Comparative Evaluation of Asset Quality of Malaysian Bank Versus Foreign Bank.

• Main Author: Norzihan, Mohamad
• Format: Thesis
• Language: English
• Published: 2007
• Subjects: HG Finance
• Online Access: http://etd.uum.edu.my/84/1/norzihan.pdf; http://etd.uum.edu.my/84/

The purpose of this dissertation is to investigate the comparative evaluation of assets quality of Malaysian bank versus foreign bank which is operating in Malaysia. This comparative study is done after considering all the factors which is contributed to the evolvement of credit risk for determining the assets quality the commercial bank studied from 2002 to 2006. A total of ten commercial banks which comprises of five local banks and five foreign banks are used in this study. Furthermore, the objective of this study is to determine the determinant of credit risk in the particular commercial bank and to examine the effect of these determinant factors towards the credit risk. In this study we used linear regression analysis. From this study there are four significant variables towards credit risk of local banks, which are loan loss provision, non performing loans (of previous year), leverage and loan concentration. Foreign banks have two significant variables which are recoveries and non performing loans (of previous year). Through comparison of credit risk, there are three variables has a similarities between local banks and foreign banks which are non performing loans (of previous year), net charge off and loan to total asset ratio. As a conclusion, this study has enhanced the understanding and information regarding on credit risk.