profitability – Jurnal Pengurusan

Basel III New Liquidity Framework and Malaysian Commercial Banks Profitability

khairul23 — Sat, 15 Oct 2022 10:34:05 +0000

In the light of the 2007-2008 global financial crisis, Basel Committee on Banking Supervision proposed the Net Stable Funding Ratio (NSFR), a new liquidity framework under Basel III. Its aim is to promote sustainable funding structures of the financial institutions. This current paper attempts to analyse NSFR impact on Malaysian commercial banks profitability. Using panel data of eight domestic Malaysian commercial banks for the period 2005-2011, the results suggest there is a convincing evidence that this new liquidity ratio is an important factor in affecting the sample banks’ profitability. The ability of banks in managing the stability of their funding sources as well as liquidity of its asset is an advantage to them and is translated into higher profitability. In addition, this study also confirms finding of previous studies that relates bank-specific determinants and profitability.

Struktur Pasaran, Gelagat Firma dan Prestasi Keuntungan Firma Insuran Am di Malaysia pada Tahun 1970 hingga Tahun 2012

syafiqahazieati — Sat, 08 Oct 2022 09:38:08 +0000

The insurance industry in Malaysia has been increasingly competitive, especially following the economic crisis and financial liberalization process. In fact, most of the firms in the general insurance industry had suffered losses annually. Government intervention, through BNM, by introducing changes in policies and regulations, such as requirements on company solvency level, were targeted at increasing the confidence level among the insurance holders in the country. However, a large number of renowned insurance companies have taken action for sale or foreclosure due to financial difficulties or indebtedness of their companies. It is important that each company realizes that a high market share (market concentration) does not guarantee financial security or good performance. This paper empirically examines the determinants, such as market structure and profit performance of general insurance companies in Malaysia, to understand the underlying factors affecting their viability. The earlier part of this study discusses factors that measure changes in market structure, profitability and other associated variables. In the analysis part of this study, a two structure model, represented by two main functions, that is, market share function, and profitability function, is used. This model is based on the theory of industrial organization (IO), formally known as Structure, Conduct and Performance (SCP) theory. Time series data for the 40 year period is used for determining the model estimation on market structure and profitability of general insurance firms, using Two Stage Least Square (2SLS) method. There are four main hypotheses, namely the SCP hypothesis, the Relative Market Power (RMP) hypothesis, the Efficient-Structure (ES) hypothesis and the Market-Power (MP) hypothesis, were tested. The findings in this model show that general insurance firms’ profit function has a positive and significant correlation with insurers’ premium income, returns on investment and fixed assets turnover. As for the profit function of the firm, it has a negative and significant relationship with market share, turnover of total assets and insurance prices. Market share also has a positive and significant relationship with the level of productivity of the firm’s management and market concentration ratio for the 10 largest firms. The results of this study are in acceptance of SCP hypothesis on the role of market concentration ratio and productivity of firms. In addition, the findings also support the RMP hypothesis on the role of prices, and ES hypothesis on the importance of productivity and efficiency of firms.

Sustainability Certifications and Financial Profitability: An Analysis on Palm Oil Companies in Malaysia

Nazira Adnan — Sat, 08 Oct 2022 08:22:39 +0000

As the second largest palm oil producer in the world, Malaysian palm oil industry has contributed significantly to the national GDP. However, this industry has been under criticism for serious deforestation and open burning activities, which obviously opposing to the objective of the oil palm Good Agricultural Practice on zero burning. As a result, sustainability certification of Roundtable Sustainable Palm Oil and Malaysia Sustainable Palm Oil had been introduced towards achieving sustainable development governance in this industry and fulfilling the needs of importing countries on certified palm oil. However, the number of companies with sustainability certification is relatively low due to the concern on potential additional cost, which then could affect firm profitability. Therefore, this study aims to examine the impact of sustainability certification on financial profitability among 39 palm oil companies in Bursa Malaysia, from 2009 to 2016. Based on the GLS estimation model, the finding shows that the profitability of firms with sustainability certification is almost 2% higher than firms without certification. The finding of this study provide useful input for industry players and could encourage palm oil companies to subscribe sustainability certifications to improve their sustainability practices and good governance as well as increase their profits.