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Purpose – This research analyses the stability of a number of banks operating in Malaysia by using descriptive statistical analysis based on internal variables. These include the characteristics of the bank, capital adequacy ratio, ratio of profitability, liquidity ratio and the ratio of bank operations.

Methodology/approach – Each bank’s stability is studied using z-score analysis. Data are sourced from the balance sheets and income statements of the banks from 2000 to 2011.

Findings – The results indicate that characteristics of a bank do influence a bank’s performance. There are significant differences in financial ratios between Islamic and conventional banking. Islamic banks provide a lower loan loss of capital to cover impaired loans than conventional banks. This provides high capital based on the mean value obtained. The capital ratio allows both sets of banks to meet the capital adequacy ratio set by the Central Bank of Malaysia. Meanwhile, in profitability ratios, conventional banks have higher returns on higher assets, whereas Islamic Banking has higher returns on higher equity. Only 8 Islamic banks and 11 conventional banks are highly stable banking institutions in Malaysia.

Originality/value – Islamic and conventional banking systems in Malaysia need further improvement to deal with unexpected economics crises and increased competition between the two. Hence, Islamic banking must be refined, especially for improving their stability to attract more investments for further development and performance.

This paper examines the profitability and performance measurement of U.S. regional banks during the period 1994–2011, using the GMM estimator technique. Our study extends prior research by including several factors not previously considered using U.S. data.

We use bank-specific, industry-specific, and macroeconomic determinants of profitability contemporaneous with our performance indicators. We follow the accounting fundamental analysis path in explaining the bank performance.

Among the performance measures, the efficiency ratio and provisions for credit losses are negatively and equity scaled by assets is positively related to profitability. However, these relationships either reverse (efficiency ratio and provisions for credit losses) or become insignificant (equity scaled by assets) when the target becomes change in profitability. The level of nonperforming assets is negatively related to profitability across all measures of profitability used. Macroeconomic variables are largely unrelated to profitability during the year they are measured. However, they have a significant relationship with earnings change measures, suggesting they have a lagged effect on profitability. The slope of the yield curve is especially strong in this regard.

We use our determinants to model changes in bank profitability one year ahead, in addition to including several factors not previously considered, using the predictive focus of the fundamental analysis research.

Studies of Depression-era financial remediation have generally focused on federal deposit insurance and the provision of equity to banks by the Reconstruction Finance Corporation (RFC). This paper broadens the concept of financial remediation to include other programs – RFC lending, federal guarantees of farm and home mortgages, and the elimination of interest on demand deposits – and other intermediaries – savings and loans, mutual savings banks, and life insurance companies. The benefits of remediation or the amounts potentially at risk to the government in these programs are calculated annually and allocated to the various intermediaries. The slow remediation of real estate loans (two-thirds of these intermediaries' loans) needs further study with respect to the slow economic recovery. The paper compares Depression-era remediation with efforts during the 2008–2009 crisis. Today's remediation contrasts with the 1930s in its speed, magnitude relative to GDP or private sector nonfinancial debt, the share of remediation going to nonbanks, and emphasis on securities markets.

American International Group, Inc. (AIG) has recently been charged with reporting bogus transactions that hid losses and inflated its net worth. The New York State Attorney General Eliot Spitzer alleges that AIG inflated reserves used for paying claims by millions of dollars and that AIG's CEO Maurice Greenberg repeatedly directed AIG traders late in the day to buy AIG shares to prop up its price, among other allegations. We examine the accounting errors for which AIG and Greenberg are being charged and analyze the opportunities missed by the auditors to detect problems, within the framework of corporate governance. That is, we evaluate the corporate environment that supported these lapses and provided an environment conducive to the perpetration and acceptance of fradulent reporting. We discuss how corporate governance not only promotes better financial reporting, but provides a level of scrutiny that encourages more ethical behavior at all levels of the corporate hierarchy, and we discuss the imperative for accounting education.

Several developing economies witnessed a large number of systemic financial and currency crises since the 1980s that resulted in severe economic, social, and political problems. The devastating impact of the 1982 and 1994–1995 Mexican crises, the 1997–1998 Asian financial crisis, the 1998 Russian crisis, and the ongoing financial crisis of 2008–2009 suggests that maintaining financial sector stability through reduction in vulnerability is highly crucial. The world is now witnessing an unprecedented systemic financial crisis originated from the USA in September 2008 together with a deep worldwide economic recession, particularly in developed countries of Europe and North America. This calls for devising and using on a regular basis an appropriate and effective monitoring and policy formulation system for detecting and addressing vulnerabilities leading to crisis. This chapter proposes a macroprudential/financial soundness monitoring, analysis, and remedial policy formulation system that can be used by most developing countries with or without crisis experience as well as with limited data. It also discusses a process for identifying and compiling a set of leading macroprudential/financial soundness indicators. An empirical illustration using Philippines data is presented. There is an urgent need for increased coordination, collaboration, and partnership among central banks, banking and financial market supervision agencies, and ministries of finance, economic, and planning for proper macroprudential monitoring. A high-level national financial stability committee under the auspices of the head of the state as well as a ‘‘regional financial stability board’’ needs to be established to complement and support the activities of an “international stability board.”

This chapter model the factors behind the instability of exchange rate by using exchange market pressure (EMP) index. The authors focus first to construct the EMP and then secondly, test the interrelationship between EMP, real gross domestic product, money supply (M2), consumer price index, trade openness and share price using quarterly data in selected East Asian countries. The empirical results of this study explicitly indicate that EMP is determined by the states of other variables in most of the studied countries. Planning on the macrolevel is essential when managing and ensuring continuous monitoring of the exchange rate condition. This would translate into positive macroeconomic welfare and economic growth sustainability.

For nearly 80 years, the field of macroeconomics has largely been shaped by the aftermath of the Keynesian revolution. Many economists have argued that this revolution and the subsequent internal and external disputes it has sparked have had the unfortunate side effect of crowding out much of what was good in macro-level analysis before it, leading to the dissatisfactory state of macroeconomics we have today. In the search for alternative paths for macroeconomics, I focus on two separate but compatible traditions: monetary disequilibrium (MD) theory and the Austrian business cycle theory (ABCT). I argue that scholars in these traditions employed a far richer micro-theoretic explanation for the business cycle well before Keynes’s General Theory. Unfortunately, their ideas were not united in time to mount a sufficient counterattack to the Keynesian crusade. My goal is to unite the best elements of these two traditions by providing what I believe is the “missing link” that can help connect these alternative paths: free banking theory.

This paper examines how the determinants of bank performance and profitability were affected by the recent systemic banking crisis. We explore the contemporaneous determinants of U.S. regional banks’ performance and profitability before, during, and after the crisis years.

We analyze the determinants of three measures of profitability: return on assets, return on equity, and net interest margins.

We found evidence of lowered bank profitability, credit quality, and scale of lending activities well after the defined crisis period. This coincides with historical evidence that downturns associated with a financial crisis are more severe than downturns due to short-run fluctuations in the business cycle. Banks responded to the crisis by increasing their equity and liquidity levels.

This paper is the first to compare the determinants of bank profitability during the precrisis, crisis, and postcrisis periods. Our study extends previous work by using data from U.S. banks, adding coverage of the years since the banking crisis ended, and considering profitability determinants not previously explored in studies on the effects of the crisis.