Prudential Regulation In Myanmar-Towards A Safe And Sound Banking Regulatory System

The dissertation studied upon the implementation of the new prudential regulations in Myanmar which are promulgated in July 2017.This dissertation aims to conduct empirical research towards a safe and sound banking regulatory system in Myanmar.Since 2011,critical legislative foundations for reform have been put in place,technologies and other innovation have advanced,and international interest in Myanmar’s financial sector has soared.Reform implementation is a problem,trust remains in short supply,and many other crucial reforms are lacking.The considerable progress has been made in financial sector reform and institution building in Myanmar in recent years,but much also remains to be done.The research testified the question "Does proper prudential regulation performance lead to the banking system to be safe and sound" conducting empirical research.A conceptual framework based on bank reports of ten Myanmar banks from 2014 to 2018 as panel data.Those ten banks possessed 55%of the whole Myanmar Banking Industry.Upon the result,the estimated coefficients for NLTA and LCR are negative and mean that higher net loan to total assets and liquidity ratio lead to lower profitability.But on the other ROE side,the coefficient of NLTA is positive.The coefficient for legal variable PRC is negative and implies that regulation compliance makes the bank to get low profit.The result of bank size is positive and significant in return on assets,and negative in return on equity.The profitability and performance are significantly affected based on the results of the empirical research.The profitability of the bank is varied in the result because of many reasons:e.g.(ⅰ)new regulations are based on international standards,(ⅱ)the ratios are same on all banks regardless of their size and their experience,and(ⅲ)some policy banks are mainly focused on their policy,not on their profit.Myanmar’s banking regulators chose to apply Basel Ⅱ in stages to make the transition to the global standards easier for the financial sector.The directives or regulations,which are in conformity with the Basel Principles,are based on the FIL(2016)and were announced in 2017.Since the Central Bank of Myanmar(CBM)issued new prudential regulations in 2017,nearly all Myanmar banks faced new challenges.E.g.,problems for local banks to transform into a modern banking system as there is no clear guidelines to meet new regulations,lack of suitable solutions for those challenges,weak of international knowledge and experience for regulator and supervisor.High recapitalization needs and weak accounting standards of some banks generate a challenge to the enforcement of legitimate capital improvement plans,despite the commitment of authorities to choose the path towards resolution.Myanmar economic and political stability are still in need of ongoing improvement in order for the nation’s monetary system to thrive.The author assumed that banking regulatory system is very sensitive,and it can get both advantages and disadvantages from different aspects:market conditions,foreign investment,political aspects,qualification of supervisors,profitability of bank,implementation of international banking standards,non-disclosure of real conditions to public,systemic risk management and etc.This dissertation is provided for understanding the function of banks,the theory of what we can do when the banks go wrong with its operation,and the logic of prudential regulation.It is offered some suggestions from the legal aspects for regulators when banks cannot comply and implement with the new regulations.Moreover,it is developed a proper guideline relating to the timeframe in implementing new regulations promulgated in 2017.Our regulations and our supervisions are still right and enough until the occurrences of bank run and next crisis.The appropriate prudential legislation and supervisory structures can protect the customers effectively.