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Financial Structure and Monetary Policy in Malaysia

  • S. Y. Lee
  • Y. C. Jao
Chapter

Abstract

The present financial structure of Malaysia comprises Bank Negara Malaysia (Central Bank of Malaysia), 38 commercial banks, (Appendix 2) 14 representative offices of foreign banks, 36 finance companies,.12 merchant banks, the National Savings Bank (formerly called the Post Office Savings Bank), Malaysian Industrial Development Finance Ltd., Development Bank of Malaysia, Industrial Development Bank of Malaysia, Agricultural Bank of Malaysia, Credit Guarantee Corporation, Malaysia Export Credit Insurance Company, house credit institutions, 5 discount houses, 68 insurance companies, Credit Cooperative societies, and others. There is also the informal money market, such as moneylenders, chettiars, and pawnshops, which provide mainly consumers’ credit.

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Notes and References

  1. 1.
    The external reserves of the Bank follow the tradition or practice of the old Malayan Currency Board. The Malayan, British Borneo Currency Agreement, 1960, permitted tthe fiduciary issue of $300 million, which was tantamount to maintaining minimum external reserves covering about 81 per cent of currency issue. See Lee Sheng-Yi, The Monetary and Banking Development of Malaysia and Singapore (Singapore University Press, 1974), p. 23;Google Scholar
  2. and Bank Negara Malaysia, Annual Report and Statement of Accounts, 1979, p. 161, and various issues.Google Scholar
  3. 2.
    In absolute value, deposits of domestic banks and foreign banks were M$13,927 million and M$7,173 million respectively; loans of domestic banks and foreign banks to non-bank customers were M$9,lll and M$7,357 respectively — see Bank Negara Malaysia, Monthly Statistics Bulletin, May 1980, pp. 12 and 15.Google Scholar
  4. 3.
    Quoted from Bank Negara Malaysia, Annual Report, 1977, p. 55.Google Scholar
  5. 4.
    ‘Despite the sharp rise in bank assets, the increase of capital funds has not kept pace with the growth in bank operations’ — quoted from Bank Negara Malaysia, Annual Report, 1979, p. 61.Google Scholar
  6. 5.
    At end 1979, commercial bank lending to the bumiputera community amounted to M$2,650 million, as compared with M$14,686 million for total bank lending. See Bank Negara Malaysia, Annual Report 1979, p. 72.Google Scholar
  7. 8.
    See Bank Negara Malaysia, Annual Report 1979, p. 74.Google Scholar
  8. 9.
    See Bank Negara Malaysia, Annual Reports, 1975, p. 67, and 1977, pp. 57–8.Google Scholar
  9. 10.
    See SGV, ‘A Study of Licensed Borrowing Companies in Malaysia, 1976, p.E, and Bank Negara Malaysia, Money and Banking in Malaysia (Kuala Lumpur, 1979), pp. 187–8.Google Scholar
  10. 11.
    See Bank Negara Malaysia, Annual Reports, 1979, p. 77, and various issues; and Bank Negara Malaysia, Money and Banking in Malaysia, pp. 177–88.Google Scholar
  11. 13.
    For a discussion, see Bank Negara Malaysia, Annual Report, 1977, pp. 68–9, and 1979, p. 76.Google Scholar
  12. 14.
    In contrast, merchant banks in Singapore have to borrow heavily from banks abroad, particularly their head offices. For the sources and uses of merchant bank funds, see Bank Negara Malaysia, Annual Report, 1979, p. 82, and various issues.Google Scholar
  13. 15.
    Quoted from Bank Negara Malaysia, Annual Report, 1977, p. 73.Google Scholar
  14. 17.
    Bank Negara Malaysia, Annual Report, 1979, p. 89.Google Scholar
  15. 18.
    For the direction by the Agricultural Bank, see Bank Negara Malaysia, Annual Reports, 1978, p. 81, and 1979, p. 90.Google Scholar
  16. See Federal Reserve Bank of Francisco, Pacific Basin Economic Indicators, June 1980, p. 38.Google Scholar
  17. 28.
    Bank Negara Malaysia, Money and Banking in Malaysia (KuaLa Lumpur, 1979), p. 345–6. See also the balance sheets of Bank Negara Malaysia, Annual Reports, various issues.Google Scholar

Copyright information

© S.Y. Lee and Y.C. Jao 1982

Authors and Affiliations

  • S. Y. Lee
    • 1
  • Y. C. Jao
    • 2
  1. 1.National University of SingaporeSingapore
  2. 2.University of Hong KongChina

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