Performance Of Banks In Malaysia Research Articles

CEO Experience and Commercial Banks' Performance in Malaysia–Evidence from Inside, Outside and Total Working Experience

This paper examines the CEO experience's impact on commercial bank performance in Malaysia from 2016 to 2021. Using the fixed effect model, we find that more experienced CEOs have more incredible abilities to overcome the complexity of the banking environment, hence, improving commercial banks' performance. Specifically, the CEO, with experience working within and outside the bank (Total Working Experience), strengthens the financial performance of commercial banks. Furthermore, the CEO with working experience outside the banks has more pronounced effects in improving the banks' performance than those with experience within the banks, in which an increase of one unit of working experience enhances the bank’s performance by 102% for the former and 100% for the latter. The resource dependency theory supports the findings. Based on the findings, the results suggest the importance of the CEO experience as a determinant of commercial bank performance in Malaysia. This paper provides insight into the policymakers responsible for appointing the CEOs of the banks.

The Older, the Wiser? Investigating the Effect of CEO Age on the Bank Performance in Malaysia

This paper aims to investigate the impact of CEO age on commercial bank performance in Malaysia. Our sample data consists of 84 observations from commercial banks in Malaysia from 2016 to 2021. Using the Quantile Regression Method, we find that the CEO's Age positively influences the commercial bank's performance. This finding indicates the wisdom of the CEO in making decisions when they are getting older, positively affecting the commercial bank's performance. The result is consistent with the resource-based view; the CEO is the invaluable human capital providing experience in managing the bank's performance. Our findings guide practitioners in hiring a qualified CEO

THE IMPACT OF IJARAH/LEASE FINANCING ON MALAYSIAN ISLAMIC BANK PERFORMANCE

Ijarah (lease contract) is one of the essential financing contracts offered by Islamic banking institutions to meet the demand of the clients. This study investigates the impact of Ijarah financing on Islamic bank performance in Malaysia for the period from 2004-2018 using Fixed and Random Effect Models. Ijarah financing (IJFA) which becomes the focus variable of this study with other six independent variables; operating efficiency (EXTA), bank size (LTA), total financing (TFTA), base rate (BR), consumer price index (CPI) and gross domestic product (GDP) were regressed against return on asset (ROA) and net profit margin (NPM). The results show that Ijarah financing has a positive and significant impact on NPM. The findings suggest that Islamic banks should increase their portfolio of Ijarah financing and this is also support the concentration strategy used by banks in improving Islamic bank performances. An increase in demand for Ijarah financing will increase Islamic banks performance and this reflects that Ijarah financing as an asset creation tool that banks prefer particularly for generating income.

THE IMPACT OF IJARAH/LEASE FINANCING ON MALAYSIAN ISLAMIC BANK PERFORMANCE

Ijarah (lease contract) is one of the essential financing contracts offered by Islamic banking institutions to meet the demand of the clients. This study investigates the impact of Ijarah financing on Islamic bank performance in Malaysia for the period from 2004-2018 using Fixed and Random Effect Models. Ijarah financing (IJFA) which becomes the focus variable of this study with other six independent variables; operating efficiency (EXTA), bank size (LTA), total financing (TFTA), base rate (BR), consumer price index (CPI) and gross domestic product (GDP) were regressed against return on asset (ROA) and net profit margin (NPM). The results show that Ijarah financing has a positive and significant impact on NPM. The findings suggest that Islamic banks should increase their portfolio of Ijarah financing and this is also support the concentration strategy used by banks in improving Islamic bank performances. An increase in demand for Ijarah financing will increase Islamic banks performance and this reflects that Ijarah financing as an asset creation tool that banks prefer particularly for generating income.

The Impact of Globalisation Towards Bank Performance in Malaysia

The purpose of this study is to shed some crucial light on the relationship between globalisation and performance of the banking system in Malaysia. This study uses a range of bank-characteristic determinants (internal factors), macroeconomic determinants (external factors) and three different dimensions of globalisation including economic globalisation, social globalisation and political globalisation to explain local commercial bank performance in Malaysia. This study uses regression analysis based on the secondary data for local commercial banks in Malaysia. The period for this secondary data is 10 years which is from the year 2008 till 2017. This study indicates that there is strong evidence stating both economic and politic globalisation have negatively significant effects on the bank performance in Malaysia. Meanwhile, social globalisation shows an insignificant result on this. As for bank characteristics variables, credit risk shows a negatively significant result towards bank performance in Malaysia while bank size shows a positive and significant result towards bank performance in Malaysia. Sole macroeconomic variable which is GDP does not show any significant result towards the bank performance in Malaysia. Therefore, central bank of Malaysia should give some incentive training for local bankers on how to adopt new supervision and risk management. This will give the local bankers some new knowledge to handle better risk management and directly boost the bank performance. Besides that, banks should develop their credit risk management to overcome any default loans and for better financial performances. Banks in Malaysia also need to expand their businesses as larger banks give a larger facility which directly boots the bank performance. It is also recommended for Malaysian banks to improve their forecasting of macroeconomic fluctuations in future to achieve greater efficiency levels.

Liquidity Risk Management and Financial Performance of Conventional Commercial Banks in Malaysia

Liquidity Risk Management and Financial Performance of Conventional Commercial Banks in Malaysia

The Important of Employee Retention Programs towards Bank Performance in East Coast, Malaysia

The purpose of this study is to explore the important of organizations’ retention programs towards improving firm performance in banking sector. Almost every day, banking sector in Malaysia received resignation letter from its employees. It’s either from permanent or contract basis employees. An organization underestimate this matter and just take it for granted and it resulted bank performance decreased as well as increasing in spending for new hiring. This study has been conducted by distributing questionnaire to commercial and conventional banks in East Coast, Malaysia. The findings displayed the training and development, employee compensation, communication in workplace and value in teamwork is crucial to retain employees as well as to improve bank performance in Malaysia. Result from this study will help management especially HR department to look into retention programs seriously for the purpose of retaining its staff and expertise. For future research, it has been recommended to explore new industry such as manufacturing, hotel industry, retail as well as telecommunication company due to these industries nowadays shows high rate of turnover.

Performance: Empirical Evidence From Malaysian Banking Industry

Various theories and empirical studies have been applied and proposed to establish and explain how corporate governance practices are related to banks financial performance. This study concerns the relationship between corporate governance variables and bank performance in Malaysia. The data collected and analysed in this research is from quarter one year 2011 to quarter four year 2016. Various determinants have been identified namely return on equity(ROE) for bank performance measurement, CEO duality, board size, and board gender for corporate governance. Control variables are bank size and bank leverage. The methodologies adopted in this research includes descriptive analysis, correlation analysis, Pooled Ordinary Least Square (OLS) regression, Diagnostic Tests (Jarque-Bera Normality Test, Wooldridge Test and Variance Inflation Factor), Breusch-Pagan (BP) Lagrange Multiplier test, and Hausman test. In this study, the findings indicate that strong board composition and bank leverage were experience better performance.

A Descriptive Study on Bank Performance in Malaysia: Domestic vs. Foreign Islamic Banks

Malaysia’s determination to become a hub for Islamic banking in Southeast Asia has led the Central Bank of Malaysia to grant licenses to foreign Islamic banks to operate in the country. Due to the intense competition among Islamic banks, the introduction of more innovative products is projected to tap investment opportunities not only for Malaysia but also for the rapidly growing Southeast Asian region. This paper assesses the performance of Malaysian Islamic banking industry since the introduction of the first Islamic bank two decades ago by using financial ratios. The ratios are divided into four categories; profitability, liquidity, risk and solvency, and commitment to economy and Muslim community. All 16 Islamic banks as listed by Bank Negara Malaysia were selected in the sample and to get the maximum number of observations, the period of 2005 to 2012 is selected. The chosen financial ratios indicated that domestic Islamic banks performed better during the 2005 to 2012 period in terms of profitability, but the foreign Islamic banks excelled in terms of liquidity, risk, and solvency ratios.

Using a U.S. Bank Regulatory Approach to Explain Bank Financial Strength Ratings

U.S. bank regulators require financial institutions to file quarterly financial reports, which are then available for public use. This research considers whether data constructed from regulatory filings explain bank financial strength ratings. We examine a dataset with variables on over 6,000 banks. The variables include the topics of bank capital, asset quality, management capacity, earnings, liquidity, and sensitivity to market risk. We found that one variable each from the above selected topic areas explain nearly 60% of bank financial strength ratings. Prior research attempted to explain and predict bank financial strength ratings (Hammer, Kogan, & Lejeune, 2012; Poon, Firth, & Fung, 1999). Since the 2007–2010 financial crisis, prior research has also attempted to predict the financial strength ratings of Turkish banks (Öğüt, Doğanay, Ceylan, & Aktas, 2012), the performance of South African banks (Kumbirai & Webb, 2010) and bank performance in Malaysia and China (Said & Tumin, 2011). We utilize variables from a bank regulatory model to determine how well they explain financial strength ratings. Our research adds to the literature by considering nearly the entire population of U.S. banks across time periods not previously considered.

Determinants of bank performance in Malaysia

This study examines the extent to which CAMEL variables, bank-specific factors, corporate governance and macroeconomic factors influence the performance of banks in Malaysia. Three-panel data models are used for analysis, which is the pooled ordinary least squares, random effects and two-step GMM models over the period 2003 to 2016. The results indicate that capital strength, bank size, remuneration of the board of directors, the duality of the CEO-chairman and economic growth have a positive effect on bank performance, whereas management efficiency, liquidity and loan growth have a negative effect on performance. The findings suggest that the performance of banks is affected not only by bank-specific factors but also by governance and macroeconomic factors. Evidence on the relationship between governance and performance indicates that increasing the number of independent directors is simply not enough to influence performance. Our findings provide justification for regulators to consider having a set of eligibility specifications to become a bank director to ensure that governance in the banking industry is further strengthened.

Measuring performance of islamic banks using maqasid index

Banking Industry plays vital role in a country's economic development therefore it is important to evaluate banks’ performance. Islamic Banks performances are measured using the same mechanism, which considers only financial ratios that are shareholder oriented. From Shariah point of view it is insufficient. The objectives of this paper are twofolds, firstly, to determine the performance of Islamic banks in Malaysia by using Maqasid Index that integrates the Shariah principles with financial ratios by applying Simple Additive Weightage (SAW). Secondly to identify the indicators contributing to the performance using Panel Data Analysis. The scope of this research is nine local Islamic Banks in Malaysia. The study found that Alliance Bank outperformed the other banks based on Maqasid Index. The indicators that significantly contribute to the performance of Islamic banks are fair returns, profit ratio, and investment ratio in real sectors.

A STUDY ON NON PERFORMING ASSETS OF THE INDIAN BANKS.

There has been an increase in the Credit flow to various sectors of the economy such as infrastructure, industry, services and agriculture. But simultaneously there has also been an increase in the Non-Performing Assets (NPAs) in the Indian banking sector. NPAs have direct impact on the profitability and the net-worth of the banks. The banks have to take initiatives to bring down the Non-Performing Assets. Gross NPA reflects the quality of the bank loans and the Net NPA reflect the actual burden of the banks. This paper makes an attempt to study the trends of Gross NPA, Net NPA, the impact of NPAs and the recent measures taken by the government to decrease the NPAs. Non-Performing Assets(NPA) Private Sector Bank Public Sector Bank. Asha Singh, (2013): ?Performance of Non-Performing Assets (NPAs) in Indian Commercial Banks?, International Journal of Marketing, Financial Services and Management Research, Volume 2, No 9, September, 2013, pp 86-94. U. Daru, (2016): ?NPA in Banking Sector: As an Indicator of Financial Inefficiency?, International Journal of Research in Finance and Marketing, Volume 6, Issue 12, December, 2016, pp.132-139. Pragya Prashant Gupta, (2016): ?NPA-A Curse for Indian Banking Sector?, Abhinav Journal of Research in Commerce and Management, Volume 5, No 8, August 2016, pp. 25-38. Press Information Bureau, (2016): ?Government has taken various measures to deal with the issue of Non Performing Assets (NPAs) in Banking Sector?, Ministry of Finance, http://pib.nic.in/newsite/PrintRelease.aspx?relid=142298, April, 2016. RBI, (2016): ?Report on Trend and Progress of Banking In India 2014-2015?, https://dbie.rbi.org.in/ Siti Nurain Muhmad, et.al., (2015): ?Using The Camel Framework in Assessing Bank Performance in Malaysia?, International Journal of Economics, Management and Accounting, Volume 23, No.1, 2015. [P. Vanishree Sah. (2017); A STUDY ON NON PERFORMING ASSETS OF THE INDIAN BANKS. Int. J. of Adv. Res. 5 (Apr). 1238-1242] (ISSN 2320-5407). www.journalijar.com Dr. P. Vanishree Sah CVR College of Engineering

The interaction effect of corporate governance and CAMEL framework on bank performance in Malaysia

This study conducts an analysis of interaction effect between corporate governance and CAMEL framework (capital adequacy, asset quality, management competency, earning quality, liquidity) toward bank performance in Malaysia. The study highlights the corporate governance as a moderator to CAMEL framework in enhancing the bank performance. Additionally, to closely examine the interaction effect, the simple slope test is employed in this study to investigate the impact of high and low corporate governance toward CAMEL framework and bank performance. The result indicates that capital adequacy, management competency, earning quality and liquidity have a significant relationship with bank performance when interacting with corporate governance. However, the result of simple slope test shows that management competency and liquidity have a better interaction with high corporate governance. The outcome of the study should be to provide vision to the corporate governance bodies in Malaysia, depositors, investors, stakeholders and also researchers to adopt and increase knowledge especially on how corporate governance and CAMEL framework could improve bank performance.

The interaction effect of corporate governance and CAMEL framework on bank performance in Malaysia

This study conducts an analysis of interaction effect between corporate governance and CAMEL framework (capital adequacy, asset quality, management competency, earning quality, liquidity) toward bank performance in Malaysia. The study highlights the corporate governance as a moderator to CAMEL framework in enhancing the bank performance. Additionally, to closely examine the interaction effect, the simple slope test is employed in this study to investigate the impact of high and low corporate governance toward CAMEL framework and bank performance. The result indicates that capital adequacy, management competency, earning quality and liquidity have a significant relationship with bank performance when interacting with corporate governance. However, the result of simple slope test shows that management competency and liquidity have a better interaction with high corporate governance. The outcome of the study should be to provide vision to the corporate governance bodies in Malaysia, depositors, investors, stakeholders and also researchers to adopt and increase knowledge especially on how corporate governance and CAMEL framework could improve bank performance.

Recapitalization Effectiveness and Performance of Banks in Malaysia

Recapitalization through capital injection is one of the strategies for banks to strengthen their banking system from the possibility of bank failures. Banks cannot deny that capital is one of the most important components to run their business. In spite of that, few studies have been conducted to assess the effectiveness of such strategy on Asian banks. This paper investigates the effectiveness of capital injection in the Malaysian banking sector which was adversely hit by the financial crisis. Panel data from 1997 to 2014 was used. The financial data is obtained from annual reports published in Bank Scope and The World Bank database. The data were processed using Panel Least Square and Random effect model. The empirical analysis reveals that, GDP, CAR, previous year capital injection and loan write-off (LWO) explain 89.6 percent of the variance in capital injection effectiveness. CAR and LWO/TA are significant at 5 percent confidence level. The evidence from the results shows that recapitalization is vital for long term survival of the banking sector. The study recommends that in order to improve the profitability of banking sector, the banks should write off bad loans and ensure they have adequate capital either through capital injection, or growth to withstand financial risks.

The Outcome of Politically Connected Boards on Commercial Bank Performance in Malaysia

This study draws on upper echelon theory (Hambrick & Mason, 1984) to examine whether the demographic characteristics of politically connected board members affect commercial bank performance in Malaysia. Interaction effect between age, ethnicity, and the political connections of board directors demonstrates that commercial bank performance depends on the presence of non-ethnic minority elder directors who have political connections with higher government authorities. The findings have important implications for corporate governance in commercial banking sectors in Malaysia. Although bank performances are impressive, the valuable human capital resources of board members who have diverse skills and backgrounds remain underutilized. Improving corporate governance performance through better use of human capital resources is of paramount importance for an effective business strategy that facilitates creativity and innovation. Government-Linked Companies (GLCs) should reengineer strategies to support the private sector, instead of crowding out private investment.

Factors affecting bank governance in Malaysia

Since the financial crisis in year 1997, banks in Malaysia had undergone various issues and transformations, including stricter regulation on merger and acquisitions and greater enforcement of corporate governance. Besides that, the institutions had also gone through the transformation in terms of the risk assessment practice due to the stricter rulings under Basel II regulations. Taking into account of these changes, this study empirically examines the effects of corporate governance, risk and capital on the performance of banks in Malaysia. Based on 132 firm-year samples for the period of 2004-2009, study indicates a significant and negative relationship between bank risks and performance. It further reveals that the risk weighted capital (RRWC) improves bank performance. However none of the corporate governance variables have any associations with banks performance. The detail explanations of the findings along with the suggestions for future research are provided in the full text of the reports.

The effects of corporate governance, bank risks and capital on bank performance in Malaysia (2004-2009)

This study seeks to investigate the effects of corporate governance, risk and capital on the performance of Malaysian banks. This gives incremental insights on the effects of new regulations; revised Malaysian Code on Corporate Governance (MCCG, 2007) and the implications of this code on the performance of Malaysian banks. This is by addressing the level of boards and audit committees independence, risks and the level of risks weighted capital (RWC) on banks performance. In particular, this study aims to investigate whether regulations improves banks performance.