Banks In Malaysia Research Articles

INTEGRATED ANTI-MONEY LAUNDERING INITIATIVES IN THE MALAYSIAN BANKING INDUSTRY TOWARDS FATF FULL-COMPLIANT STATUS

Background and Purpose: This study aims to demonstrate the integrated anti-money laundering (AML) initiatives in the Malaysian banking industry, with particular focus towards achieving the Financial Action Task Force (FATF) full-compliant status.
 
 Methodology: This study adopts a qualitative approach, which includes reviews and analysis of secondary data in relevant literature and documents relating to money laundering risk in the Malaysian banking industry.
 
 Findings: The integrated AML initiatives combine domestic and international efforts, which are anchored by the Malaysian Central Bank and FATF, respectively. Malaysia has been proactively abiding by the FATF requirements, and affirmative progression can be seen from the improved FATF-compliant status throughout the years.
 
 Conclusion and Contributions: This study adds new knowledge to the existing literature by integrating domestic and international AML efforts. Achieving a FATF full-compliant status is not impossible for Malaysia with the current integrated AML initiatives in place, and this forms a strong pillar that could protect the Malaysian banking industry from money laundering risk.
 Keywords: Money laundering, AML, risk, banking industry, Malaysia.
 
 Cite as: Mat Isa, Y., Hoque, M. N., Mohd Sanusi, Z., & Haniff, M. N. (2023). Integrated anti-money laundering initiatives in the Malaysian banking industry towards FATF full-compliant status. Journal of Nusantara Studies, 8(1), 117-139. http://dx.doi.org/10.24200/jonus.vol8iss1pp117-139

Examining the Effects of Big Data Analytics Capabilities on Firm Performance in the Malaysian Banking Sector

Banks’ primary goal is to gain profit for survival and to thrive. Therefore, they have to take various measures, such as data analysis, to maintain their sustainable competitiveness. Along with the rapid development of information technology, big data analytics capabilities (BDAC) is considered essential for banks in the highly dynamic market. To gain an in-depth understanding of the economic importance of BDAC in the banking sector in Malaysia, this research examines the relationship between BDAC and firm performance (i.e., market performance and operational performance) based on the resource-based view (RBV) and the contingent resource-based view (CRBV). The partial least squares structural equation modelling (PLS-SEM) was adopted to analyse the collected data from 162 bank managers in Malaysia. The findings verify that BDAC is composed of seven tangible/intangible resources and human skills, and it significantly influences firm performance in the banking sector.

Syariah Compliant Milk Bank: The Need and Issues

World Health Organisation (WHO) defines premature infants as those babies born before the completed 37th week of pregnancy (Turner-Maffei et al., 2014). Malaysian National Neonatal Registry (MNNR), reported an increase in the rate of premature births. This is also the trend seen worldwide. Premature babies, as they born prior to period of maturity, they are physically and physiologically still immature; their brain is immature, their eyes, their heart, their kidney, their gastrointestinal tract, their kidney and even their immune system are still very immature. Many may need admission into intensive care wards and special care nurseries to support, close monitoring and help them grow stronger. They are prone for infection, as their skin are still fragile, and they are not able to surmount an adequate immune response to fight off infection. Ensuring premature babies having access to breastmilk is of utter importance. Breastmilk has the protective capabilities such as the IgA, to prevent them from getting infections, breastmilk is more tolerable for premature babies and is proven to prevent serious diseases such as Necrotising Enterocolitis. Some mothers, however, cannot breastfeed their child and cannot supply expressed breastmilk due to various reasons. Therefore, there is a critical need for the development of milk bank. Milk Bank is not new, it is rather common in many countries. In fact, it is well established in the United States, United Kingdom and many other developed countries. The establishment of these milk banks has saved and protected the lives of newborn babies, especially the those premature. However, for Muslims, the issue arised in regards the issue of milk-kinship. The 97th Conference of the Fatwa Committee National Council for Islamic Religious Affair of Malaysia held on 15th – 17th December 2011 to forbid the establishment of milk bank in Malaysia. Thus, establishment of a syariah-compliant human milk bank is of a dire need. International Journal of Human and Health Sciences Supplementary Issue: 2023 Page: S8

The Perceived Attitude of Bank Customers towards the Intention to Use Digital Banking in Malaysia

The Perceived Attitude of Bank Customers towards the Intention to Use Digital Banking in Malaysia

Dividend Payout Policy: The Case of Islamic and Non-Islamic Banks in Malaysia

Dividend Payout Policy: The Case of Islamic and Non-Islamic Banks in Malaysia

The impact of COVID-19 on audit fees and audit report lag: Evidence from Malaysian Islamic Banks

The world is currently dealing with a severe health, economic, and social crisis brought on by the coronavirus disease of 2019 (COVID-19), which has spread quickly. Globally, the COVID-19 epidemic has already had a significant negative impact on the economy and finances. This study investigates the effect of Pandemic COVID-19 on audit fees, audit quality and audit report lag. This study observes the annual reports of 16 Malaysian Islamic from 2016 to 2020. A panel data analysis is used for hypothesis testing. The study found that Islamic banks in Malaysia needed a longer time to issue audit reports during the Covid-19 crisis than before the crisis. However, audit fees and quality are not affected by the Covid-19 crisis. This study is only on data from Licensed Islamic banks in Malaysia. Therefore, this study cannot be generalised to the entire economy of Malaysia.This study is helpful for future researchers in contributing literature to their study and helpful for policymakers to be better prepared to face the risk of future crises.

Indonesia Sharia Bank CSR vs Malaysia Sharia Bank CSR

In Indonesia, the government establishes regulations for the disclosure of CSR practises in Law No. 40/2007 and related Bapepam. The purpose of this study is to find out how the implementation of CSR differs in Islamic banking in Indonesia and Malaysia. The population is Islamic Banking in Indonesia and Malaysia with a total of 27, while the sample of this study is 7 Indonesian Islamic Banks and 7 Islamic Banks in Malaysia. The Independent sample t-test with SPSS version 16 was used to analyse the data for this investigation. The study's findings indicate that Malaysian and Indonesian social banking practises are being implemented similarly. The adoption and declaration of the ISR Index of 100% provides some proof that none of all Islamic banks, both in Indonesia and Malaysia, have achieved their full potential (one hundred percent). This is due to the fact that certain sub-items of the ISR index, like green products, environmental audits, and support for political activities, are impossible for the banking sector to complete. As a result, the UK banking system's CSR disclosure is almost identical to that of Malaysian banks in the US.

Determinants of money laundering: a study among commercial banks in Malaysia

Banks and other financial institutions are required by law to comply with AML requirements to guarantee they do not facilitate money laundering. However, financial institutions are exceptionally susceptible to money laundering activities in Malaysia. With this concern, this project aimed to identify the determinants which contribute to money laundering activities among commercial banks in Malaysia. Since there are only a few studies have analysed various factors that influence money laundering, this study intends to achieve the aim of the study which is to figure out the level of influence that the factors identified as independent variables on the dependent variable, money laundering. In this study, technology, legal framework, income, and ethical behaviour are acknowledged as the independent variables. A total of 102 survey questionnaires were delivered to commercial bank employees via a convenience sample strategy. Descriptive and inferential statistics were compiled by entering the replies of a total of 102 respondents one by one into SPSS. The results revealed that there is a positive relationship and correlation between all four independent variables; technology, legal framework, income and ethical behaviour towards the dependent variable, money laundering. Consequently, the null hypothesis formulated for this research has been disproved, however, the alternative hypotheses have all been accepted and validated by the data analysis conducted. In addition, this research is claimed to be capable of resolving money laundering difficulties and educating commercial banks on how to identify and prevent money laundering in their organisations.

Metadiscourse Features in Risk Management Reports by Local and International Banks in Malaysia

Metadiscourse Features in Risk Management Reports by Local and International Banks in Malaysia

CBDC-A New Tool in 'Financial Inclusion' Tool Kit

The Central Bank Digital Currencies (CBDC), if appropriately designed, can help to improve the Financial Inclusion in the Country.The Effective implementation needs a balanced, risk-based approach and the support to the complementary policies. The Central Banks in the World are actively considering, how the Retail Central Bank Digital Currencies (CBDCs) may fit with the Policy Goals around Total Financial Inclusion in the Country. They are:~ Central Bank of The Bahamas.~ Bank of Canada.~ Peoples Bank of China.~ Eastern Caribbean Central Bank.~ Bank of Ghana.~ Central Bank of Malaysia.~ Bangko Sentral ng Pilipinas.~ National Bank of Ukraine and~ Central Bank of Uruguay.While a Central Bank Digital Currency, like other forms of the Money, has different functions (e.g., Means of Payment, Store of Value, Unit of Account, Settlement Assets), its link to Financial Inclusion in the Country in context of its payment properties.Abbreviations: CBDC= Central Bank Digital Currency.e-KYC= Electronic Know Your Customer.EMDEs=Emerging Markets and Developing Economies.AEs=Advanced Economies.PSPs=Payment Service Providers.ACHs=Automated Clearing Houses.

Comparison of Existing Legal Framework of Corporate Social Responsibility for Banks in Malaysia and United Kingdom

The concept of Corporate Social Responsibility (CSR) is not new in the corporate world. Many researchers and academics have developed their own definitions of CSR over time. Since the 1950s, academics and researchers have been unable to agree on a single, accepted definition of CSR. Companies throughout the world are dealing with a variety of issues related to their new position, which is to fulfil the requirements of the contemporary generation in an ethical manner. Undoubtedly, CSR an innovative idea in Malaysia increases the significance of CSR for banks in Malaysia. The researchers will try to determine about the existing legal framework of Corporate Social Responsibility for banks in Malaysia and United Kingdom (UK) by making a comparison of the legal framework between two countries and seeks recommendations for improvement of existing legal framework of CSR for banks in Malaysia.To achieve that, we will try to will try to determine the existing legal framework of Corporate Social Responsibility for banks in Malaysia and United Kingdom and will try to find possible deficiencies in the legal frame CSR for banks in Malaysia. Additionally, it is important to consider the CSR legal framework for banks in UK. The study will attempt to look out for pertinent laws, rules, regulations, and recommendations in the local and international legal frameworks of CSR for banks in UK and Malaysia.

CUSTOMER PERCEPTION OF SERVICES QUALITY OF THE ISLAMIC BANKING IN MALAYSIA DURING COVID-19 PANDEMIC

The aims of this study is to explore the factors that affect customers’ satisfaction with Islamic banking services in Malaysia during Covid-19 pandemic. The study is basically conducted on the basis of primary data collected by a well-structured questionnaire using Google Form. The respondents were 102 customers of Islamic Banking in Malaysia by using a simple random sampling technique. Both descriptive and inferential statistics have been used in the study. Descriptive statistics include percentage, mean, standard deviation and inferential statistics include, Reliability test, ANOVA, and Multiple Regression analysis. Regression analysis applies to find the casual effect relationship between dependent and independent variables. The study results show that reliability, competence, and service quality have a positive and significant relationship with customer satisfaction except transparency. The study reveals that reliability, competence, and service quality significantly affect customer satisfaction of Islamic banking services during Covid-19 pandemic but transparency has no effects on satisfaction during the pandemic situation. The study emphasizes that the Islamic banking institutions in Malaysia should focus the reliability and competency to enhance the quality of services during the crisis periods and to meet the customers’ expectations which led to customer loyalty.

A Mcdm-Based Model of Malaysian Commercial Bank Performance Prior to and During Covid-19

This study aims to propose the integrated Analytic Hierarchy Process (AHP) with Technique for Order of Preference by Similarity to the Ideal Solution (TOPSIS), VlseKriterijumska Optimizacija I Kompromisno Resenje (VIKOR), and Preference Ranking Organization Method for Enrichment Evaluations II (PROMETHEE II) to calculate the performance of commercial banks in Malaysia before and during covid-19. The information was taken from the financial statements of eight commercial banks in Malaysia for the years 2018 through 2021. Return on Assets (ROA), Return on Equity (ROE), Earnings per Share (EPS), Liquidity, Total Liabilities, and Total Equity are six selected criteria used to evaluate the overall performance of commercial banks. Malayan Banking Berhad (MBB) had the best performance among Malaysian commercial banks, according to the findings of the research. The AHP-VIKOR and AHP-PROMETHEE II methods demonstrated that Malayan Banking Berhad remained number one for four years. Using the TOPSIS methodology, Malayan Banking Berhad is also ranked first for the years 2020 and 2021. In contrast, Alliance Bank had the worst performance among Malaysian commercial banks. Using the AHP-VIKOR and AHP-PROMETHEE II methods, Alliance Bank's ranking has remained unchanged from 2018 to 2021. In addition, the AHP-TOPSIS method only recorded Alliance Bank in last place for 2018 and 2019. The final trend results for the eight commercial banks in AHP-VIKOR and AHP-PROMETHEE II are virtually identical.

Libyan Islamic Banks Experience in Reducing Bank Liquidity from an Islamic

Background: The problem with the study is that the problem of bank liquidity in Libyan Islamic banks is exacerbated by the excess of bank liquidity coverage. (2): Purpose: The study aims to learn about Libyan banks' experience in reducing bank liquidity from an Islamic perspective: Malaysian banks are a model. The study highlights the importance of highlighting Libyan Islamic banks' experience in reducing bank liquidity from the perspective of Islamic Malaysian banks as a model. (3) Method: The study followed a qualitative approach to evaluating internal and external factors, circumstances and variables associated with Libyan Islamic banks' experience in reducing bank liquidity from an Islamic perspective. Individual open interviews were conducted with employees of Libyan Islamic Banks, estimated at 15 employees from Libyan Islamic Banks. Fifteen questions were posed to participants, centered on internal control and its elements on bank liquidity and its components from an Islamic perspective. The study found several findings, (4) Results: including that bank liquidity risk is the risk to banks and may amount to a crisis related to the bank's lack of cash that enables it to fulfil its day-to-day duties to customers. And (5) Conclusion: include an attempt to adopt a peace model and to open the door to short, medium and long-term investments in order to maintain the levels and rates of bank liquidity of Libyan Islamic banks.

Highlighting Differences in Cash Flow from Investing Activities and Capital Adequacy Ratio Relationship between Indonesian and Malaysian Commercial Banks

This study compares the impact of Cash Flow from Investing Activities (CFI) on the Capital Adequacy Ratio (CAR) between Indonesian and Malaysian commercial banks. The study uses time-series data from the countries' big-five banks from 2009 to 2013. This study engages the regression model to measure the CFI's impact on CAR and then applies a Chow test to compare the discrete regression output between the two countries. The statistical tests reveal that the CFI of Indonesian banks correlated negatively with the CAR, while Malaysian banks showed a positive correlation. Consistent with the correlations, the influence of CFI on CAR in both countries is equally significant. By a Chow test, this study concluded that the CFI's impact on CAR significantly differs between the banks in the countries. From the literature perspective, the CFI and CAR relationship of Malaysian banks is closer to the findings of previous detached studies. The figures indicate that nowadays, Malaysian banking harvests cash inflow from their past investments. Otherwise, the Indonesian banks portray the ongoing spending for long-term investment during the recent five years. This preference results in a consistent decrease in CFI when the CAR moves upward. Departing from the existing differences, to optimize the CFI and CAR relationship, this study suggests the CFI and CAR equilibrium formulation for banks to avoid cash shortages and failure to earn interest due to capital buffer retaining to maintain a high ratio of capital adequacy.

Independence of the Supervisory Board in Banks: A Comparative Analysis of Indonesian and Malaysian Law

The independence of board members play a crucial role in establishing good corporate governance. This is especially important for banks compared to companies in non-financial industries as they play a key role in the nation's economy. Malaysian corporate governance carries a reputation of effective legal framework and enforcement system amongst ASEAN member states. The report by ACGA shows that Malaysian banks implement better corporate governance than banks in Indonesia. This paper seeks to find the adequacy of Indonesia’s regulation on the supervisory board independence in banks to ensure good corporate governance compared to the regulation in Malaysia. Findings to this research show that Malaysian law on independent board members are much more stringent than the requirements in Indonesia. The study also finds that the fundamental structure of the company board model (Indonesia adopts the two-tier model and Malaysia adopts the one-tier model) affects how supervision is upheld and the placement of independent board members within the company. Malaysian legal framework ensures a majority of independent members at both supervisory and managerial function, whereas Indonesian legal framework emphasizes the need for independence only at the supervisory function.

Factors Contributing to Non-performing Financing: Evidence from Islamic Banks in Malaysia before Pandemic

This study is going to ascertain the contributing factor of non-performing financing in Islamic banks in Malaysia. Purpose – This study aims to investigate the specific bank characteristics as well as macroeconomic variables. Methodology/approach –Twelve local Islamic banks would be the focus for this study starting from period 2009 until 2018 which are before pandemic. The annual report has been used as the primary source for the financial data. While for the macroeconomics data, DataStream database has been used. Panel data approach was used to investigate the data and all the determining factor from both factors were regressed against non-performing financing. Findings – This study found that just two bank-specific characteristics, bank size and capitalization, showed a significant negative link with non-performing financing. While the other variables from macroeconomic factors does not give any important impact on non-performing financing for the Islamic banks in Malaysia.

Perception on Shariah Governance Attributes and Information Technology towards Fraud Prevention and Detection Activities in Malaysian Islamic Banks

Nowadays, fraud in the financial sector is common and a global issue. The Islamic Financial Institution (IFI) in Malaysia faces the issue despite Shariah-compliance. Fraud and riba’ in Islam are forbidden due to being non-Shariah compliant matters. Thus, the study examines the attributes of Shariah governance as an agent for fraud prevention and detection. Data were collected from 16 Islamic Banks with internal auditors and risk analysts as the respondents. The correlation and regression analysis revealed that effective Shariah committee did not impact fraud prevention and detection activities. Conversely, effective internal audit, virtuous senior management, and information technology use positively influenced fraud prevention and detection activities in Islamic Banks in Malaysia. Future research should consider extending the study to other segments of IFIs such as licensed Takaful operators, licensed investment banks or prescribed development financial institutions approved to conduct Islamic financial business. Future research also should consider to incorporate moderating variables such as working experience years of the respondents. Future research can also specifically analyse the use of blockchain technology in fraud prevention and detection activities.

SHORT-RUN AND LONG-RUN RELATIONSHIP OF ISLAMIC HOME FINANCING IN MALAYSIA: ANALYSIS ON ISLAMIC BANKS

Islamic home financing is a service offered by Islamic banks according to the Islamic principle. In Malaysia, it has been offered since the early 1980s. The demand for Islamic home financing in Malaysia has increased over time. Therefore, this study would like to delve into the short-run and long-run relationship between the factors involved in Islamic home financing. Past studies highlighted the microeconomic factors and macroeconomic factors in Islamic banks that contribute to the growth of Islamic home financing in Malaysia. Thus, this study would include four factors comprised of deposits, liabilities, GDP, and government expenditure. Deposits and liabilities are categorized into microeconomic factors, whereas GDP and government expenditure are macroeconomic factors. The first objective is to identify the short-run and long-run relationship between the factors mentioned above on Islamic home financing in Malaysia. The second objective is to analyze the causality effects of the factors on Islamic home financing in Malaysia. The methodology comprises of quantitative research design. Data collection is based on secondary data collection, which was retrieved through documentation review and statistical highlights from Bank Negara Malaysia. The data comprise the first quarter of 2010 until the second quarter of 2021. Analysis data is conducted through an econometric approach within time series data which is the ARDL test and Granger causality test. The findings of this study would emphasize the importance of microeconomic factors and macroeconomic factors on Islamic home financing. It would encourage the supply and growth of Islamic home financing by Islamic banks in Malaysia in the future.

Analysis of Rationalization through Restructuring of Islamic Finance based on the Ihsan Principle

Ihsan is the pursuit of excellence in worship and daily activities to achieve success and happiness so as to be rewarded with sweetness of faith and Paradise for doing something beyond what is required. A person who does not pursue ihsan is not considered as zalim (wrongful or unjust) or failing his religious obligations as long as he is just and fair. The main goal of Islamic banking institutions is to avoid all forms of zulm (injustice, cruelty, oppression, exploitation) in transactions and to distinguish Islamic transactions from conventional financial practices. In order to ensure quality and harmony, muamalat practice must be assessed and reviewed from the perspective of ihsan to gain the blessings and pleasure of Allah SWT. The purpose of this study is to analyze and evaluate the rationalization in restructuring Islamic financing from the perspective of ihsan to ensure the objectives and functions of Islamic financial institutions are achieved. This research is qualitative using the method of content analysis. The data were analyzed using descriptive and deductive methods. The results show that the recommendations from the Central Bank of Malaysia and rationalization of Islamic financing restructuring procedure fulfills the principle of ihsan in past implementation and during the Covid-19 pandemic crisis. Islamic banking institutions have been responsible and exercised forbearance by providing facilities and eliminating difficulties to assist customer dealings. Customers also have the responsibility to banks that have provided financing facilities and accommodated their financial affairs. Hence, this study can serve as a guide to all parties in applying the principle of ihsan to any action and practice to ensure a more meaningful life.