Tutorial 4 MBA4013

Malaysia is considered as having the world’s first comprehensive legal framework for Islamic finance industry. What is the approach to Islamic finance practiced in Malaysia?

• pro-active approach

• government-driven approach

• top-down approach

• bottom-up appraoch

• passive/voluntary approach

....... is the main regulatory authority responsible for securities and future markets

BNM regulates several sectors of financial businesses such as

• insurance & takaful

• conventional & financial institutions

• money & capital market

• payment systems

• exchange controls

Name 2 acts repealed by the Islamic Financial Services Act (IFSA) 2013

Evaluate responses using AI:

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Answer explanation

Your answer should be:

- Islamic Banking Act 1983

- Takaful Act 1984

How many SAC members of BNM do we currently have?

• 7

• 8

• 9

• 10

Which statement below is TRUE regarding promoting competition and efficiency through banking structure?

• The more banks exist in the market, the higher the competition

• The higher the competition, the prices and quality of the products and services will be competitive

• Higher competition among banks is good for the customers

• Too much or too little competition is not efficient for the banking industry.

Answer explanation

All answers are correct. Competition to a certain degree improves quality of products & services and allows customers to enjoy competitive prices.

Too little or no competition leads to monopoly.

Malaysian deposit insurance is known as

Answer explanation

PIDM

Perbadanan Insurans Deposit Malaysia

What is the objective of deposit insurance?

• to reduce the risk associated with bank liabilities

• to protect the bank from liquidity run & deposit crises

• to maintain public confidence in the banking system

• to protect depositors against the loss of their insured deposits

Answer explanation

https://www.pidm.gov.my/en/how-we-protect-you/deposit-insurance-system/what-is-the-deposit-insurance-system-dis

The Deposit Insurance System (DIS) is a system established by the Government to protect depositors against the loss of their insured deposits placed with member institutions in the event of a member institution failure.

Although not mentioned in the slides, logically PIDM is aimed at protecting depositors' money/deposit in the IFIs registered with PIDM

Market discipline supports clear financial reporting and encourages the timely release of financial information to the public. Examples of financial information include

• company's assets

• company's liabilities

• company's income

• company's net profit or loss

• company's cash flow

Answer explanation

The monetary policy is set by changing the Overnight Policy Rate (OPR). The OPR is BNM’s policy interest rate that influences ......

• banks’ lending rates

• banks’ financing rates

• deposit rates

• takaful monthly contribution rates

• insurance premium rates

Answer explanation

https://www.nst.com.my/lifestyle/heal/2019/10/532287/why-do-my-medical-health-plan-premiumscontributions-keep-increasing

Increase in takaful contribution/insurance premium is due to medical inflation rate instead of OPR.