How Islamic are Islamic banks? A non-linear assessment of Islamic rate – conventional rate relations

Sukmana, Raditya and Ibrahim, Mansor H.,(2017), How Islamic are Islamic banks? A non-linear assessment of Islamic rate – conventional rate relations. , Economic Modelling, UNSPECIFIED

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Abstract

In this paper, we perform a non-linear assessment of Islamic rate – conventional rate relations for the case of Malaysia. Using monthly data covering the period January 1999 to November 2016, we find strong evidence supporting non-linear reactions of the Islamic investment rates to conventional rates in the long run and/or short-run for all matched maturities. More precisely, the Islamic investment rates exhibit faster upward movement (slower downward movement) in responses to conventional deposit rate increases (decreases). The asymmetric pricing behaviour of Islamic banks however tends to weaken as maturity lengthens. Accordingly, we infer that Islamic banks do not rigidly peg their investment deposit rates to conventional deposit rates as some have claimed in questioning the Islamicity of Islamic banks.
Keywords : Islamic banks Islamic investment rates Deposit rates Nonlinear ARDL, UNSPECIFIED
Journal or Publication Title: Economic Modelling
Volume: 64
Number: UNSPECIFIED
Item Type: Article
Subjects: Ekonomi Islam
Depositing User: Nila Nurjanah
Date Deposited: 16 Dec 2019 03:22
Last Modified: 16 Dec 2019 03:22
URI: https://repofeb.undip.ac.id/id/eprint/152

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