Banking System In Malaysia

998 Words4 Pages
Abstract This paper discusses banking systems of Thailand and Malaysia, two of the major players in the Association of Southeast Asian Nations (ASEAN) through the overview of the system, regulation, and development in the financial sector. There will be a comparison of balance sheet structure and the income statement of both countries’ commercial banks in the same selected periods. This paper discusses the effect of ASEAN’s financial markets to Thailand and Malaysia and how these countries have prepared themselves to meet the aspirations of the AEC. Enhancing financial integration is essential to improve the AEC countries. The challenges for banking integration come mainly from the difference terms of banking regulations and the diversified…show more content…
The 1997 financial crises and its aftermath had caused many negative impacts on Thailand and Malaysia banking systems. In order to recover from the crisis, government authorities and private sector players have instituted deep-rooted reforms to the financial system. For policy responses following the 1997 financial crisis, the BOT began a new initiative, to further develop Thailand's financial system, resulted in the introduction of Financial Sector Master Plan (FSMP) phrase I in January, 2004. Whereas, BNM has introduced the first master plan or a 10-year master plan provided for year 2001-2010, beginning with building the institutional capacity of the domestic intermediaries and developing the domestic financial infrastructure. Thailand and Malaysia financial systems have strengthened their own financial statement such as balance sheet after the crisis happened in 1997.Due to the ASEAN banking integration, the banks in each country are influenced to develop their own system in order to improve their efficiency. A stable and sound financial system is the goal of decades of development of ASEAN. Analysis The overview of banking system in…show more content…
The banking system was in a difficult time as important indicators such as operating profit, net profit, net interest margin ,and ROA decreased rapidly. One of the important indicators to monitor credit risk is the non performing loan ,which is a sum of borrowed money upon which the debtor is unable to make scheduled payments for at least 90 days, was very high in 1998 and 1999, which means that the banking sector was in a very high risk and many people were unable to payback their loans, the economy was in a downturn and had suffered badly from the 1997 crises. Recently, from figure 1.2, Thailand has maintained stable of 2.15 percentage of the total
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