Impaired Financing Determinants of Islamic Banks in Malaysia

Despite commendable growth of Islamic banking on a macro level, impaired financing is an issue among Islamic banks at the micro level. The 2008 Global Financial Crisis shows large credit risk was largely attributable to staff inefficiency. This study investigates the moderating effect of staff efficiency on determinants of credit risk or impaired financing of sixteen Islamic banks in Malaysia over the 2005-2013 periods. The determinants include new variables such as political stability index and corruption index besides GDP, inflation, finance to deposit, loan loss provisions, liquidity, capital, net interest margin, profitability, loan growth and net charge offs. The study highlights new findings where impaired financing reduced with higher political stability index and corruption index. Loan loss provision has significant positive whilst loan growth has negative impact on impaired financing. Staff efficiency significantly moderates the impaired financing relationship with capital ratio, profitability and loan growth. This relationship yields model fit of 0.889. The results support Resourced - based Theory and provide statistical evidence of the importance of staff efficiency in managing banks’ credit risk. None of the external factors had significant influence on impaired financing, which statistically proved that the profit and loss sharing concept of Islamic banking provides effective tool to mitigate external risks

Corporate restructuring and its wealth effects: the case of Lion Group

This case study evolves around four announcements related to a specific corporate restructuring proposal. The primary reason for the corporate restructuring is to restructure the debt of six companies: Lion Industries(LICB), Silverstone (SCB), Amsteel Corp Berhad (ACB), Lion Corporation(LCB), Lion Forest Industries (LFI), and Lion Diversified Holding Berhad(LDH). The track record of the companies revealed that these companies have been heavily levered causing them to be financially risky and therefore, highly sensitive to any economic shocks, let alone a fatal financial typhoon like the 1997 economic crisis. As at the end of the study period on June 30, 2003, that is, more than three years after the initial announcement of the proposed corporate restructuring, the plan has yet to be completed. Nonetheless, the present study had managed to produce some interesting results. By applying the common event-study approach, the results indicated that information about the restructuring plan has been significantly conveyed to the market in each restructuring announcement. Generally, the market regards all announcements in event window (-1,+1) unfavourably

Corporate restructuring: film characteristics and performance

Theoretically, corporate restructuring is meant to remove firms' operating and financial constraints and improve firm perfonnance. However, corporate restructuring announcement might be interpreted differently by the market. Using event-study method, this study examines the impact of corporate restructuring announcements made by selected firm on their stock prices. Overall, the effect of the restructuring announcements, made by these companies on stock prices was significant while the average two years of return on total assets and return on operating cash flow in the post restructuring period were mixed. Evidence also indicates that debt reduction, refocusing and alignment of interest between management and shareholders through board of directors' ownership do not constitute the main focus for some finns in the post restructuring period

Additional Evidence On Board Ownership, Firm Performance And Level Of Diversification: The Case Of Malaysian Firms

This study attempts to examine the relationship between level of diversification and board ownership using bivariate correlation analysis. It further analyses using partial correlation analysis if any of the selected variables act as a common cause variable that correlates level of diversification and firm performance and develop a final estimated regression model using the selected variables extracted from 121 listed companies on the Kuala Lumpur Stock Exchanges (KLSE). Only concentration of ownership and degree of shareholders' control shows significant positive correlation. In the multiple regression analysis, dividend policy remains to be the predictor variable for Tobins' Q as a measure of firm performance but with a small R squar

Board structure, free cash flow and dividend per share in Malaysia listed firms: an empirical study of interaction effect

One of a firm’s major financial decisions that lies in the hands of the board of directors is dividend policy which has long been linked to the firm’s profitability and performance. From the shareholders’ viewpoint, profitability does not necessarily add value to their wealth unless and until it translates into dividend payment and price appreciation.Therefore, how corporate governance via board structure influences the use of free cash flow and how this interaction affects dividend payment are crucial. This study examined the interaction effects of firm’s characteristics such as board structure and free cash flow on divided per share as a proxy of firm’s performance. The fixed effect regression with a sample of 361 non-financial Malaysian listed firms over the period of 2002 to 2007 were employed in the analysis. The interaction between board structure, independent directors , board size and free cash flow revealed that duality weakens the positive effect of free cash flow on dividend, while independent directors strengthen the positive effect of free cash flow on dividend payment. Overall, the results of this study may be surmised to suggest that large number of independent directors in the board of directors benefits the firms in the use of free cash flow, leading to an increase in distributable income to shareholders; but the existence of duality role does not benefit firms in the use of free cash flow, leading to a decrease in distributable income to shareholders. However, board size does not have an effect on the use of free cash flow and performance

The Moderating Role of Intellectual Capital between Relationship of Bank Specific Factors and Credit Risk of Islamic Banks: Evidence from Pakistan

Purpose-The Objective of this study is to investigate the moderating role of Intellectual Capital between the relationship of Bank internal factor and Credit Risk in Islamic banks of Pakistan. Design/Methodology-Panel data are obtained from annual reports of 4 Islamic banks of Pakistan from the period 2006 to 2017. These are analyzed using hierarchical regression techniques, via Eviews 9 software. Findings-The results showed that intellectual capital significantly moderates the relationship of bank internal variable and credit risk in Islamic banks in Pakistan. Practical Implications-The study found that Intellectual Capital is a very important driver for credit risk. The investment in Intellectual Capital may lower the credit risk which will further help in the growth and sustainability of the bank and hence the growth in the economy. The results of the study will be useful for bank management, policy maker, and regulator and academia for future research

Corporate Restructuring and Its Wealth Effects: The Case of Lion Group

This case study evolves around four announcements related to a specific corporate restructuring proposal. The primary reason for the corporate restructuring is to restructure the debt of six companies: Lion Industries (LICB), Silverstone (SCB), Amsteel Corp Berhad (ACB), Lion Corporation (LCB), Lion Forest Industries (LFI), and Lion Diversified Holding Berhad (LDH). The track record of the companies revealed that these companies have been heavily levered causing them to be financially risky and therefore, highly sensitive to any economic shocks, let alone a fatal financial typhoon like the 1997 economic crisis. As at the end of the study period on June 30, 2003, that is, more than three years after the initial announcement of the proposed corporate restructuring, the plan has yet to be completed. Nonetheless, the present study had managed to produce some interesting results. By applying the common event-study approach, the results indicated that information about the restructuring plan has been significantly conveyed to the market in each restructuring announcement. Generally, the market regards all announcements in event window (-1,+1) unfavourably.

Detection Of Sprague Dawley Sperm Using Matching Method.

Cross correlation algorithm is the common method for image matching technique. In this paper, an expert system based on cross correlation is designed to reduce the workload of pathologist and improve the screening technology in medical field

Paraoxonase-1 activities and procalcitonin levels in sepsis and non-infectious systemic inflammatory response syndrome patients in a tertiary intensive care unit

Sepsis and septic shock remain to be a leading cause of death in the intensive care unit (ICU), including in Malaysia. Distinguishing early sepsis from non-infectious systemic inflammatory response syndrome (SIRS) may be difficult upon presentation. Thus, research has been ongoing in finding a specific and effective marker for sepsis, where paraoxonase-1 (PON1) has shown to be a promising contender. PON1 is a high density lipoprotein associated enzyme, where early researches have shown that its activities decrease as oxidative stress increases in intensity during sepsis. This study aimed to compare PON1 activities between sepsis and non-infectious SIRS patients, as well as comparing its activities in patients who ultimately survived or died as a result of their ordeal. In addition, this study looked into the diagnostic and predictive performance of PON1 for sepsis and mortality as well as the correlation between PON1 activities and a known sepsis marker, procalcitonin (PCT). This prospective observational study, recruited ICU patients above the age of 18 with SIRS and divided them into sepsis and non-infectious SIRS based on clinical assessment with or without positive cultures. PON1 activities; paraoxonase (PON) and arylesterase (ARE) activities, and PCT levels were measured daily over the first three days of ICU admission. Out of the 239 patients recruited, 164 (69%) had sepsis and 68 (28.5%) died in hospital. Results showed significantly lower PON1 activities in sepsis compared to non-infectious SIRS throughout the three-day. PON1 activities were also significantly lower in non-survivors compared to the survivors Further analysis also showed that ARE activity to be a slightly better detector of sepsis than PON activity (PON AUC 0.64-0.65 versus ARE AUC 0.67-0.69), but similar in power in predicting mortality (ARE AUC 0.61-0.64, PON AUC 0.62-0.64). PON1 activities and PCT levels were all significantly correlated with weak to moderate correlation with r-values between 0.207- 0.476. We concluded that PON1 activity measured early on ICU admission has a big potential to be a biomarker in distinguishing sepsis from non-infectious SIRS and in prediction of mortality. A larger scale study, involving multiple centres could be done to further confirm or refute these findings