigation of the impact of bank-specific factors which include the liquidity, credit, capital, operating expenses and the size of commercial banks on their performance. She studied these

characteristics using Return on average assets (ROAA) and return on average equity (ROAE) model. She concluded that Capital ratio, bank size and GDP are positively related while only liquidity is negatively related to banks profitability. However, only the last determinant which is inflation rate does not significantly contribute to Islamic banks profitability [14].

1. Al-Tamimi, H. A. (2005). The Determinants of the UAE Commercial Banks Performance: A Comparison of the National and Foreign Banks. Journal of Transnational Management, 10(4), 35 47. 2. Bashir, A.-H. M. (2003). Determinants of Profitabiltiy in Islamic Banks:Some Evidence FromThe Middle East. Islamic Economic Studies, 11(1), 31-57. 3. Sufian, F. (2007). "The efficiency of Islamic banking industry in Malaysia Foreign vs domesticbanks". Humanomics, 174-192. 4. Mokhtar, H. S., Abdullah, N., &Alhabshi, S. M. (2008). "Efficiency and competition ofIslamic banking in Malaysia". Humanomics, 28-48. 5. Siddiqui, A. (2008). "Financial contracts, risk and performance of Islamic banking". Managerial Finance, 34(10), 680-694. 6. Sufian, F., &Parman, S. (2009). Specialization and other determinants of non-commercial bankfinancial institutions profitability: Empirical evidence from Malaysia. Studies in Economicsand Finance, 26(2), 113-128. 7. Sufian, F., & Noor, M. A. (2009). "The determinants of Islamic banks efficiency changes.Empirical evidence from the MENA and

Asianbanking sectors". International Journal ofIslamic and Middle Eastern Finance and Management, 1753-8394. 8. Koutsomanoli-Filippaki, A., Margaritis, D., & Staikouras, C. (2009). "Profit efficiency under a directional technology distance function approach". Managerial Finance, 0307-4358. 9. Hassan, T., Mohamad, S., & Bader, M. K. (2009). "Efficiency of conventional versus Islamic banks: evidence from the Middle East". International Journal of Islamic and Middle Eastern Finance and Management, 1753-8394. 10. Sufian, F., & Habibullah, M. S. (2009). Bank Specific and Macroeconomic Determinants of Bank Profitability: Empirical

Evidence from the China Banking Sector. Front. Econ. China, 4(2), 274-291. 11. Akhtar, M. F., Ali, K., & Sadaqat, S. (2011). Liquidity Risk Management: A comparative study between Conventional and Islamic Banks of Pakistan. "Interdisciplinary Journal of Research in Business", 1(1), 35-44. 12. Ali, K., Akhtar, M. F., & Sadaqat, S. (2011). "Financial and NonFinancial Business Risk Perspectives Empirical Evidence from Commercial Banks". Middle Eastern Finance and Economics, 150159. 13. Sadaqat, M. S., Akhtar, M. F., & Ali, K. (2011). An Analysis on the Performance of IPO A Study on the Karachi Stock Exchange of Pakistan. "International Journal of Business and Social Science", 2(6), 275-285.

14. S. Zulaiha Determinants of Islamic banks profitability in Malaysia 15.

RasidahMohd Said &MohdhanafiTumin. (2011). Performance of financial ratios of commercial banks in malaysia and china. International Review of Business Research Papers, 7(2), 157-169.

According to Rasidah&MohdHanafi (2011) capital is better model as an internal determinant of bank profitability, as increase in profit may lead to an increase in capital. The capital ratio or equity to asset ratio (EA) measures the capital adequacy of the bank. It signals the overall shock absorbing capacity of a bank for potential loan asset losses. The higher the capital ratio, the stronger is the ability of the bank to withstand asset losses (Samad, 2004). Additionally, the greater the capital ratio, the lower is the need for external funding, hence the higher the profitability of the bank.

This paper examines the relationship of some internal factors which are extracted from banks account (balance sheets and/or profit and loss accounts) with banks performance in Malaysia and China. The empirical results indicate that the variable of credit risk is negatively related to ROAA for banks in both countries. However, for the ROAE, the credit risk is negatively related to Malaysian banks profitability only. The effect of capital on banks performance is rather mixed. Capital strength and the ROAE of Chinas banks profitability are positively and significantly related.

This factor, however, is not significant for Malaysian banks. Operating expenses is significantly negative related to banks performance in both countries when performance is measured by ROAA. When ROAE is employed as measure of performance, this relationship remains true only for China. Liquidity and size of banks somehow do not have any influence on the performance of banks for both countries. In general, the ultimate effect of financial ratios on banks performance varies across sample countries and may critically influenced by other countryspecific factors.