Finance In Malaysia Research Articles

MSME Lending And Bank Efficiency: Comparison Between Indonesia And Malaysia

MSMEs are one of the pillars of the country's economy; banking has a role in facilitating financing for MSMEs so that they can proliferate. On the other hand, banks must consider the cost efficiency they produce, considering that MSMEs are one of the sectors with high credit risk. This study aims to prove that financing for MSMEs can increase bank efficiency and that there are differences between banking in Indonesia and Malaysia. This study uses quantitative with an associative and comparative approach. The population of this study is banks listed on the Indonesia Stock Exchange and Bursa Malaysia in the 2020-2023 period. The Indonesian sample technique uses the purposive sampling method, and Malaysia uses the saturated sample method. The analysis technique uses stochastic frontier analysis (SFA), multiple linear regression, and difference tests with the help of statistical tools like Stata 17. The findings of the study show that financing for MSMEs affects bank efficiency. There is no difference between bank efficiency in Malaysia and Indonesia, but there is a significant difference between MSME financing in Malaysia and Indonesia. The theoretical implications of this study complement the theory regarding the relationship between MSME financing and bank efficiency. The practical implications of this research can provide recommendations to regulators in Indonesia to boost banking by increasing the financing ratio to MSMEs.

Correlation of Islamic Financing and Economic Growth through A Panel Data Approach

One of the strengthening of the financial sector is through financing, therefore what factors are needed that can encourage financing growth. This study aims to analyze economic growth, assets and Non-Performing Financing affecting Islamic financing during the period Q1 2017 to Q4 2022. The research went through the unit root test stage, panel data estimation, then panel data regression was selected using the Fixed Effect Model method. Based on the results of the research, it was concluded that economic growth, assets and NPF together affect Islamic financing in Malaysia, Saudi Arabia, Bahrain, the United Arab Emirates and Qatar. Economic growth and assets have a positive and significant influence on financing. Meanwhile, NPF has a negative influence on financing. The higher the NPF will affect the quality of financing, so it can lower the bank's health level.

Homeownership through asnaf home financing in Malaysia: an empirical investigation

Purpose The purpose of this study is to examine asnafs’ acceptance of home financing in Malaysia. Design/methodology/approach This work developed and introduced the maqasid theory of consumer behaviour (MTCB) to examine the effects of educational programmes, mortgage welfare, consumer justice and Islamic debt policy on receptiveness. Data analysis involving 733 respondents was conducted using partial least squares (PLS), where SmartPLS4.0 software comes into play. Findings In the core model, the effects of the MTCB’s variables helped shape the development of asnaf home financing acceptance. Research limitations/implications This study was based on quantitative data and geographical constraints. Practical implications The findings provide valuable inputs for the Joint Committee Body (JCB), combining Islamic banks and State Islamic Religious Councils to develop action plans for improving the facility offered. Social implications This work functioned as a social benchmark for improving Islamic home financing that includes asnafs’ homeownership. Originality/value A new conceptual framework for asnaf home financing drawn from MTCB is developed in the context of asnafs’ homeownership.

Transformation of Waqf Asset Development Financing in Malaysia Through Diversified Direct Financing Methods

Transformation of Waqf Asset Development Financing in Malaysia Through Diversified Direct Financing Methods

New measures of Islamic social finance receptiveness index

PurposeThis study investigated the receptivity of the zakat wakalah system in social finance in Malaysia under the lens of innovation diffusion theory (IDT).Design/methodology/approachThis study conducted quantitative research using Google Forms. The sample size was 261 respondents who participated and were useable in this study. The Statistical Package of Social Science (SPSS) 27 was employed to analyse the data. The data were collected online from August 1 till August 31, 2022.FindingsThe results reported significant effects of relative advantage, simplicity, compatibility and perceived benevolence on the zakat wakalah receptiveness index (ZAWi) for Medium Group Acceptance (MEGA) and High Group Acceptance (HIGA). As for Low Group Acceptance (LOGA), insignificant results were reported in relative advantage, compatibility and perceived benevolence but not simplicity.Research limitations/implicationsThis study was limited to Labuan geographically, Malaysia and the variables employed. Yet, the results highlight the factors that influenced ZAWi and the two groups namely HIGA and MEGA found them all significant.Practical implicationsThis study enhanced the theoretical and practical effects of ZAWi. The results rendered a competitive benchmark for zakat institutions and zakat payers for improved zakat distribution policy.Social implicationsThis study advanced psychology and management theory by improving knowledge of zakat wakalah for effective zakat distribution. In turn, it can be employed as the baseline theory for future studies to enhance existing hypotheses.Originality/valueThis study introduced a new ZAWi formulated from IDT in the context of zakat distribution in Malaysia.

Staff Retention among Employees in Malaysian Financial Institutions

This study investigates the retention of employees at a local commercial bank with a sample of 100. This study aims to assess flexible working arrangements, training and career development, compensation and benefits, and job and organisation fit that influence the retention of employees. This study found that only flexible working arrangements influence employee retention. The research findings assist respective bank management in formulating efficient human resource strategies. Understanding the variables that impact the retention of employees enables targeted interventions to improve employee happiness, engagement, and turnover rates.

Waqif preference of waqf-based qardhul hassan financing in Malaysia using a maqāṣid approach

Purpose The purpose of this study is to develop a new framework to measure waqif preference of waqf-based qardhul hassan financing in Malaysia. Design/methodology/approach Using a maqāṣid approach, this study’s data were drawn from 286 valid usable questionnaires to examine the effects of consumer, family, ummah and humanity factors on the preference. Findings The study found that the said factors sourced from Attia’s maqāṣid al-Shariah were instrumental in determining waqif preference to donate in waqf-based qardhul hassan financing. Research limitations/implications Like others, this study’s findings are limited in terms of their generalisations and applications. The theory, context and variables used should be expanded in future works. Practical implications The results obtained are useful as a yardstick to enable the offered waqf-based qardhul hassan financing for improved mutual well-being among different classes of the wealth of societal groups in Malaysia. Furthermore, the results provide valuable insights into the direction for practitioners mainly managers involved in introducing waqf-based qardhul hassan financing as a new Islamic social financial instrument for poor and needy folks, at best. Originality/value This study is novel in terms of the proposed conceptual framework, where the waqif perspective comes into play.

APLIKASI KONSEP KEJUJURAN DALAM AL-IJARAH THUMMA AL-BAI’ (AITAB) DI INSTITUSI PERBANKAN ISLAM DI MALAYSIA

Al-Ijarah Thumma Al-Bai' (AITAB) is an innovation in Islamic finance and has emerged as a popular method of financing in Islamic banking institutions in Malaysia. The implementation of AITAB in Malaysia must comply with the concept of honesty which is an important principle in the context of muamalat. The element of honesty plays an important role in curbing unhealthy practices and ensuring that the contracting parties are not wronged. Therefore, this paper aims to examine the extent to which the concept of honesty is applied in AITAB-based financing in Islamic banking institutions. This study employed qualitative research methodology. The data is obtained by using the method of content-analysis through library research as well as document analysis by analyzing AITAB agreement documents. The findings of the study showed that the implementation of AITAB in Malaysia applies the concept of honesty through the disclosure of material information related to AITAB financing. However, there are suggestions for the improvement of the application of the concept of honesty in AITAB-based financing in Malaysia.

A Review of Islamic Banks Financing in Malaysia

A Review of Islamic Banks Financing in Malaysia

The Emergence of Fintech on Cost Management in Malaysian Financial Institutions

A good cost management system is vital in ensuring that the final product or service costs do not reflect a large variance from budgeted financial targets. Over time, new information and technologies may be introduced that completely change the production method, business process, or product itself. The term "FinTech" has gained significant attention as a result of various influential factors, such as advancements in technology, the anticipation of business innovation within the market, the need for cost reduction, and the evolving demands of customers. The advent of new digital technologies has led to the automation of various financial activities, potentially offering more efficient and economically viable products across different segments of the financial industry. These segments include lending, asset management, portfolio advice, and the payment system. The main objective of this paper is to provide a synthesis of the impacts of fintech on cost management, which will improve firm value among financial institutions, and to propose a framework for fintech and cost management. It has been found that fintech provides the management with relevant, accurate, and reliable information on the firm’s critical success factors within and outside an organization related to cost management for long-term periods.

Fulfilling the Demands of Digitalization in the Accounting Profession: A Technological Knowledge Assessment for Future Accountants

As the digital world continues to grow, both finance and accounting practitioners, as well as future accountants, must embrace the digital transition in order to remain relevant. Thus, this study attempts to assess the technological knowledge for future accountants and evaluate its relationship with the digitalization of the accounting profession. Employing a non-probability purposive sampling approach, online questionnaires were distributed to accounting interns from the top six public universities for accounting and finance in Malaysia. This study found a moderate level of knowledge about technology among the respondents. Meanwhile, there is a significant and weak positive relationship between knowledge about technology and the digitalization of the accounting profession. Future research could be extended to accounting students at all universities and use alternative research methodologies, such as in-depth interviews, to improve the assessment of future accountants’ technological knowledge.

RESPONSIBILITIES OF CUSTOMERS AND ISLAMIC BANKS TO MANAGE AND RECOVER NON-PERFORMING FINANCING

This paper is to study the responsibilities of the customers and Islamic banks in managing the non-performing financing in Malaysia. This research is also to examine the provisions of the facility agreement by three different Islamic banks to analyze the treatment of non-performing financing by the banks. The researcher employs qualitative methodology whereby this study is based on analysis of primary data from an interview with representative of Bank A to determine the mechanism used by Bank A to recover the non-performing financing as well as secondary data. Secondary data was obtained by looking up to the relevant provisions from the facility agreement of the three Islamic banks in respect of an event of default and compensation, collection of information from Bank Negara Malaysia’s Policy Documents and Guidelines, case law from Lexis Nexis, books, articles and journals relevant with the research topic. This study is aimed to reveal the responsibilities of the customers and Islamic banks in managing and handling the non-performing financing as well as examine the measures taken by Bank A to recover its non-performing financing. This research is significant in attempt to highlight the obligations of the customers on their financing as well as the treatment by Islamic banks in assisting and dealing with the non-performing financing.

Islamic Financial Literacy and Living Standard of Women in Malaysia

From year to year, Malaysia faces a rising cost of living, with the indicator of consumer price index with the rate has increased on average to 3.9% from 2016 to 2019. Since the emergence of Islamic banking and finance in Malaysia, people have been served with a wide range of Shariah-compliant financial products. Nonetheless, women's financial literacy level is lower than men's, and they are more likely to rely on men for financial affairs. This study aims to assess the level of Islamic financial literacy among Malaysian women and to assess it to their living standards. Besides, it also analyses the effect of demographic factors of women such as age, marital status, education level, and income level on Islamic financial literacy. This study uses purposive sampling with a survey as the instrument to collect the primary data from working women in Malaysia as the target respondents. It examines the data of 156 respondents, all of whom are women, using multiple regression for the data analysis. This study discovers that 82.69 % of women in the study have a high level of Islamic financial literacy. Based on the analysis, it finds that only age significantly influences the level of Islamic financial literacy of women in Malaysia. Next, the result shows that simultaneously all independent variables; age, marital status, education level, and income level, influence Islamic financial literacy. The findings further indicate that women with higher incomes outperform those with lower incomes. This research contributes to enriching the literature on Islamic financial literacy, which is that the empirical studies on women are limited. It also provides insight to the government, industry practitioners in enhancing their roles to improve the Islamic financial literacy of Malaysian women and widen the acceptance of Islamic financial products.

Impacts of Information technology and Risk Management on Cybersecurity Governance: Empirical Study on Malaysian Financial Institutions

"Cybersecurity threats have successfully targeted financial institutions worldwide due to the increased connectivity of seamless and borderless financial services. Considering that criminals have employed more sophisticated methods to exploit the financial industry, financial institutions must adopt an integrated framework to counter the attacks and protect financial infrastructure from exploitation. The study examined cybersecurity governance by extending the Integrated System Theory (IST), including information technology (IT) governance and risk management (RM) governance. Questionnaires were distributed to Malaysian financial institutions through corporate social media platforms, email, and Google Form in November 2021. The questionnaire used a five-point Likert scale and comprised Section A which focused on the respondents’ demographic profile, while Section B emphasised the research construction. A total of 128 respondents participated within four weeks. Data obtained from the questionnaire was analysed for descriptive statistics, correlation, and regression analyses. Resultantly, IT governance and RM governance significantly and positively impacted cybersecurity governance. The study provides better insights to the practitioners, academicians, or researchers to identify which factors to be considered and emphasise before developing an integrated cybersecurity governance framework."

Waqf-based qardhul hassan financing preference in Malaysia: an exploratory study

PurposeThe purpose of this study is to examine donors’ or waqifs’ desire for waqf-based qardhul hassan financing in Malaysia using a maqasid method, where a pragmatic approach is used.Design/methodology/approachUsing judgemental sampling, a total of 275 waqifs participated in this work to identify their preference in donating their money to the facility should it is introduced. Using the developed waqf-based qardhul hassan scale (WAQASCALE), this study examined the preference accordingly. Data were analysed using IBM SPSS 27.FindingsThe results obtained were as follows: the first factor considered by the waqifs in donating money was perceived household well-being, followed by perceived recipients’ welfare, perceived mankind benevolence and perceived Muslims’ community security.Research limitations/implicationsThe authors developed construct items that had generalisability issues as they were at the infancy stage of development among social finance scientists along with the narrow geographical constraint where the actual survey was conducted.Practical implicationsThe results were useful in giving new guidance to state governments and Islamic banks (IBs) in Malaysia to explore further this sort of facility for the improved well-being of those affected by COVID-19. Besides, sustainable development goals (SDGs), such as poverty, hunger and responsible consumption, among others can be addressed effectively for the mutual well-being of those affected by the health crisis in an effort of combating financial hardships in the meeting of basic needs, at least. The partnership between the state government and IBs could lead to the offered qardhul hassan financing-sourced funding from waqf for reduced financial hardships by needy and poor folks.Originality/valueThis study introduced a new WAQASCALE in the context of qardhul hassan financing in Malaysia.

Pemikiran Ekonomi dan Kewangan Islam Profesor Dr. Joni Tamkin Bin Borhan Islamic Economic and Financial Thought of Professor Dr. Joni Tamkin Bin Borhan

Professor Dr Joni Tamkin bin Borhan was a Shariah scholar who has made a great contribution to Islamic economics and finance in Malaysia. He was a Professor in Islamic economics at the Department of Shariah and Economics, Academy of Islamic Studies, University of Malaya. Since the establishment of the first Islamic bank in Malaysia in 1983, the role of Shariah scholars has become increasingly significant, especially in designing the Islamic financial system in Malaysia. This study aims to analyze his ideas and thoughts in Islamic economics and finance. The data was collected from his own UM-Expert database before he passed away. This database is used to share with others of his academic activities and also used as evaluation for his achievements by University of Malaya. In addition, interviews with his wife were also conducted for additional information and confirmation of some relevant facts. As a professor in this field, his views and thoughts regarding the Islamic economic and financial system are something very valuable and need to be highlighted to the highest level.

Pemikiran Ekonomi dan Kewangan Islam Profesor Dr. Joni Tamkin Bin Borhan Islamic Economic and Financial Thought of Professor Dr. Joni Tamkin Bin Borhan

Professor Dr Joni Tamkin bin Borhan was a Shariah scholar who has made a great contribution to Islamic economics and finance in Malaysia. He was a Professor in Islamic economics at the Department of Shariah and Economics, Academy of Islamic Studies, University of Malaya. Since the establishment of the first Islamic bank in Malaysia in 1983, the role of Shariah scholars has become increasingly significant, especially in designing the Islamic financial system in Malaysia. This study aims to analyze his ideas and thoughts in Islamic economics and finance. The data was collected from his own UM-Expert database before he passed away. This database is used to share with others of his academic activities and also used as evaluation for his achievements by University of Malaya. In addition, interviews with his wife were also conducted for additional information and confirmation of some relevant facts. As a professor in this field, his views and thoughts regarding the Islamic economic and financial system are something very valuable and need to be highlighted to the highest level.

Fraud Detection in Malaysian Financial Institutions using Data Mining and Machine Learning

The escalating threat of fraud in financial institutions is a global issue, with the Malaysian sector being no exception. This study focuses on the implementation and efficacy of Data Mining and Machine Learning methodologies in identifying and mitigating fraudulent activities within these institutions. The paper critically reviews existing literature, bridging the gap between advanced technology application and fraud management. Fraudulent transactions in the financial sector are dynamic and sophisticated, requiring advanced detection techniques. Traditional approaches often struggle to manage this complexity effectively, demonstrating a need for more advanced and adaptive strategies. This is where Data Mining and Machine Learning techniques, renowned for their predictive and analytical prowess, can significantly contribute. Data Mining, the process of uncovering patterns and correlations within large datasets, is a useful tool for detecting anomalies that may suggest fraud. The study assesses various data mining techniques, such as clustering, classification, and association, and explores their application in detecting fraudulent transactions. Findings indicate that these techniques can substantially enhance fraud detection rates while minimizing false positives. Furthermore, Machine Learning, an artificial intelligence subset, has shown immense potential in fraud detection. Its ability to learn from and make decisions based on data makes it a viable solution for fraud detection. This paper explores both supervised and unsupervised learning algorithms and their efficacy in identifying fraud in the Malaysian financial sector. Results suggest that machine learning models, when correctly implemented, can significantly improve the accuracy of fraud detection. The review underscores the importance of employing advanced technologies like Data Mining and Machine Learning to combat financial fraud effectively. It also suggests future research directions, emphasizing the need for context-specific, localized models considering Malaysia's unique socio-economic environment. Moreover, the development of hybrid models, integrating both data mining and machine learning, could offer improved results. In conclusion, this study sets a precedent for further exploration into the application of advanced analytical tools in fraud detection in the Malaysian financial sector. The potential these technologies offer for improving accuracy and adaptability in fraud detection systems is substantial and warrants thorough investigation. Keywords: Fraud Detection, Malaysian Financial Institutions, Data Mining, Machine Learning, Financial Fraud Management

Interest rates and Islamic commercial property financing: can there be a possible solution?

PurposeThis study aims to investigate the dynamic interaction between interest rates and commercial property financing offered by Islamic banks in Malaysia.Design/methodology/approachThe authors use the autoregressive distributed lag (ARDL) cointegration methodology to analyse the short- and long-run effect of the interest rates and rental rates on commercial property financing of Islamic banks in Malaysia between 2010: Q1 and 2018: Q2.FindingsThe findings reveal that changes in interest rates affect Islamic commercial property financing. This indicates that Islamic banks still rely on interest rates as a benchmark without fully implementing Islamic rental rates. This corroborates the subsequent finding, where overnight policy rates influence commercial property financing.Research limitations/implicationsDespite the authors’ attempt to provide insights into Islamic commercial property financing, the study is limited to secondary data; further research can use survey information to obtain other details that are not included in this study. Similarly, this study does not cover the operation and financial lease debate in Musharakah Mutanaqisah. Future studies can examine the challenges faced by the financial institution towards implementing rental rates in other emerging and developing countries using a different methodology.Originality/valueThis study is the first to investigate the dynamic changes in overnight policy rates, average lending rates and rental rates on Islamic commercial property financing in Malaysia using ARDL techniques. The authors uncover the research and institutional implications of Islamic commercial property financing rates and provide policy and future research directions coupled with the proposed modified rental rate to be developed.

Comparative Study of Financial Literacy and Socio-demographic Factors in Sibu, Sarawak

Elevating the level of financial literacy in Malaysia stands as a pivotal objective of the National Strategy, given the considerable proportion of Malaysians who continue to identify as financially illiterate. This trend is compounded by the mounting incidence of bankruptcy among the younger demographic. The present research aims to scrutinise the significant differences that establish among the degrees of financial literacy and socio-demographic variables within the adult population of Sibu, Sarawak. This study adopted a quantitative methodology, employing the technique of convenience sampling. A total of 152 questionnaires were gathered through both online surveys via Google Forms and face-to-face distribution. An adapted performance assessment was employed to aid the respondents in gauging their level of financial knowledge and skills. The results of one-way ANOVA analysis suggest that individuals who conform to specific socio-demographic profiles exhibit a greater degree of financial literacy. These aforementioned profiles were characterised by their female gender, middle-aged group (between 40 to 49 years old), marital status, possession of advanced academic degrees (either master or doctorate), employment in private sector, and middle-range income earners (RM6001-RM9000). There were statistically significant differences between the mean financial skills of various age, education, occupation, marital status, and income level groups. The limitation of this research is the small size of the study sample. Future study may as well explore and incorporate new variables to delve into deeper insights of the underlying causes of financial illiteracy. In order to promote financial literacy and fraud detection, the results may be used to assist the regulators (such as the Central Bank of Malaysia and the Security Commission Malaysia) and Malaysian Financial Planning Council in developing more effective policies and educational programmes that are tailored for various groups with different socio-demographic characteristics.