ABSTRACT

The purpose of this research is to determine the factors that significant to explain foreign and
domestic banks liquidity in Malaysia. This study will focus only on bank specific factors. The
bank specific factors include Capital Adequacy, Bank Size, Asset Quality and Profitability. This
study obtained secondary data from Bankscope which comprise 18 foreign banks and 22
domestic bank and covers the period from 2011 to 2015. Some factors were expressed in ratios,
while some were in percentage and the dummy variable was in qualitative in form. This study
concludes that the result based on the panel data, fixed effect model and random effect model
that using annual data. The empirical findings shows that there two factors that significant to
liquidity of foreign bank such as Capital Adequacy and Asset Quality. However, there two factors
that shows insignificant towards the foreign banks liquidity. The factors are Profitability and
Bank Size. Capital Adequacy, Asset Quality and Profitability have positive relationship with
liquidity of foreign bank while Bank Size has negative relationship. The result of findings also
indicates there are two factors that significant towards domestic banks liquidity such as Capital
Adequacy and Profitability while Asset Quality and Bank Size are insignificant. All the factors
have positive relationship towards liquidity of domestic bank except the Bank Size has negative
relationship with the liquidity of domestic bank.

ACKNOWLEGMENT

First and foremost, we would like to express our gratitude to Allah

S.W.T for His blessings and opportunity in helping us to finish this report with
ease.

We believe that with His blessings it has aid us in our search and

findings for significant information regarding this study.

Next, we feel invited to address the help of our beloved lecturer MGT
646 Dr. Wahida Binti Ahmad for guiding, commenting and providing essence
tips for us to excel further in this report. It would not be possible without the
help of, she has sacrifice her time and effort to show us how and aid us in
understanding the way the report need to be done.

In addition, we also feel very thankful to our family and friends who
have always give us the necessary support to complete this study. Without
the sharing of information, helping each other with ideas and sacrificing their
time despite a busy schedule, it will not make this research as successful, we
also would like to voice out our appreciation to all the respondents of this
research for their time and opinion.

Last but not least, we want to thank the library administration of UiTM
Puncak Alam for helping us to find the necessary information in database
which making it easier for us to look for references and histories of previous

studies that enabled us to look at things in different perspectives and for

allowing us to use the facilities provided during the operating hours. Without
all of these commitments and supports, this research would not have
materialized.