Credit expansion and financial stability in Malaysia

Abstract

This study investigated the degree of synchronization between credit expansion and financial stability in Malaysia at aggregated and disaggregated levels. The dynamic factor model and a broad range of macro-financial variables are adopted to construct a financial stability index to measure the stability of the Malaysian financial system. The non-parametric method is subsequently employed to gauge the degree of synchronization between credit and financial stability. The empirical findings indicated a negative synchronization between business credit and financial stability in Malaysia, suggesting that an expansion in business credit would lead to financial instability. The results implied that difficulties will arise in designing policies as business credit expands. On the other hand, there is insufficient evidence to show that increasing household credit has any negative influence on Malaysian financial stability.

Risiko Kredit, Stabilitas, dan Kebijakan Pembiayaan Bank Syariah di Indonesia

“…Namun, secara terpisah kedua risiko tersebut berpengaruh terhadap stabilitas bank. Koong et al (2017) menguji hubungan antara ekspansi kredit terhadap stabilitas keuangan. Variabel stabilitas diukur dengan indikator non-performing loans dan risk-weighted capital ratio bank-bank di Malaysia periode 2009-2013.…”

“…Financing to Deposit Ratio (Koong et al, 2017) yang merupakan rasio penggunaan dana bersumber dari dana pihak ketiga untuk pembiayaan atau pemberian kredit menunjukkan ratarata yang cukup tinggi sebesar 91,92 persen dengan tingkat standar deviasi yang rendah dibanding nilai rata-ratanya. Dengan demikian dapat dikatakan bahwa penyebaran data cukup merata mendekati angka rata-rata.…”

“…Begitu juga dengan variabel pembiayaan murabahah (MBAF) dan FDR terdapat hubungan positif tidak signifikan. Hasil ini juga bertentangan dengan hasil studi oleh Koong et al, (2017) yang menyatakan bahwa ada hubungan antara ekspansi kredit dengan risiko kredit (non-performance loan). Hasil ini dapat diinterpretasikan bahwa terjadinya risiko kredit tidak memiliki arti penting terhadap stabilitas bank syariah dan keputusan pembiayaan berbasis jual beli murabahah.…”

The Relationship Between Household Credit and Banking Stability in Malaysia: Panel Evidence

“…Second, this study was motivated by earlier studies focusing on total credit growth, including credit in the household and business sectors (Amador et al, 2013;Foos et al, 2010;Igan & Pinheiro 2011;Baradwaj et al, 2015;Kashif, Iftikhar & Iftikhar 2016;Koong et al, 2017). However, this study focused solely on the ratio of household credit to total loans because, Büyükkarabacak, Neven T. Valev (2010) and Demirgüc-Kunt and Detragiache (1998) put forward an argument that a high level of household credit has been an essential predictor of banking instability.…”

Determinants Of Financial Condition In Malaysia

“…The inclusion of policy rate measures the price of financing for the household and firms (Gómez et al, 2011). The money supply reflects on the money market condition (Koong et al, 2017).…”