CUSTOMERS’ DEPOSIT BEHAVIOUR IN DUAL BANKING INDUSTRY: A MARKET STRUCTURE ANALYSIS

Background and Purpose: The aim of this paper is to evaluate public acceptance toward Islamic banking system in Malaysia by using the market structure analysis as proposed in industrial organizational studies. The structural approach framework was used to evaluate the nature and changes of market concentration in the Malaysian Islamic and conventional deposit markets.   Methodology: The well-known market concentration measure, namely concentration ratio (CR) is calculated to study the changes in saving behaviour among depositors in both banking markets. The concentration ratios of deposits for both banking markets are evaluated by using the banking firms’ level data for the period 1997–2016. Pearson and Spearman correlation analysis was also used to investigate the relationship between the total deposits and bank-specific variables.   Findings: It is found that interest or profit rate paid to the depositors are the factor that greatly affect the depositors’ choice of banks to save their money. Besides, experience doing businesses is more important to Islamic banks compared to conventional banks in order to attract depositors.   Contributions: The findings demonstrate that societies, especially the Islamic community, are still loyal to conventional banks, which have more experience in the banking operation. The findings of this study are expected to open the eyes of the Muslim community to use Islamic banking services, which are certainly sharia-compliance.   Keywords: Concentration ratio, deposit, dual banking, market structure, perception.   Cite as: Mohammed, N., Jauhari, A., & Mohammed, N. (2020). Customers’ deposit behaviour in dual banking industry: A market structure analysis. Journal of Nusantara Studies, 5(1), 356-377. http://dx.doi.org/10.24200/jonus.vol5iss1pp356-37

Review of Malaysian retail banking market: an industrial organizational perspective

The attempt of this paper is to analyze the Malaysian retail banking market within structure-conduct-performance paradigm framework which roots from the industrial organizational field. The Malaysian retail banking market practices dual banking system which consists of conventional and Islamic banking firms. Therefore, the analysis in this paper will focus on the structure, conduct and performance of both banking system descriptively. The structure of the retail banking market will also focused on several aspects such as market size and distribution, market competitiveness, market delineation and barriers to entry. While, marketing expenses, distribution of the branches and the quality of services will be analyzed to evaluate the banking firms conduct in the market. Meanwhile, the performance of the banking firms will be analyzed from two perspectives namely, ratio analysis and welfare perspectives. Overall, the study shows that both domestic and foreign banking firms play a significant role in the Malaysian retail banking market

Hubungan tabungan-pelaburan dan analisis mobiliti modal

This article examines the relationship between the saving-investment correlation and the degree of capital mobility of the Asian countries: Malaysia,Singapore, Thailand, India, Indonesia, Myanmar, Pakistan, China, Hong Kong, Korea, Philippines, Japan, and Sri Lanka over the period 1960 to 2000. Open macroeconomic model and Overlapping Generation (OLG) model, was used as the theoretical framework. Specifically, objectives of this research are to evaluate the long-run and short-run dynamic relationship between saving and investment rates using the Vector Error Correction Mechanism (VECM) and impulse response function. For policy implication, Granger causality test was applied to examine whether the growth of saving rates affects the growth of investment, or the growth of investment, rates causes the growth of saving rates. The results for VECM show that saving and investment rates for China, Philippines, Korea, Malaysia, Pakistan and Singapore are cointegrated. This suggests that there exist the long-run relationship for both variables in those countries. Results also show that the growth of saving rates affects the growth of investment for Philippines and Singapore. The reverse causality holds for China and Indonesia. However, for Japan, Korea and Myanmar there exist the causality flows both ways

Impact of structural changes on bank competition in dual banking industry

The banking industry in Malaysia has undergone a change in its market structure, especially in terms of competition due to several factors such as the implementation of the merger program, restructuring of the Islamic banking operations, liberalization and technological advancement. Therefore, this study is conducted to measure the changes in the degree of competition in the Malaysian dual banking due to structural changes occurring in the industry. The Panzar-Rosse (PR) method has been used to measure the degree of competition in the Malaysian dual banking market for the period 1997-2016. Present study uses static panel data estimation to estimate the developed models. The value of H-statistics indicates that Islamic and conventional banks operate in monopolistic competition market structure. The findings show that structural changes have increased the level of competition in the Malaysian banking industry. The results of the study show that policy changes made by Bank Negara Malaysia have improved the level of competition in the Islamic and conventional banking markets. Knowledge of competitive issues is crucial so that policy makers may formulate new policies for the banking industry that suit the current market structure

The degree of competition in the Malaysian dual banking industry

The purpose of this study is to evaluate the degree of competition in the Malaysian dual banking industry to address the question of whether Islamic banks are able to cope with competition from the well-established conventional banks. The Panzar-Rosse (PR) method has been used to measure the degree of competition in Islamic compared with conventional banking market over the period of 1997-2016. Present study uses static panel data estimation to estimate the developed models. Results from the H-statistics values using total income show that level of competition in the Islamic banking market is more intense than conventional banking market. Hence, providing evidence that Islamic banks are able to compete with conventional banks that have long history of establishment. The H-statistic values using total interest income also indicate the same result, hence supporting the robustness of these results. The findings also show the effectiveness of policy changes adopted by Bank Negara Malaysia in order to increase level of competition in both banking markets. Hence, knowledge on this issue is important to the policy makers for them to formulate new policy regarding banking competition

Amalan lindung nilai dan nilai syarikat di Malaysia: kesan penyederhanaan risiko FX dan status patuh shariah

Kajian ini merungkai persoalan hubungan antara amalan lindung nilai dengan nilai syarikat dengan mengambil kira sama ada risiko mata wang asing (risiko FX) dan status patuh Shariah menyerderhanakan hubungan tersebut. Penelitian ini merupakan satu kajian terhadap perlaksanaan Piawaian Pelaporan Kewangan (FRS) 7 dan 139 yang berkait dengan penambahbaikan pelaporan pengurusan risiko FX. Majoriti syarikat tersenarai di Malaysia adalah patuh Shariah, oleh itu amalan lindung nilai perlu diperhalusi apabila ia dilaksanakan menggunakan derivatif FX konvensional yang melibatkan riba’. Justeru, objektif kajian adalah mengkaji hubungan antara amalan lindung nilai mengggunakan derivatif FX dengan nilai syarikat, serta mengkaji kesan penyederhanaan risiko FX dan status patuh Shariah terhadap hubungan tersebut. Kajian menggunakan kaedah momen teritlak terhadap 250 syarikat bukan kewangan tersenarai Malaysia, meliputi tempoh 2010 hingga 2018. Keputusan kajian menunjukkan amalan lindung nilai berhubung secara positif dan signifikan dengan nilai syarikat, dan hubungan tersebut disederhanakan oleh risiko FX dan status patuh Shariah. Lembaga Piawaian Perakaunan Malaysia perlu mengetatkan pelaporan perakaunan syarikat untuk memastikan syarikat melaporkan secara terperinci risiko FX. Ini dapat membantu pelabur melihat kepentingan risiko FX terhadap amalan lindung nilai dan nilai syarikat. Selain itu, FRS perlu diperhalusi agar laporan kegiatan amalan lindung nilai selari dengan metodologi saringan Shariah

Gonado-hypophyseal lesions and reproductive hormonal changes in Brucella melitensis-infected mice and its lipopolysaccharides (LPSs)

Gonado-hypophyseal lesions and reproductive hormonal changes in Brucella melitensis-infected mice and its lipopolysaccharide (LPS) were investigated. Forty-eight mice (24 males and 24 females) were used as infection models in this study, and they were divided into three equal separate groups of eight mice based on their sex: M1, M2, and M3 and F1, F2, and F3 (M = Male, F = Female). Groups M1 and F1 were orally inoculated with sterile phosphate-buffered saline (PBS) and served as the negative control. Groups M2 and F2 were orally inoculated with 0.4 ml of 109 colony-forming units (cfu) of B. melitensis, while groups M3 and F3 were orally inoculated with 0.4 ml of LPSs from 109 cfu of B. melitensis. All the groups were observed for 10 days for changes in clinical signs or signs of mortality and then euthanized. Whole blood was collected via cardiac puncture, while tissues were fixed in 10 % formalin for histopathological processing. Histopathological lesions in the male and female reproductive tracts ranged from mild to moderate degenerative, inflammatory, and necrotic lesions. These changes were moderate in M2 than in M3 in males and in F3 than in F2 groups in females. Lesions in the pituitary gland ranged from mild to moderate inflammation and necrosis with astrogliosis. F2 and M2 groups had more lesion distribution in the pituitary gland than F3 and M3 groups. There was a 13 % decline in progesterone concentration in F2 and a 44 % decline in F3. Estradiol level declined by 33 % in F2 and slightly increased by 4.2 % in F3. Progesterone-estrogen ratio (P/E) increased by 31 % in F2 and declined by 46 % in F3. Testosterone concentration increased by 74 % in M2 and decreased by 56 % in M3. The study showed that oral administration of B. melitensis affects the pituitary gland and may alter the hypothalamic-pituitary-gonadal axis

Impulse control behaviours in a Malaysian Parkinson’s disease population

Background: Impulse control behaviours are repetitive and excessive activities that may be sub-syndromal and not fulfill the criteria for impulse control disorder. These activities have potential to negatively impact on the daily lives of sufferers. We conducted a study to investigate the prevalence of impulse control behaviors and its associated features in Parkinson’s disease in our population. Methods: We conducted a prospective cross-sectional study on consecutive patients attending neurology clinic. Inclusion criteria include idiopathic Parkinson’s disease patients with Hoehn & Yahr stage I-IV. Eighty patients were enrolled and screened for impulse control behaviors using the Questionnaire for Impulsive-Compulsive Disorder for Parkinson’s disease (QUIP). Results: Prevalence of impulse control behaviors among our cohort was 11.3%; the features significantly associated with it were higher level of education (p=0.02), advanced stage of disease (p=0.03) and higher levodopa dosage (p= 0.01). The commonest impulse control behavior in our cohort was compulsive medication use (7.5%), followed by hobbyism (6.3%), hypersexuality (5%), compulsive buying (3.75%), punding (2.5%), walkabout (2.5%), compulsive eating (1.25%) and pathological gambling (1.3%). Conclusions: There is an association between impulse control behavior and higher levodopa dosage in a study on patients with Parkinson’s disease in Malaysia. We also found a low prevalence of pathological gambling as compared to studies performed in the West

Market structure and performance of dual banking system in Malaysia

Concentration, competition and efficiency are three elements that are often associated with the banking industry. Banking industry in most of the countries in the world had undergone tremendous changes due to several structural changes occurred in the industry. Malaysia has also not left behind in facing this wave of change. There are four main sources that contribute to the structural changes in the Malaysian banking industry namely, bank mergers, implementation and restructuring of Islamic banking industry, liberalization and advancement in information and communication technology (ICT). Besides, the 1997 East Asian Financial Crisis and restructuring of banking industry under the Financial Sector Master Plan also have contribute to the aggressive structural changes in the Malaysian banking industry. Thus, the main purpose of this study is to investigate the impact of structural changes on the degree of concentration, competition and performance of the Islamic banking system compared to conventional banking system in Malaysia. This study used the data of both domestic and foreign banks which operated in dual banking industry in Malaysia, covered the period 1997-2016. The research method in this study has been developed properly to achieve the objectives of the study. First, this study utilizes structural approach to measure various types of market concentration indices, calculated on year-to-year basis in order to investigate the link between concentration and competition. All measures of concentration have been calculated using the formulas proposed in the industrial organizational theory. Second, this study developed the Panzar-Rosse (PR) model to calculate the Hstatistics to determine the degree of competition in Islamic and conventional banking markets. Third, the data envelopment analysis (DEA) method is used to measure income and cost efficiency scores. Finally, the calculated measures of concentration, competition and efficiency are included in a model in order to estimate the relationship between those variables. All the econometric models in this study are estimated using pooled cross-section (OLS) and panel estimation approach (fixed and random effects). Findings of this study are as follows. First, analysis on market concentration provides evidence on the decreasing trend in the level of concentration of Islamic banking market. In contrast, level of concentration is increasing in the conventional banking market. Second, the H-statistics computed using the PR model shows both banking markets operated under the monopolistic competition structure. However, level of competition is more intensifying in the Islamic compared to conventional banking market. Third, results on efficiency scores show that Islamic banks are more cost efficient, but conventional banks are more efficient in generating income. Fourth, the results on the nexus between competition, concentration and efficiency show the existence of negative relationship between competition and concentration; and a positive relationship between efficiency and competition. Based on these findings, this study concludes that the existence of an ideal level of concentration and competition is important for banks to adjust their behaviour to suit market conditions and to operate efficiently. Besides, policy makers and regulators may use the knowledge on market structure and performance in this study to formulate policies and strategies that will optimize the number of banks that operated in the industry

Concentration and competition in dual banking industry: a structural approach

The purpose of this paper is to investigate the evolution of market concentration and competition in Malaysian dual banking industry for the period of 1997-2013. This study utilized structural approach to investigate changes in the market structure particularly the level of concentration and competition that contributed by several structural changes which take place in the dual banking system. According to structural approach, concentration plays an important role in examining the link between concentration and competition. Therefore, present paper utilized the structural approach to measure various concentration indexes to provide significant evidence on the changes in the market structure of Malaysian banking industry for the largest available data set of 1997-2013. Pearson correlation analysis was also used to examine the consistency of those various measures used in this study. The paper found evidence that structural changes have altered the market structure of the banking industry which comprises of Islamic and conventional banking system. The results also indicate that dual banking industry operates in the monopolistic competition structure. Therefore, concentration indexes can be used by authorities to decide on the optimal number of banks operating in the industry