Title: Impact of corporate governance and financial stability on bank risk in Malaysia

Authors: Mei Foong Wong

Addresses: Faculty of Accountancy, Finance and Business, Tunku Abdul Rahman University College, Jalan Genting Kelang, 53300, Kuala Lumpur, Malaysia

Abstract: Banks may not survive a major financial shock or in the coming financial crisis especially in Asia are most at risk. As bank governance and financial stability have potential adverse and destabilising effects on banks, this study is carried out to investigate the influence of bank corporate governance and financial stability on bank risk. Based on a panel of Malaysian listed conventional banks from 2010 to 2018, we adopt panel cointegration test and fully modified ordinary least squares estimator. The results provide strong evidence of the adverse influence of financial instability and poor bank governance on bank risk. Thus, policy makers should attempt to formulate appropriate course of actions to overcome the unfavourable consequences stemming from the bank financial instability and quality of bank governance, considering of the multidimensional facets of financial instability and bank governance.

Keywords: bank risk; corporate governance; financial stability; Malaysia; profitability.

DOI: 10.1504/IJMEF.2021.116977

International Journal of Monetary Economics and Finance, 2021 Vol.14 No.4, pp.353 - 362

Received: 23 Oct 2020
Accepted: 20 Feb 2021
Published online: 10 Aug 2021 *

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