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June
2000
(Issue No. 114)
Synopsis
Malaysian Financial and
Corporate Sector under Distress: A Mid-Term Assessment of Restructuring Efforts
by Dr R Thillainathan
In this paper, the writer assesses Malaysia's restructuring
efforts in the aftermath of the East Asia financial crisis. He finds that while
Malaysia had made substantial progress in bank and corporate rehabilitation,
the problems of moral hazard within the rehabilitation should be addressed. As
such he points out that, amongst others, there is a need for a prudential and
disclosure-based regulatory regime to avert a future banking crisis. Amendments
to the Companies Act and the bankruptcy law are needed too.
Securitisation in Malaysia
by Tan Wai Kuen
This article which is part of a series, covers the role of
Cagamas, its securitisation process as well as the benefits derived by the
originators of housing loans from selling their housing loans to Cagamas.
Top
Impact of Loan Sales on Asset Risk: Some Preliminary Empirical
Evidence
by Dr Ahmad Nazri Wahidudin
Loan selling has increasingly become a significant transaction
for financial institutions in Malaysia. The author's empirical study provides
evidence that loan sales do not contribute to any change in the level of asset
risk. It implies that financial institutions can safely tap the capital market
for relatively cheaper funds to finance their loan portfolio. This also helps
banks to better manage their assets / liabilities profile.
Accounting for Corporate Bonds,
Compound Instruments and Preference Shares: A Commentary
by Tan Liong Tong
This article highlights some conceptual issues on accounting for
bonds, compound instruments and other related financial liabilities. It is
divided into 4 sections. The first section explains the conventional method of
accounting for straight bonds, comparing it with the fair value accounting
model that has been receiving increasing attention in the recent years.
The next two sections deal with the accounting issues of compound financial
instruments and redeemable preference shares in the context of the
Malaysian reporting environment.
Top
General Principles of Corporate Borrowings
by Roger Tan Kor Mee
This paper highlights the general principles that govern
borrowings for companies from licenced financial institutions. It also deals
with the implications of some recent major decisions made by the courts, and
the impact these decisions have or may have on the Malaysian banking industry.
Optimising the Role of the
Branch Network in the 21st Century
by David J Cavell and Timothy J Ryan
The question of the future role of the bank branch - and whether
it has any role at all - has reached a critical stage. The writers ¨C in
supporting the case for the decline of the branch ¨C believe the plans that are
now being implemented for the restructure of the Malaysian bank sector would
reach a point at which consideration would be given to the future of the
consolidated branch networks. They feel that many opportunities would arise to
achieve cost savings through the post merger rationalisation of these networks,
as had happened in other markets.
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Rethinking Interest Rates: Why
There Should be Limited Downside to the KLIBOR
by Patrick Er, Jamie Yoon and Yew Hsu Junn
It has been more than 18 months since Bank Negara Malaysia
reversed its IMF-style tight monetary stance and proceeded to send interest
rates to 10-year lows. Consequently, this has been a period of unprecedented
stability in interest rates. The writers attempts to predict where interest
rates will be heading, even with a reasonably open capital account.
The Applicability of the
Dividend-Yield Investment Strategy At the Kuala Lumpur Stock Exchange
by Allan Ngam Kim Hon
Studies conducted on the New York Stock Exchange show that the Dividend Yield
Strategy outperformed both the Dow Jones Industrial Average (DJIA) and the
S&P500 constantly year after year. In this paper, the writer applies the
same strategy on the Kuala Lumpur Stock Exchange. He finds that the Dividend
Yield Strategy can be used both as an offensive investment strategy to
outperform the stock market and as a defensive strategy to preserve capital
during recessional years.
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