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2nd
Quarter 2002
(Issue No. 118)
Synopsis
Rating
of Malaysian Commercial Banks: A DEA Approach
by Dr Salleh Yahya, Hooy Chee Wooi and Goh Wee Kiat
This paper attempts to examine and rate the
efficiency level of domestic commercial banks and foreign commercial banks
operating in Malaysia. Using the Data Envelopment Analysis (DEA) approach, this
research shows that the majority of the domestic commercial banks are
inefficient due to oversupply of inputs and low profits compared to the foreign
banks. The results of the DEA analysis also reveal that the 1997 Asia Currency
Crisis did not significantly affect the level of efficiency of commercial banks
in Malaysia.
Performance
Evaluation of the Islamic Banking Scheme in Malaysia
by Dr Shaari A Hamid and Fadhilah Ahmad
This study reviews the performance of 10
commercial banks in Malaysia that offer Islamic banking products. In conducting
their study, the authors replicated two methodologies used in evaluating
commercial banking performance. The first approach found equity over total
assets (EQTA) and staff expenses (SE) to be most significant variables in
Islamic banks?performance evaluation, while the second approach shows that Bank
Islam Malaysia, a full-fledged Islamic bank, is not fully utilising its
resources to generate more income towards strengthening shareholder's funds.
Top
The
Branch-Entering the 21st Century: Its Role Within the Delivery Mix
by David J Cavel
The writer studied the role of the bank branch as a delivery
channel within the context of the total delivery system. He concludes that as a
means of projecting the organisational brand, developing the client base and
exploiting opportunities to grow the customer base, the branch continues to be
the most effective means of delivering banking services and products. He finds
that while other delivery channels may be deployed, their effectiveness remains
subordinate to the branch channel.
Bank
Securitisation and Basel 2
by Ian Linnel and David Andrews
In this paper, the writers offer the rationale for banking
institutions to securitise their assets. They conclude that securitisation
under the Basel Capital accord offers various benefits to banks including a
cheap source of funding, opportunity for greater balance sheet management and a
primary source of funding. While the Accord contains disincentives, the
incentive of capital relief via securitisation will provide a strong inducement
to banks to continue to securitise.
Top
Resilience
and Competitiveness of the Malaysian Economy: A Review of Selected Issues for
Sustainable Development
by Dr R. Thillainathan
Despite the increasing size and pace of mergers over the past decade, the
majority of corporate combinations do not achieve the objectives set by
management. The reasons may vary but come down to four key areas ¨C mispricing,
lack of strategic fit, poor implementation and unrealistic expectations. In
consequence, the potential value of these combinations, rather than being
unleashed, has been unrealised. However, the urge to merge or to seek alliances
will continue to dominate the financial services industry in the networked
economy, especially as many areas of this economy are over-provided with
financial services and under-provided with the profitable future business base
they will need to thrive in the years ahead. As global markets move into a more
sombre period of growth, achieving value in these corporate combinations both
quickly and sustainable will become the business imperative. This research
report is based global survey covering 300 financial institutions aimed at
assessing how they are approaching corporate combinations.
The
Top 10 Most Efficient IPO Fund-Raising Issues (1979 to 2000)
by Dr Steven M. Dawson
The best initial public offers (IPOs) for new investors are
almost never the best IPOs for issuers and the original shareholders. IPO
underpricing means nice profits for new investors, but the very same
underpricing also means part of the original shareholders?wealth was given
away. The financial press emphasises the new investors?gains from IPO
underpricing, but this is only part of the story. It overlooks the effects on
existing shareholder wealth and the efficiency with which new funds were
raised. This study provides the other side of the IPO story ?which were the
most efficient IPOs at raising new funds and looking after the original
shareholders?value over a 22-year period, 1979 through 2000. Interestingly,
skill at raising funds efficiently did not transfer to producing above average
returns for investors over the first year of trading.
Top
An Evaluation of the Fixed Ringgit Regime: Is Monetary
Independence A Reality?
Dr Noor Azlan Ghazali
In this paper, the writer's implicit view is that the fixed
exchange rate regime reduces monetary independence ? contrary to the claim made
by Bank Negara Malaysia. He argues that, in certain circumstances, internal
stability has to be sacrificed for external stability; and therefore, such a
regime may not be suitable for an open economy such as Malaysia's. To support
his views, the writer offers some references, including his reading of the
Malaysian experience of 2000-2001.
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