Title: Determinants of non-bank financial institutions' profitability: empirical evidence from Malaysia

Authors: Fadzlan Sufian

Addresses: Department of Economics, Faculty of Economics and Management, Universiti Putra Malaysia, 43400 Serdang, Selangor, Malaysia; Khazanah Research and Investment Strategy, Khazanah Nasional Berhad, Level 35, Tower 2, Petronas Twin Towers, Kuala Lumpur City Centre, 50088 Kuala Lumpur, Malaysia

Abstract: The present paper examines the determinants of non-bank financial institutions| (NBFIs) profitability in a developing economy. Specifically working within the Malaysian financial sector, the analysis is confined to the universe of the merchant banks and finance companies operating in the Malaysian financial sector during the period 2000-2004. The results suggest that Malaysian NBFIs with a higher risk exhibits lower profitability level. On the other hand, the large Malaysian NBFIs with high operational expenses exhibits higher profitability level, thus supporting the expense preference behaviour hypothesis. The results suggest that specialisation has no significant relationship with Malaysian NBFIs profitability.

Keywords: non-bank financial institutions; profitability; multivariate regression analysis; Malaysia; developing countries; expense preference behaviour.

DOI: 10.1504/GBER.2009.028981

Global Business and Economics Review, 2009 Vol.11 No.2, pp.141 - 166

Published online: 19 Oct 2009 *

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