Internal factors influencing commercial banks’ lending behaviour in Malaysia
Mohamad Azwan Md Isa1, Ruziah A Latif2, Zaibedah Zaharum3, Ferri Nasrul4, Mohd Khairul Ariff Noh5.
Commercial banks play a pivotal role as a financial intermediary in mobilizing funds among the sectors such as private households, business firms, and the government. Investment activities, business expansion, and industrial development depend largely on the funds, without which a country’s economy will be stagnant and even worse the economy is going to be in catastrophe. Apparently, lending activity is the core business of commercial banks that contributes the largest income proportion to the banks. Therefore, this paper aims to examine the four specific internal factors influencing the commercial banks’ lending behaviour. Sampling from the year 2009 to 2018, this study evidences that the volume of deposit, level of liquidity and bank size significantly influences the lending behaviour of commercial banks in Malaysia after the 2007/2008 global financial crisis. Specifically, the volume of deposit and non-performing loans negatively influence the banks’ lending behaviour whereas the level of liquidity and bank size pose positive impacts on lending behaviour. These findings are very beneficial to the commercial banks, the Central Bank of Malaysia (BNM), depositors or shareholders as well as business firms in planning, formulating appropriate policies and ultimately making well-informed decisions in the future.
Affiliation:
- Universiti Teknologi MARA (UiTM), Malaysia
- Universiti Teknologi MARA (UiTM), Malaysia
- Universiti Teknologi MARA (UiTM), Malaysia
- Universiti Teknologi MARA (UiTM), Malaysia
- Universiti Teknologi MARA (UiTM), Malaysia
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