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  Publications | Banker's Journal Malaysia | Paper Synopsis | Issue 129

 

2005
(Issue No. 129)

Synopsis

A Conceptual Framework of a Risk-based Deposit Insurance Structure for the Malaysian Banking System
by John Tee Chwee Ming

An implicit blanket deposit coverage creates moral hazard to Malaysian banking institutions when it comes to risk management policy. Banks would have adverse incentive to make adverse selection on credit allocation. This paper concludes that a risk-based deposit insurance structure has a higher ability to promote prudential bank management, hence avoiding the high cost of restructuring an insolvent bank. It also provides recommendation on quantitative and qualitative variables that should be used to assign score. The assigned scores through a combination of on site and off site monitoring systems would produce a actuarially fair market premium. In the long run, a risk premium deposit structure complements one of the Basle II pillars on the usage of market discipline as a regulatory tool. Nevertheless, deposit insurance corporations must be conferred adequate powers to deal with insolvent banks or risk being rescued in the end. As a final assessment, Malaysian banks are judged to be ready for risk based deposit insurance as they have been subjected to stringer prudential regulation standards since 1999.

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Exploring the antecedents of Needs and Job Satisfaction Among Employees of a Leading Bank in Malaysia: Implications for Managing Bank Staff
by Lew Tek Yew & Liew Mei Yin

In view of the rising competition as a result of globalisation, managers have placed great importance on the construct of job satisfaction. This paper investigates the perceptions of need satisfaction and job satisfaction among the employees of a leading bank in Malaysia. This study utilises the Cornell Job Descriptive Index and the Porter Need Satisfaction Questionnaire. The findings indicate that salary, self-actualisation and autonomy needs are regarded as the least fulfilled needs while the most important needs perceived by the employees were salary, self-actualisation and job security needs. The results show that respondents from the supervisory category generally perceived less need satisfaction compared to respondents from the clerical category. All five job facets of the Cornell JDI had strong significant relationships with overall job satisfaction and the partial correlation coefficients are above 0.70. Meanwhile, almost 36% of employees are not satisfied with promotion opportunities which is the most important job facet influencing the level of job satisfaction.

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Women Entrepreneurs and their Selection Criteria for Banks: An Exploratory Study
by Dr Rosli Mahmood

This paper focuses on a study that examined bank selection criteria employed by women entrepreneurs in Malaysia. A total of 100 women business owners participated in the study. The findings reveal that the main factors determining bank selection are: fast and efficient service, ease of obtaining loans, reception received at the bank, friendliness of bank personnel, lower interest charges on loans, bank's reputation and image, confidence in bank manager and confidentiality of bank. The findings are of interest to bankers because they provide information on the selection criteria by a crucial segment of potential customers.

Analysing IPO Types and Investor Returns: Did the Guard Dog Bark?
by Prof Steven M Dawson

Some IPOs do well, and others do not. How can investors without the benefit of hindsight separate the two? We look at the two types of IPOs, public offers of new shares and offers for sale of existing shares, to see if they provide a clue to solve this mystery. Using data for November 1999 to October 2005 we find that new share IPOs, as occurs in Hong Kong but not in Singapore, are more underpriced when offered to the public, but then they behave about the same as existing share IPOs in market trading over the following year.

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The US Current Account Deficit: Causes, Consequences and Concerns
by Fadzlan Sufian

The US current account deficit, which has been growing steadily since 1991, has raised concerns among economists and policymakers. Most economists agree that the deficit is the major threat facing the US economy, while policymakers have suggested that the large and growing deficit may be unsustainable. This paper attempts to examine causes, consequences and concerns of the deficit. It concludes that, over the near term, a deficit of the current magnitude is sustainable and unlikely to disrupt the US economy.

Supranational Institutions and Domestic Bond Markets
by Ismail Dalla & Prof Bala Shanmugam

Since the 1997 Asian financial crisis many East Asian countries began to value the need for domestic bond markets. By working closely and jointly on several key areas such as creating of rules, guidelines and tax benefits, these countries were able to attract foreign bond issuers, which, in turn helped to stimulate and develop the domestic bond markets of these countries. In fact, domestic bond markets in East Asian countries have accumulated to a healthy US$1.3 trillion. The success achieved by East Asia in developing in developing an active bond market has been mirrored by similar success in Latin America.

While domestic bond markets has gained reputation in East Asian and Latin American countries, much of these efforts originate from supranationals. The tireless contributions by the World Bank, IFC, IDB and ADB in setting up a strong infrastructure to facilitate bond issuance has created a pathway for East Asian countries to increase their bond market share. It is hoped that other nations would follow the steps taken by these 'bond-active' countries in developing their domestic bond markets.

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