IDEAS home Printed from https://ideas.repec.org/a/ukm/jlekon/v43y2009ip67-83.html
   My bibliography  Save this article

The Stability of Deposits in the Interest-Based and Interest-Free Banking Systems in Malaysia

Author

Listed:
  • Yusoff, Remali

    (School of Business and Economics, University Malaysia Sabah, Locked Bag 2073, Kota Kinabalu, Sabah, Malaysia)

  • Wilson, Rodney

    (Professor of Economics at the School of Government and International Affairs, University of Durham, United Kingdom)

Abstract

This study empirically examines the stability and the main factors that have influenced the deposits in the Malaysian banking system. A structural model of the Malaysian money deposits applied to annual data for the 1983-2001 periods was designed. This structural model consists of five behavioural equations and three identities. A structural model functional form is used and estimated using the ordinary least squares in the log linear form. The behavioural equations are used to estimate the influences of various factors on the conventional demand deposits, conventional time deposits, Islamic demand deposits, Islamic time deposits, and Islamic investment deposits. The implications of the study are that the increase in real gross domestic product, interest rate stability, and an increase in the profit-share for savings and investments are important for maintaining and enhancing the development of Malaysian money deposits. The results show that all the models (conventional and Islamic banks deposits) are stable; however, Islamic demand deposits and Islamic time deposits are more stable than conventional demand deposits and conventional time deposits, because their Chow tests values are smaller than those of conventional deposits. The findings of this study suggests that as shariah compliant deposits are more stable than their conventional equivalents, then this makes a run on deposits less likely, reducing the potential amount of capital adequacy cover needed.

Suggested Citation

  • Yusoff, Remali & Wilson, Rodney, 2009. "The Stability of Deposits in the Interest-Based and Interest-Free Banking Systems in Malaysia," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 43, pages 67-83.
    • Handle: RePEc:ukm:jlekon:v:43:y:2009:i::p:67-83
    as

    Download full text from publisher

    File URL: http://www.ukm.my/jem/wp-content/uploads/2021/06/jeko_43-4.pdf
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ukm:jlekon:v:43:y:2009:i::p:67-83. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Muhammad Asri Abd Ghani (email available below). General contact details of provider: https://edirc.repec.org/data/feukmmy.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.