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2016 | OriginalPaper | Chapter

48. Bank Fragility and Its Determinants: Evidence From Malaysian Commercial Banks

Authors : Nurul Farhana Mazlan, Noryati Ahmad, Norlida Jaafar

Published in: Proceedings of the 1st AAGBS International Conference on Business Management 2014 (AiCoBM 2014)

Publisher: Springer Singapore

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Abstract

When are banks considered fragile and what triggers them to be fragile? This paper attempts to answer those questions by measuring bank fragility and identifying probable factors determining bank fragility of Malaysian commercial banking sector during the period of 1996–2011. This paper constructs the banking sector fragility index (BSFI) to measure fragility of commercial bank during the period studied. The index is then used to identify the determinants of commercial bank fragility. Results of BSFI show that the commercial banking sectors are in fragile condition from 1996 until 2000 and in a highly fragile stage between 1996 and 1998 since the BSFI are less than −0.50. In addition, findings based on the logistic regression analysis infer that the likelihood of Malaysian commercial banks to be fragile is significantly determined by total loans to total assets and interbank rate.

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Metadata
Title
Bank Fragility and Its Determinants: Evidence From Malaysian Commercial Banks
Authors
Nurul Farhana Mazlan
Noryati Ahmad
Norlida Jaafar
Copyright Year
2016
Publisher
Springer Singapore
DOI
https://doi.org/10.1007/978-981-287-426-9_48