IDEAS home Printed from https://ideas.repec.org/a/eee/jbfina/v66y2016icp1-18.html
   My bibliography  Save this article

Financial distress and the Malaysian dual baking system: A dynamic slacks approach

Author

Listed:
  • Wanke, Peter
  • Azad, Md. Abul Kalam
  • Barros, Carlos Pestana

Abstract

This paper presents an efficiency assessment of the Malaysian dual banking system using the Dynamic Slacks Based Model (DSBM) in order to assess the evolution of Malaysian Banks’ potential input–saving/output–increase from 2009 to 2013. More precisely, DSBM is used first in a two-stage approach to assess the relative efficiency of Malaysian Islamic and conventional banks by emulating the CAMEL rating systems. Then, in the second stage, Monte Carlo Markov Chain (MCMC) methods applied to generalized linear mixed models (GLMM) are combined with DSBM results as part of an attempt to produce a model for banking performance assessment with effective predictive ability. Results indicate higher inefficiency levels and slacks in Islamic banks when compared to conventional ones. Furthermore, when the scope of analysis is the group of Malaysian Islamic banks, the efficiency levels of foreign banks are lower compared to their national counterparts, suggesting regulatory and cultural barriers. Policy implications are derived.

Suggested Citation

  • Wanke, Peter & Azad, Md. Abul Kalam & Barros, Carlos Pestana, 2016. "Financial distress and the Malaysian dual baking system: A dynamic slacks approach," Journal of Banking & Finance, Elsevier, vol. 66(C), pages 1-18.
    • Handle: RePEc:eee:jbfina:v:66:y:2016:i:c:p:1-18
    DOI: 10.1016/j.jbankfin.2016.01.006
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0378426616000169
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jbankfin.2016.01.006?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Dual banking system; Malaysia; DSBM; Two-stage; MCMC; GLMM;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbfina:v:66:y:2016:i:c:p:1-18. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbf .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.