1) This presentation summarizes a study on the relationship between corporate governance and bank performance in Malaysia before and after the 1997 Asian Financial Crisis. It analyzes data from 4 private domestic banks and 7 foreign banks from 1995 to 2005. 2) The results show that before the crisis, foreign banks had better corporate governance and higher performance compared to domestic banks. After the crisis, domestic banks improved their corporate governance and saw better performance due to central bank regulations. 3) The conclusion is that good corporate governance has a positive impact on bank performance in Malaysia. The implications are that managers and shareholders should focus on governance, and central banks play a key role in protecting banks through prudent policies and regulations.

1. A SYNOPSIS PRESENTATION
BY GROUP III
AVASH BHATTARAI
HIMALAYA BAN
KALPANA PARAJULI
KUSHAL SHRESTHA

2. TABLE OF CONTENTS
• Introduction
– About Author
– Research Context
– Purpose of the Study
– Study Methodology
• Data Analysis and Finding
• Conclusion
– Conclusion and Implication

3. PART I

4. What do you know about the year 1997?
Hint……………!
1930…………..!
2007…………..!
Not Global but………………!

5. The countries most affected by the 1997 Asian financial crisis

7. About the Author
Peong Kwee Kim
is the Faculty of Business and law .
She has done MBA in Banking and
Finance.
Her areas of expertise include
Finance, Banking and Corporate
Governance
Devinaga Rasiah
is a lecturer with the Faculty of
Business & Law.
Her MBA is from University of
Wales, UK.
Her research interests are in
commercial and investment
banking.

8. • “Corporate Governance in East Asian countries has been
characterized by ineffective boards of directors, weak
internal control, unreliable financial reporting ,lack of
adequate disclosure ,lax enforcement to ensure compliance
and poor audits. These problems are evidenced by
unreported losses and understated liabilities .Regulators
responsibility for monitoring and overseeing such practices
failed to detect weaknesses and take timely corrective
action” (p.67-68 World Bank 1998)
• Asian Development Bank (2000) found that weak corporate
governance was on of the major contributors to the building
up of vulnerabilities in East Asia(including
Thailand, Indonesia and Malaysia)that finally led to the
banking crisis (from Asian financial crisis) in 1997

9. Conceptual Framework
Board Ownership
Structure
(Internal Governance)
Government
connected
Ownership
Corporate
Governance
External Forces-
Regulation
(External Governance)
 Capital Ratio
 Fixed Assets and
Inventories to
capital
Bank
Performance

10. Purpose of the study
• The study attempts to identify and understand
the difference between two types of banking
ownership- the private domestic-owned banks
and the foreign –owned banks in terms of
relationship between corporate governance and
bank performance in the pre and post Asian
financial crisis.

11. Research Sample
• From Secondary Sources from 1995-2005
• Between 4 private banks out of 10
• Between 7 foreign banks out of 13
• Variables to seek in annual reports
– % of shares in shareholders
– Loans and advances
– Total equity
– Loan loss and provision
– Net profit for the year
– Fixed assets
– Share capital

12. A. Private Domestically Owned Banks
1.Affin Bank Berhad
2.Bumiputra commerce Bank Berhad
3.Eon Bank Berhad
4.Maybank BERHAD
B. Foreign Owned Banks
1.ABN AMRO Bank(M) Berhad
2.Bangkok bonk(M) Berhad
3.Citibank(M) Berhad
4.HSBC Bank (M) Berhad
5.OCBC Berhad
6. Standard Chartered Bank (M) Berhad
7. United Overseas Bank (M) Berhad
List of Banks under study

13. 4
6
Ownership Structure
Sample Private
Domestic Bank
Other Private Domestic
Bank
7
6
Ownership Structure
Sample Foreign Owned
Banks
Other Foreign Owned
Bank

14. PART II
DATA ANALYSIS AND FINDINGS

15. Descriptive Statistics for Foreign Banks in Pre and Post Crisis

16. -20
0
20
40
60
80
100
120
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
CAR
FAI
CR
OWNF
ROE
Trend line of Mean

18. ROE

21. Interpretation
The table illustrates that in both pre and post crisis CAR has
positive relationship with CR,OWNG but negative relationship with
FAI. Meanwhile it also has positive relationship with ROE
The CAR has significant effect on bank performance ROE at 5%
level of alpha.

22. Interpretation
The table illustrates that in both pre and post crisis CAR has
positive relationship with CR,OWNF but negative relationship with
FAI. Meanwhile it also has positive relationship with ROE
The CAR has significant effect on bank performance ROE at 5%
level of alpha.

23. PART III

24. CONCLUSION
• Positive relationship between the CG and Bank
Performance in Malaysia
• In the pre crisis the foreign owned banks had a
better good corporate governance and gained
better performance than that of private
domestically owned banks in Malaysia
• In post crisis the private domestically owned
bank had a better implementation of corporate
governance and gained better performance due
to the prudential regulation of central bank.

25. IMPLICATION
• Helps managers to implement good corporate governance and concerns
about ownership and government effects on bank performance.
• Similarly, shareholders with information have an important role to face the
bank’s management to implement good corporate governance and to
ensure the good corporate governance the manger should established the
good control mechanism.
• To implement the good corporate governance the central banks have to
play the vital role to encourage and protect the commercial banks by
issuing the different policies in legal lending limits, the quality of
assets, knowledge of your customers, protection against money
laundering etc.

26. In Nepalese Perspective