ECONOMICS: Malaysian central bank
Far Eastern Economic Review
May 7, 1998

Banking Blunders
  * By Salil Tripathi
    143 Words

Don't look further than the 1997 Bank Negara Malaysia report to
understand why Malaysian banks are in such a mess. In 1997, when the
Kuala Lumpur stockmarket lost 52% of its value, nearly 17% of all loans
made by Malaysian banks went to he finance share purchases. Despite a
glut in the property market, 40% of bank loans went to the real-estate
industry, mainly to finance construction. But manufacturing got just a
little more than one out of every 10 ringgit lent.
   Though consumers faced job and salary cuts, banks lent merrily to
households buying microwave ovens and colour TVs. Bad loans in the
consumer-credit category rose. No wonder finance companies were
scurrying around looking for cheap land on which to park repossessed
 Most analysts believe that as companies continue to default, up to
20% of all bank loans might turn bad.