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Malaysian banking sector outlook during global financial crisis


Tan, Lai Hock (2009) Malaysian banking sector outlook during global financial crisis. Discussion Paper. Universiti Utara Malaysia. (Unpublished)

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Abstract

This paper is to discuss the Malaysian banking sector outlook and examine whether Malaysian banks are well placed to weather this Global Financial Crisis. The current international financial turmoil has demonstrated the vulnerabilities in the financial systems of even the developed countries. As we have witnessed, the sub-prime mortgage crisis and the slowdown of the global economy originated from the United States which is regarded as the most developed and advanced financial market in the world. In this study, we attempt to exam whether Malaysian banks are being well placed to weather this Global Financial Crisis by testing the Capital Adequacy Ratio of Malaysian Banking System. Our finding shown that net NPL has significant relationship with risk-weighted capital ratio (RWCR), which means higher net NPL ratio will lead to higher probability of banking crisis. We believes that the Malaysian banks are fairly well placed to weather the weaker conditions ahead given the progress in the last two to three years in the clean up of their balance sheets and the buffer resulting from higher provision reserves and a generally stable capital position. While this should support the Stable Outlook on the ratings for most of the banks, the situation will have to be watched closely given the potential for further downward revision in global and regional growth prospects, particularly in 2009

Item Type: Monograph (Discussion Paper)
Additional Information: Master of Science (Banking) - (WBB 6013: Seminar in Banking)
Uncontrolled Keywords: credit underwriting; bank lending; lending standards, loan losses
Subjects: H Social Sciences > HG Finance
Divisions: School of Economics, Finance & Banking
Depositing User: Mrs. Norazmilah Yaakub
Date Deposited: 22 Feb 2011 01:44
Last Modified: 26 Apr 2016 00:08
URI: http://repo.uum.edu.my/id/eprint/2450

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