No abstract

This study investigates the internal and external factors that influence bank lending behaviors in Malaysian’s dual banking system. The final regression of 24 commercial and 15 Islamic banks using the pooled ordinary least square (POLS) method revealed that the size of the bank proxies by the logarithm of total assets as the most significant factor influencing bank lending behavior in Malaysia from 2010 to 2018. This suggests that larger banks are more diversified and have a larger pool of funds to be loaned out. Because banks rely on deposits to issue loans, the deposits received by the bank have a substantial impact on bank lending. The greater the number of deposits obtained; the more bank lending activities will occur. The data also demonstrated that commercial and Islamic bank lending behavior in Malaysia is strongly connected with deposit volume (DEPO), GDP, and bank size (SIZE).

This article shed some light on the role between bank-specific factors and loan growth in Malaysia using an unbalanced panel analysis of 80 bank-year observations obtained from Eikon Thompson Reuters. Analyzing loan growth is essential to comprehend the expansion of the money supply caused by the creation of credit through new bank loans. Employing the Pooled Ordinary Least Square (POLS) method, the key finding of this study revealed that the capital adequacy ratio had a detrimental impact on the growth of loans at Malaysian commercial banks. Denoting that credit growth and non-performing loans fluctuate over time, particularly before the start of the financial crisis, we discovered a positive correlation between NPL on loan growth. The size of the bank also has a significant impact on how Malaysian commercial banks behave when it comes to lending. The procyclical nature of Asian banks' non-discretionary loan loss reserves is demonstrated by the negative association between credit risk and lending growth. As we reported opposing effects of NPL and GDP on loan growth, thus further study is needed to confirm these conditions.