The implications of gap and risk on profitabilty : commercial banking industry in Malaysia
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Date
2005-05
Authors
Shaiful Nizan Murad @ Mansor
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Abstract
Against the backdrop of rapidly changing financial landscape and increased uncertainty, the bank will always need to regularly review its risk management process in order to ensure safe daily operations and sound policies. Every commercial bank in Malaysia is having its own unit in monitoring and analyzing risks in banking business that they are onto. It is vital in order to ensure that their financial system is best placed to serve the economy and survived. The aim of the study is timely in order to find the gap between Loans and Advances and Deposits and apart of that the research also wants to find the degree of maturity between Loan and Advances and Deposits that contributed towards their Net Income by using a simple regression technique. Four selected local banks and four foreign banks were chosen based on the loan market share in Malaysian banking market and the data were collected from their respective financial statements from 1994 until 2003. The findings reveal short term loans to deposits significantly relates to local banks profitability while both short term and long term loans to deposits is significantly relate to foreign banks. At the same time this study also looked into gap analysis between Loans and Advances and Deposits between both selected banks later it was found that both banks were mismatched between those two items for the past ten years.
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Keywords
Business Administration , Banking Industry