Determining the viability of rental price to benchmark Islamic home financing products evidence from Malaysia

Determining the viability of rental price to benchmark Islamic home financing products evidence from Malaysia

Abstract - The purpose of this paper is to analyze the possibility of relying on the rental rate to price Islamic home financing product. Design/methodology/approach – By comparing two models consisting of either rental rate or lending rate (LR) and selected macroeconomic variables that could influ...

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Main Authors: Mohd Yusof, Rosylin, Kassim, Salina, Majid , M. Shabri A., Hamid, Zarinah
Format: Article
Language:English
Published: Emerald Group Publishing Limited 2011
Subjects:
HG1501 Banking
Online Access:http://irep.iium.edu.my/3553/
http://irep.iium.edu.my/3553/
http://irep.iium.edu.my/3553/
http://irep.iium.edu.my/3553/1/2011-Determining_Rental_Price_to..-Benchmarking_Journal%5B1%5D.pdf
id iium-3553
recordtype eprints
spelling iium-35532012-05-08T00:36:17Z http://irep.iium.edu.my/3553/ Determining the viability of rental price to benchmark Islamic home financing products evidence from Malaysia Mohd Yusof, Rosylin Kassim, Salina Majid , M. Shabri A. Hamid, Zarinah HG1501 Banking Abstract - The purpose of this paper is to analyze the possibility of relying on the rental rate to price Islamic home financing product. Design/methodology/approach – By comparing two models consisting of either rental rate or lending rate (LR) and selected macroeconomic variables that could influence property value, the study focuses on the Malaysian data covering the period from 1990 to 2006. The study adopts several econometric time-series analysis, such as the autoregressive distributed lag estimates, bi-variate Granger causality, and multivariate causality based on the vector error-correction model. Findings – The study finds consistent evidence that the rental price (RP) is a better alternative than the LR to price Islamic home financing product. In particular, the rental rate is found to be resilient to short-term economic volatility, while in the long run, it is truly reflective of the economic fundamentals. Practical implications – This feature of the RP renders it as a fair pricing mechanism for the Islamic home financing product. Results of this study contribute towards finding an alternative benchmark for the Islamic home financing product which is currently using the conventional interest rate as its benchmark. Originality/value – To the best of the authors’ knowledge, the current study is the first of its kind which provides empirical evidence for the possibility of relying on the rental rate to price Islamic home financing product. Emerald Group Publishing Limited 2011 Article PeerReviewed application/pdf en http://irep.iium.edu.my/3553/1/2011-Determining_Rental_Price_to..-Benchmarking_Journal%5B1%5D.pdf Mohd Yusof, Rosylin and Kassim, Salina and Majid , M. Shabri A. and Hamid, Zarinah (2011) Determining the viability of rental price to benchmark Islamic home financing products evidence from Malaysia. Benchmarking: An International Journal, 18 (1). pp. 69-85. ISSN 1463-5771 http://www.emeraldinsight.com/journals.htm?issn=1463-5771&volume=18&issue=1&PHPSESSID=b0klossmtda4nvr50huhih72t5 DOI 10.1108/14635771111109823
repository_type Digital Repository
institution_category Local University
institution International Islamic University Malaysia
building IIUM Repository
collection Online Access
language English
topic HG1501 Banking
spellingShingle HG1501 Banking
Mohd Yusof, Rosylin
Kassim, Salina
Majid , M. Shabri A.
Hamid, Zarinah
Determining the viability of rental price to benchmark Islamic home financing products evidence from Malaysia
description Abstract - The purpose of this paper is to analyze the possibility of relying on the rental rate to price Islamic home financing product. Design/methodology/approach – By comparing two models consisting of either rental rate or lending rate (LR) and selected macroeconomic variables that could influence property value, the study focuses on the Malaysian data covering the period from 1990 to 2006. The study adopts several econometric time-series analysis, such as the autoregressive distributed lag estimates, bi-variate Granger causality, and multivariate causality based on the vector error-correction model. Findings – The study finds consistent evidence that the rental price (RP) is a better alternative than the LR to price Islamic home financing product. In particular, the rental rate is found to be resilient to short-term economic volatility, while in the long run, it is truly reflective of the economic fundamentals. Practical implications – This feature of the RP renders it as a fair pricing mechanism for the Islamic home financing product. Results of this study contribute towards finding an alternative benchmark for the Islamic home financing product which is currently using the conventional interest rate as its benchmark. Originality/value – To the best of the authors’ knowledge, the current study is the first of its kind which provides empirical evidence for the possibility of relying on the rental rate to price Islamic home financing product.
format Article
author Mohd Yusof, Rosylin
Kassim, Salina
Majid , M. Shabri A.
Hamid, Zarinah
author_facet Mohd Yusof, Rosylin
Kassim, Salina
Majid , M. Shabri A.
Hamid, Zarinah
author_sort Mohd Yusof, Rosylin
title Determining the viability of rental price to benchmark Islamic home financing products evidence from Malaysia
title_short Determining the viability of rental price to benchmark Islamic home financing products evidence from Malaysia
title_full Determining the viability of rental price to benchmark Islamic home financing products evidence from Malaysia
title_fullStr Determining the viability of rental price to benchmark Islamic home financing products evidence from Malaysia
title_full_unstemmed Determining the viability of rental price to benchmark Islamic home financing products evidence from Malaysia
title_sort determining the viability of rental price to benchmark islamic home financing products evidence from malaysia
publisher Emerald Group Publishing Limited
publishDate 2011
url http://irep.iium.edu.my/3553/
http://irep.iium.edu.my/3553/
http://irep.iium.edu.my/3553/
http://irep.iium.edu.my/3553/1/2011-Determining_Rental_Price_to..-Benchmarking_Journal%5B1%5D.pdf
first_indexed 2023-09-18T20:11:25Z
last_indexed 2023-09-18T20:11:25Z
_version_ 1777407503163719680

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