Banking In Malaysia Case Study

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The term “Bank” has been defined in different ways. According to Walter Leaf, “A bank is a person or corporation which holds itself out to receive from the public, deposits payable on demand by cheque.” Besides that, under the Banking and Financial Institutions Act (BAFIA) 1989, a “bank” is defined as “a person which carries on banking business”. Commercial banks are a financial institution based on trade funds, craft their basic as they act as a medium between investment and capital. The main player in the banking system and it is the largest and most crucial provider of funds in the banking system is commercial banks. According to Muhamad Muda (1996), the history of Malaysian banking development dates back to more than 130 years ago when the first commercial bank which is the Chartered Mercantile Bank of India, London and China was established in 1859. In July 1913, Kwong Yik (Selangor) Banking Corporation was the first domestic bank in Malaysia. Commercial Bank, finance companies and merchant banks is the early financial structure of Malaysia. On 24 January 1959, the Central Bank which is Bank Negara Malaysia was established under the Central Bank of Malaya Ordinance, 1958 and Bank Negara…show more content…
The economic downturns in year 1985 in the developed countries are affected by the U.S. high interest rate policy and it causes a large crumble of commodity trade in the world. Due to this, the export price index in Malaysia is affected by decreased by 30%. Economic downturn make the local commercial banks faced the highest non-performing loans which is 17.8% of the overall loans. Asia Financial Crisis in July 1997 was happened due to the floating of the Thai bath and it made the economics of Malaysia slightly raised doubt that it would perish to a Thai financial
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