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What’s in it for Me? A Primeron Differences between Islamic and Conventional Finance in Malaysia

Author

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  • Olga Krasicka
  • Sylwia Nowak

Abstract

What attracts conventional investors to Islamic financial instruments? We answer this question by comparing Malaysian Islamic and conventional security prices and their response to macrofinancial factors. Our analysis suggests that Islamic and conventional bond and equity prices are driven by common factors. Likewise, especially in recent years, Islamic banks have responded to economic and financial shocks in the same way as conventional banks, suggesting that the gap between Islamic and conventional financial practices is shrinking.

Suggested Citation

  • Olga Krasicka & Sylwia Nowak, 2012. "What’s in it for Me? A Primeron Differences between Islamic and Conventional Finance in Malaysia," IMF Working Papers 12/151, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:12/151
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    References listed on IDEAS

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    1. Serhan Cevik & Joshua Charap, 2015. "The Behavior of Conventional and Islamic Bank Deposit Returns in Malaysia and Turkey," International Journal of Economics and Financial Issues, Econjournals, vol. 5(1), pages 111-124.
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    Cited by:

    1. Alexakis, Christos & Pappas, Vasileios & Tsikouras, Alexandros, 2017. "Hidden cointegration reveals hidden values in Islamic investments," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 46(C), pages 70-83.
    2. Ajmi, Ahdi Noomen & Hammoudeh, Shawkat & Nguyen, Duc Khuong & Sarafrazi, Soodabeh, 2014. "How strong are the causal relationships between Islamic stock markets and conventional financial systems? Evidence from linear and nonlinear tests," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 28(C), pages 213-227.
    3. repec:mbr:jmonec:v:11:y:2016:i:2:p:135-152 is not listed on IDEAS
    4. repec:ipg:wpaper:2013-035 is not listed on IDEAS
    5. Mohamed Ariff & Mervyn K. Lewis, 2014. "Similarities and differences in Islamic and conventional banking," Chapters,in: Risk and Regulation of Islamic Banking, chapter 4, pages 55-70 Edward Elgar Publishing.
    6. repec:eee:pacfin:v:43:y:2017:i:c:p:124-150 is not listed on IDEAS
    7. repec:ipg:wpaper:35 is not listed on IDEAS
    8. Hammoudeh, Shawkat & Mensi, Walid & Reboredo, Juan Carlos & Nguyen, Duc Khuong, 2014. "Dynamic dependence of the global Islamic equity index with global conventional equity market indices and risk factors," Pacific-Basin Finance Journal, Elsevier, vol. 30(C), pages 189-206.
    9. Mumtaz Hussain & Asghar Shahmoradi & Rima Turk, 2016. "An Overview of Islamic Finance," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 7(01), pages 1-28, February.
    10. repec:taf:oaefxx:v:5:y:2017:i:1:p:1363355 is not listed on IDEAS
    11. repec:eee:ecosys:v:41:y:2017:i:2:p:215-235 is not listed on IDEAS
    12. Alfred Kammer & Mohamed Norat & Marco Pinon & Ananthakrishnan Prasad & Christopher M Towe & Zeine Zeidane, 2015. "Islamic Finance; Opportunities, Challenges, and Policy Options," IMF Staff Discussion Notes 15/5, International Monetary Fund.

    More about this item

    Keywords

    Malaysia; International financial markets; Islamic banks; conventional banks; Sukuk; bond; bonds; islamic finance; Financial Markets and the Macroeconomy;

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