Effect of Loan Moratoriums on Liquidity Risk, Financial Performance, and Stock Prices of Malaysian Banks

The research investigates the effect of loan moratoriums based on the pre-event period, event period, and post event period, that includes 3 different event dates: 1) Implementation of Movement Control Order (MCO), 2) The announcement of six-month moratorium on repayment, and 3) Second phase of six-month moratorium on repayment. Event study methodology is employed to compare the effect of these 3 event dates on the liquidity risk, financial performance, and stock prices of Malaysian banks. The research reveals the behavior of Malaysian banking sector during the global pandemic and examines the governmental financial policy. It introduces loan moratorium and its effect to the public, enabling them to understand the current pandemic and the government's financial relief measures. It shows the public how the government managed to control the pandemic and provide financial assistance to reduce the public's financial burden.