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Does conventional interest rate influence islamic deposit rate of return or the other way around ? evidence from Malaysia

Author

Listed:
  • Isa, Yazid
  • Masih, Mansur

Abstract

In theory, the Islamic deposit rate of return should be free from the influence of conventional rate of interest. But it is alleged that the Islamic deposit rate of return is not independent of the conventional rate of interest. The focus of this paper is to investigate whether the Islamic deposit rate of return is indeed free or not from the influence of the conventional rate of interest. Malaysia is taken as a case study. The standard time series techniques are employed for the investigation. The findings tend to indicate that the conventional rate of interest does indeed affect both the conventional deposit rate of return and the Islamic deposit rate of return at least in the context of Malaysia. The findings have strong policy implications.

Suggested Citation

  • Isa, Yazid & Masih, Mansur, 2017. "Does conventional interest rate influence islamic deposit rate of return or the other way around ? evidence from Malaysia," MPRA Paper 102877, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:102877
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    References listed on IDEAS

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    5. Amir Kia & Ali F. Darrat, 2003. "Modeling Money Demand under the Profit-Sharing Banking Scheme: Evidence on Policy Invariance and Long-Run Stability," Carleton Economic Papers 03-13, Carleton University, Department of Economics, revised Apr 2007.
    6. Kia, Amir & Darrat, Ali F., 2007. "Modeling money demand under the profit-sharing banking scheme: Some evidence on policy invariance and long-run stability," Global Finance Journal, Elsevier, vol. 18(1), pages 104-123.
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    More about this item

    Keywords

    Islamic deposit rate of return; conventional deposit rate of return; interest rate; Malaysia;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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