Comparative Study on Determinats of Bank Cost Efficiency.pdf - CHAPTER ONE INTRODUCTION 1.1 Overview of the Study This study begins by explaining the

Comparative Study on Determinats of Bank Cost...

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1 CHAPTER ONE INTRODUCTION 1.1 Overview of the Study This study begins by explaining the financial system in Malaysia and the difference types of financial institutions followed by a brief illustration of efficiency together with the output and input of banks on assessing the level of efficiency. 1.1.1 Financial System in Malaysia Initially, the Board of Commissioners Currency in Malaya and British Borneo was the sole monetary authorities in Malaya (Schenk, 2013). Malaysia’s financial sector begins after the independence with the establishment of Malaysia’s central banks with the motives to maintain a strong ringgit, stimulate the growth of economy by promoting financial stability and a sound financial structure. Back then, financial system was dominated by branches of British banks with the function to serve and promote the welfare of British (Alqahtani, Mayes, & Brown, 2017). The first Malaysian Governor of Bank Negara was Tun Ismail Mohamad Ali who has made the record as the governor of the central bank’s longest -serving in Asia with 18 years of service. His contribution was trying to promote and strengthen local banks to match all the branches of foreign banks in the country (BNM, 2016). The focused of building financial infrastructure begins in 1960 which Malaysia starts to possess the development of commercial banks in the country and expand its branch banking services to cater the demand from customers. Within the years, the development of Malaysia financial system started to cultivate with the establishment of the Bursa Malaysia formerly known as Kuala Lumpur Stock Exchange (KLSE), Discount Houses, Lembaga Tabung Haji (TH) previously known as Lembaga Urusan dan Tabung Haji (LUTH), Securities Commissions, Agricultural Bank, and Malaysian Industrial Development Finance which helps the economy to grow and prosper. The development of Malaysia financial system keeps on improving to make sure it is at par with other countries. In the 1970, it focuses to improve on integrity and professionalism in the management of bank. Throughout the year it has establish
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