Does economic freedom fosters banks’ performance? Panel evidence from Malaysia

Sufian, Fadzlan and Habibullah, Muzafar Shah (2010) Does economic freedom fosters banks’ performance? Panel evidence from Malaysia. Journal of Contemporary Accounting & Economics, 6 (2). pp. 77-91. ISSN 1815 5669

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Abstract

The present paper provides new empirical evidence on the impact of economic freedom on banks’ performance. The empirical analysis is confined to the Malaysian banking sector during the period of 1999–2007. We find that overall economic freedom and business freedom exerts positive impacts, implying that higher (lower) freedom on the activities that banks can undertake and entrepreneurs to start businesses increases (reduces) banks’ profitability. The empirical findings seem to suggest that corruption has a corrosive impact on Malaysian banks’ profitability. Interestingly, the impact of monetary freedom is negative, demonstrating the importance of government intervention in determining the profitability of banks operating in the Malaysian banking sector.

Item Type:	Article (Journal)
Additional Information:	/5208
Uncontrolled Keywords:	Banks, Economic freedom, Profitability, panel regression analysis, Malaysia
Subjects:	H Social Sciences > HG Finance > HG1501 Banking
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Institute of Islamic Banking & Finance (IIiBF)
Depositing User:	Dr. Fadzlan Sufian
Date Deposited:	03 Nov 2011 16:58
Last Modified:	03 Nov 2011 16:58
URI:	http://irep.iium.edu.my/id/eprint/5208

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