A macro stress testing framework for assessing financial stability : evidence from Malaysia

The main results of the macro stress testing exercise in this paper reveal that Malaysia’s banking sector is resilient, well diversified, and highly interconnected. Further, Malaysia has a thriving equity market, large bond market and growing private debt securities. Main results of the baseline scenario suggest a modest change in capital ratios; the post-stress test CAR and Tier 1 capital ratio are -1.64% and -1.38% respectively. The impact of all fundamental shocks on capital ratios under both adverse and severely adverse scenarios is significant. The aggregate capital shortfall in the form of needed capital injection (i.e. cost to the government from failed banks) under adverse scenario is 1.55% of the GDP (or $4.59 billion based on 2015 GDP of$296.22 billion). The capitalization needs became more severe in the severely adverse scenario, $10.52 billion (or 3.55% of 2015 GDP). The important conclusion of the macro stress testing is that no bank failed, faced a liquidation or suspension of license.peer-reviewe

The Return of Investment on Tertiary Education in Malaysia

This paper examines the rate of return on higher education to first degrees, master’s degrees, and PhDs in Malaysia using previously published data. The purposes of this research are to study and identify whether or not there is a direct link between tertiary education and wages. Barbara Ischinger, Director for Education, points out ‘‘Education has always been a critical investment for the future, for individuals, for economies and for societies at large.’’1 John F. Kennedy once said; ‘’Let us think of education as the means of developing our greatest abilities, because in each of us there is a private hope and dream which, fulfilled, can be translated into benefit for everyone and greater strength for our nation.’’ 2 A common belief existing in all societies suggests that tertiary education degree actually provides great pay-off to the beneficiary. According to the results of some recent surveys on this topic, students in general seem to agree with this common belief that they will have positive returns immediately after graduation

The Investment Rate of Return (IRR) to Tertiary Education in Turkey

Most scholars, professionals, parents, governments, and societies strongly believe that education, especially tertiary education, provides important economic and social benefits to everyone involved. Furthermore, tertiary education is recently considered as an important investment. Students usually think of higher education in more personal terms, therefore they tend to pay less attention to the broader societal benefits, however tertiary education received immediately after secondary school can have considerable positive influence in countries’ economic development, further business growth, expansion to international markets and increase in living standards. Robert B. Zoellick, President of the World Bank Group 2010, said: “Improved learning leads to better jobs, greater productivity, and higher incomes in every society.â€1 This paper examines the IRR on tertiary education to first degrees, master’s degrees, and PhDs in Turkey using previously published data. The purposes of this research are to study and identify whether or not increase in tertiary education leads to increase in wages. Knowledge and advanced skills are critical determinants of a country's economic growth and standard of living as learning outcomes are transformed into goods and services, greater institutional capacity, a more effective public sector, a stronger civil society, and a better investment climate

Relevancy of Corporate Financial Policies and the Profit Maximization View of Islamic Banks

This paper examines relevancy of corporate financial policies and documents similarities and/or differences of how profit maximization goal is viewed by Islamic banking institutions (IBIs). Management of the firm is ultimately responsible for maximizing profits and increasing shareholder value, however this challenging task may get plagued by agency problems as well corporate financial policy conflicts. Agency problem is real and it is assumed to occur in most companies worldwide. However, the theory’s controversial nature and its narrow focus have not really convinced many scholars whether agency theory in fact provides any broad benefits to firm’s stakeholders or not. Scholars seem to be divided into two camps on agency theory. Some authors think that agency theory pays too much attention to short-term goal of share price valuation and it hardly provides any real answers to firm’s real problems. On the other hand, some proponents of this theory believe agency theory’s useful impact on capital markets

Is Turkey backsliding on global competitiveness and democracy amid its EU bid in limbo?

Turks have been around for thousands of years, who have established many states and empires in the “land of Turks” referring to Anatolia (Asia Minor) and the Eastern Thrace. The life of Turks, previously in the Altai Mountains of western Mongolia, commenced in the interior of Asia Minor when Seljuqs defeated the Byzantines at Manzikert in 1071 (Malazgirt in Turkish), which also meant the start of Turkification of Asia Minor. After the six century long reign of the Ottoman Empire (1299-1922), Turks were introduced to democracy when Mustafa Kemal abolished the Ottoman Empire in November 1922 by overthrowing Sultan Mehmet VI Vahdettin and established Turkish Republic on October 29, 1923 (The Grand National Assembly elected Mustafa Kemal as President in 1923). After the death of Mustafa Kemal Atatürk (November 10, 1938), Turkey has constantly faced instability- inflicting developments (i.e. coup d\u27état, coup by memorandum, failed coup attempts, lack of fiscal and structural reforms, political turmoil, ineffective coalition governments, social unrest, chronic deficits, and repeated economic, financial, and currency crises. Turkey’s remarkable economic and democratic performance (6% YoY GDP growth between 2002 and 2007) was halted by endogenous (increasingly dictatorial/authoritarian rule, dysfunctional politics, negative developments in the rule of law, human rights, basic fundamentals, and the Judiciary/legal system) and exogenous factors (the 2008 global financial crisis originated in the U.S.; Cyprus’ veto chapter 15 of Turkey’s EU accession negotiations; prosecution, conviction, and sentencing of the U.S. pastor Andrew Brunson of terrorism charges for taking part in the 2016 failed coup attempt; Turkey’s purchase of Russian S-400 defense system; Turkey’s removal from the F-35 program; the U.S. imposed sanctions/tariffs on steel imports from Turkey; repeated attacks on Turkish lira and the subsequent currency crisis)

Rigorous Capital Requirements under Basel iii Possible Impact on Turkey’s Financial Sector

Turkey has experienced the biggest financial and economic shock in 2001 resulting a massive overhauling of its entire banking system that eventually cost the government over $50 billion. The IMF was involved in the recovery process from the beginning providing Turkey nearly$24 billion of financial assistance between the fragile years of 1999 and 2002. After 19 Stand-By arrangements, the Turkish government recently announce that it had decided to put an end to its partnership with the IMF since 1947 and it also said that it would not commit to another arrangement after the last payment of the existing loan is made on April 2013. The resilient Turkish banking system capable of absorbing shocks during financial stress, thanks to the extraordinary work by the BRSA, a decade long political stability (one-party government since 2002) along with improved global investor confidence enabled Turkey becoming the 16th largest economy in the world with over $1 trillion in GDP. On the contrary of common arguments, a large number of Turkish government officials and the top banking executives believe that Basel III’s new rigorous capital requirements will have little or no impact on the Turkish banking sector which currently has a capital adequacy ratio (CAR) of little over 16%, thatis significantly higher than Basel III’s 10.5% in effect by January 2019