1. Current Global Financial Crisis and Its Implications
on International Financial Institutions: The Case in
Malaysia
( Rafael Nadal )
Nor Akirah bt Ramli BG09110405
Hafizah bt Hanafi BG09110146
Mardhiawaty bt Malik BG09110254
Mas Suraeda bt Ghani BG09110162
Norhaini bt Masa BG09110021
Siti Ayu bt Kurio @ Drahman BG09110102
3. Introduction
• Global - a planet, the world, the world of the whole earth, is not
limited or regional in scope.
• Financial crisis - situations in which some financial
institutions or assets suddenly lose a large part of their value
• International financial institutions (IFI) -public banks and
other credit institutions “owned” by more than one country
4. • There are other factors that caused global financial crisis
including free market ideology, etc.
• This crisis spread to Malaysia via two-way :
1. Channel of trade
2. Channel of finance
• IFI and Malaysia have each experienced a number of
impacts. Several major financial institutions taken over by
other financial institutions.
5. • Effects of Global financial crisis to IFI:
banks, investment houses, and insurance companies have either
announced bankruptcy
banks in the developing economies suffer contractions in credit lines
and reduced financial flows due to the failure of leading financial
institutions. Eg: IMF
five of America’s largest investment banks have been reborn as
commercial banks
UBS and Citigroup, have announced huge losses.
collapse of the banking system in Iceland, the fall of Fortis which a
Belgo-Dutch Bank
6. • almost all of the financial institutions in the United States and other
parts of the world including international level such as Iceland,
Hungary, Country Ukraine, and other Easter European and Baltic
endured heavy losses from their collateralized debt obligations
(CDO’s), credit default swaps (CDS’s), and other financial assets
7. Objectives
1. To determine the impact of global financial crisis in
Malaysia
2. To examine the steps taken by Malaysia in order to
overcome the global financial crisis
3. To determine the effectiveness of the steps that has been
taken by Malaysia
9. Cont….
b) Malaysia’s export
reduction in the values of a continuous drop in Exports, not only
AFFECTED industrial production in export-oriented sectors, but also
indirectly from the making and the lack of domestic demand and other
services.
c) Imports of intermediate goods
d) Impact on investment
a surge in bank outflows have a negative impact on other investment net
outflows of Recorded 11 billion lower than the previous year with a net
outflow of RM46.9 billion.
e) Impact on employment
f) Impact on inflation rate
10. Steps taken by Malaysia
Malaysia peg the value of
money so do not experience Malaysian government has
continued fall in an uncertain freeze the assets of foreign
world market investors in Malaysia Ringgit
Transformation including the
rationalization of the existing
Government refused to request
institutions, the establishment of
financial assistance from the IMF
new institutions and
funds
introduction of foreign
competition
11. Cont….
Reduce reliance on the existing
Consolidate the banking sector
financial market system and see
through mergers and acquisitions
this crisis as an opportunity to
and increased capitalization
introduce Islamic financial system
Trade relations with China Providing own stimulus package
12. Effectiveness of steps
• To maintain exchange rate stability as a policy
to reduce the policy option.
Expansionary
• Additional fluctuations driven by procyclical
fiscal policy
fiscal policy has been found to weaken the long
term growth.
• Can be adopted as a general policy response
Stabilization and • To accept the fact that the adjustment is not
stimulus inevitable and is intended to reduce pain and
promote the orderly adjustment.
13. Cont….
• Need to be timely, large, lasting,
Optimal fiscal diversified, contingent, collective and
package sustainable to reduce probability another
“Great Depression”
• Occurs because the stimulus package failed to
address critical structural weaknesses
Fiscal stimulus mentioned earlier.
package
• Stimulus private spending to replace public
spending.
14. Conclusion
Global financial crisis did not have a very
significant impact on Malaysia
This is shown by the quick recovery that Malaysia has
displayed, whereby the Malaysian economy has improved
compared to when the global financial crisis initially hit
Malaysia
Early transformation in the Malaysian financial and economic
sectors following the Asian financial crisis has also helped to
better prepare Malaysia in absorbing the shocks that resulted
from the current global financial crisis
Overall, the steps taken by Malaysia have served the country well, as
its economy has shown positive signs in recovering from the crisis as
early as in year 2010
