As mentioned above, banks receiving deposits from customer and it has to know about the risk that they are facing and try to minimize the uncertainty. Knowledge on risk is important as it enable the bank officers to decide whether it is worth to loan out the funds. Inappropriate level of risk taking by the banks will lead to bankruptcy.
The banking system plays an important role in a country’s financial system. A bank is a financial institution licensed to receive deposits and make loans. Commercial banks are typically concerned with managing withdrawals and receiving deposits as well as supplying short-term loans to individuals and small businesses.
As a developing country, there are 8 local licensed financial institutions in Malaysia, which are included Maybank, CIMB Bank, Public Bank, Hong Leong Bank, RHB Bank, AM Bank, Affin Bank and Alliance Bank.