Development Financial Institutions free essay sample

The banking sector is developing rapidly in Malaysia and commercial banks become the most important part of the financial institutions. Malaysian banking system consisted of the monetary and non-monetary institution. The monetary institution is the central bank which is known as Bank Negara Malaysia (BNM), and the commercial banks included Bank Islam. However, the non-monetary institutions comprised into two categories; the first group is supervised by Bank Negara Malaysia (BNM); comprises commercial banking institutions (including Islamic), investment banks and development financial institutions. The second is under the supervision of several government agencies and departments (IMF, 2014). Bank Negara Malaysia or known as the Central Bank of Malaysia is a statutory body which established in 1959 (BNM, 2016). BNM is governed by the Central Bank of Malaysia Act 2009. The role of BNM is to promote monetary and financial stability. This is aimed at providing a conducive environment for the development of the Malaysian economy (BNM, 2016). We will write a custom essay sample on Development Financial Institutions or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page According to the ASEAN +3 Bond Market Guide, Malaysia (2016), BNM focuses on three important elements of central banking which are monetary stability, financial stability, and payment system. Furthermore, importance has given to the development of BNM align with economic management, institution building and strengthening of the financial system.The primary functions of BNM are as below:a) Formulate and implement monetary policy in Malaysiab) Issues currency in Malaysiac) Regulate and monitor financial institutionsd) Hold and manage the foreign reserve of Malaysiae) Act as a financial advisor, banker and financial agent of the government. f) Provide foreign exchange marketSource: ASEAN +3 Bond Market Guide 2016, MalaysiaThe banking services considered one of the largest and important industries in Malaysia. This industry encourages the development of new infrastructure which provides new income opportunities (Productivity Report 2010/2011). Banking is one of the sectors that experiencing major challenges due to globalization. According to Panatik Noordin (2015), the banking industries in Malaysia have to cope with technological changes, managerial changes and global competition (Ang et al., 2014). The ability to offer a wide range of services with high quality by banks in Malaysia to satisfy the customers will enable the financial institution to be competitive in a worldwide. In today banking business, a competitor will gain a customer if another bank fails to satisfy the customer. It is because the banking situation is experiencing to improve by meeting the customers’ demands who is expecting greater changes in the industry (Osman, et.al 2016). In addition, the author further mentioned that the banking sector now becoming more integrated due to technological changes, deregulation, and liberalization which leads to the competitive environment. Thus, banks need to focus on the factors that help to develop competent employees. Currently, Malaysian financial institution is constituted by 27 commercial banks which are 8 domestically owned and 19 foreign-owned banks. These banks serve for customers included Malaysians and non-Malaysians (Bank Negara Malaysia, 2016). Besides, there are 16 Islamic Banks which included in the local and foreign setting.