Journal of Islamic Financial Studies ISSN (2469-259X) J. Islam. Fin. Stud. 1, No.1 (Dec-2015) http://journals.uob.edu.bh Bank-Specifc and Macroeconomic Determinants of Bank Proftability: Evidence from Member States of the OIC Omar Masood 1 , Muhammad Ashraf 2 and Seref Turen 3 1 University of East London, Royal Business School, Docklands Campus, University Way, E16 2RD, UK 2 University of Gujrat, School of Business and Management Sciences Department of Management Sciences, Jalalpur Jattan Road Gujrat, Pakistan 3 University of Bahrain, College of Business Administration Department of Economics and Finance, Sakheer Campus, Kingdom of Bahrain Received 22 June 2015, Revised 3 Sept 2015, Accepted 27 Nov. 2015, Published 1 Dec. 2015 Abstract: The aim of this paper is to examine the effect of internal (managerial-bank specifc) and external (macroeconomic) determinants of bank proftability over the period 2007-2012, adopting balanced panel data regression model for selected member states of the Organization of Islamic Cooperation (OIC). The results reveal that greater size of assets and management effciency regarding expense management contributes to increase in Return on Assets. The paper also demonstrates that effciency of management about operating expenses has a positive effect on proftability. Keywords: Banking, Bank proftability, OIC Keywords: Banking, Bank proftability, OIC 1. Introduction In any economy, banks play crucial role as fnancial intermediaries between surplus and defcit units. A robust and lucrative banking system makes signifcant contribution to the stability of whole fnancial system by resisting likely negative shocks; hence, determinants of bank performance continue to attract attention of all parties within the system (Athanasoglou, Brissimis and Delis 2008). For that reason, understanding determinants of bank proftability is essential to not only bank management but also to supervisors. This study attempts to fnd out the answer of this question about what determinants effect bank proftability internally (bank-specifc) and/or externally (macroeconomic) by considering the changes macroeconomic and legal environments of the sector. The paper targets to identify the aspects that infuence both Islamic and commercial banks proftability with key focus of bank-specifc determinants. Thus, the study is critical because of the importance of the topic for academics and practitioners. It also makes important contribution to existing literature that analyzes the factors effect bank proftability from Islamic as well as traditional stand points of banking. The paper is organized as follows: Section 2 discusses the previous studies on proftability determinants of Islamic and conventional banks. Section 3 explains the data, method and the variables. Section 4 presents study results and fnally Section 5 concludes the paper. E-mail: omar@uel.ac.uk, ashraf.scholar@gmail.com, sturen@uob.edu.bh