1. MOHSIN SAEED - Accounting and Finance, Business Institute of Sciences (BIS), Universiti Kuala Lumpur (UNIKL).
2. Dr. JAMALLUDIN HELMI HASHIM - Proffesor, Business Institute of Sciences (BIS), Universiti Kuala Lumpur (UNIKL).
3. Dr. GHOLAMREZA ZANDI POUR - Professor, Joopari Business Institute of Sciences (BIS), Universiti Kuala Lumpur (UNIKL).
4. Dr. HASLINA HASSAN - Business Institute of Sciences (BIS), Universiti Kuala Lumpur (UNIKL).
This study aims to examine the effect of national level banking indicators on the inflation in Malaysia. For this purpose, the timeseries annually data has been utilized over the period from 2001 to 2021. Inflation has been used as dependent variable, bank capital, bank liquid reserves, bank nonperforming loans, interest payments current and monetary sector credit as independent variables. Unit Root test is applied for stationarity of variables to avoid a spurious regression problem, and all variables become stationary, but some are at level, and some are at first difference, so this suggest the ARDL model for this study. This model suggests that bank capital, bank liquid reserves, bank nonperforming loans, interest payments current and monetary sector credit is statistically negatively significant effect on the inflation. The objectives of the study have been achieved. The results show that all the independent variables have different relationship towards inflation (CPI) which is negative related. Monetary policy can only be helpful in controlling inflation due to demand-pull factors. Moreover, one of the most extreme monetary measures is the issue of new currency by replacing the old one.
Inflation; Banking Indicators; Autoregressive Distributed Lag; and Timeseries Data.