Banking System in Malaysia
FINA0501
Asian Financial Institution
Term Paper
An Overview of the banking sector of Malaysia
Introduction
When we first think of Malaysia, we will probably think of its tourist attractions which it is quite prominent around the world. But in fact, besides its attractiveness on the scenic spots, Malaysia is also a good place for foreign investment. The banking sector of Malaysia is actually quite robust, leading to high ranking among the Asian countries. Moreover, the economy of Malaysia is thriving, which is indicated by its 7% GDP growth in 2004 and 5% in 2005. There is low inflation in Malaysia with a healthy foreign exchange reserves. Also, there is only a small amount of external debt. These all prevent Malaysia from experiencing a financial crisis like that of 1997.
Banking system
The Banking system of Malaysia comprises the central bank of Malaysia, Bank Negara Malaysia, 33 licensed commercial banks, 2 Islamic banks, 23 finance companies, 7 Discount Houses, and 12 merchant banks.
The banking system of Malaysia is divided into monetary and non-monetary institutions. For the monetary institution, it includes the central bank, commercial banks and the Islamic banks. Other banks are considered as the non- monetary institutions. So, in the following paragraphs, I will further introduce different kinds of banks of Malaysia.
Bank Negara Malaysia
The central bank of Malaysia is the Bank Negara Malaysia where the banking system in Malaysia is supervised by it. Bank Negara Malaysia was indeed established in 1959, under the Central Bank of Malaya Ordinance 1958. The four main objectives of Bank Negara Malaysia include:
1. Issuing Malaysian currency so as to maintain appropriate currency reserves
2. Acting as a the Government’s banker and financial advisor
3. Ensuring monetary stability and a sound financial structure
4. Influencing the credit situation so as to better the Malaysian economy.
The central bank also administers the foreign
Asian Financial Institution
Term Paper
An Overview of the banking sector of Malaysia
Introduction
When we first think of Malaysia, we will probably think of its tourist attractions which it is quite prominent around the world. But in fact, besides its attractiveness on the scenic spots, Malaysia is also a good place for foreign investment. The banking sector of Malaysia is actually quite robust, leading to high ranking among the Asian countries. Moreover, the economy of Malaysia is thriving, which is indicated by its 7% GDP growth in 2004 and 5% in 2005. There is low inflation in Malaysia with a healthy foreign exchange reserves. Also, there is only a small amount of external debt. These all prevent Malaysia from experiencing a financial crisis like that of 1997.
Banking system
The Banking system of Malaysia comprises the central bank of Malaysia, Bank Negara Malaysia, 33 licensed commercial banks, 2 Islamic banks, 23 finance companies, 7 Discount Houses, and 12 merchant banks.
The banking system of Malaysia is divided into monetary and non-monetary institutions. For the monetary institution, it includes the central bank, commercial banks and the Islamic banks. Other banks are considered as the non- monetary institutions. So, in the following paragraphs, I will further introduce different kinds of banks of Malaysia.
Bank Negara Malaysia
The central bank of Malaysia is the Bank Negara Malaysia where the banking system in Malaysia is supervised by it. Bank Negara Malaysia was indeed established in 1959, under the Central Bank of Malaya Ordinance 1958. The four main objectives of Bank Negara Malaysia include:
1. Issuing Malaysian currency so as to maintain appropriate currency reserves
2. Acting as a the Government’s banker and financial advisor
3. Ensuring monetary stability and a sound financial structure
4. Influencing the credit situation so as to better the Malaysian economy.
The central bank also administers the foreign