The mudharabah deposit rate behaviour in relation to the conventional deposit rate

This study examines the relationship between the conventional and mudharabah deposit rates of Malaysian banks in two separate periods — between January 1996 and September 2004, and between October 2004 and June 2011 — which signify the implementation of a framework for calculating the Islamic bank d...

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Main Authors:	Radziah Abdul Latiff, Noreha Halid
Format:	Article
Language:	English
Published:	Penerbit Universiti Kebangsaan Malaysia 2012
Online Access:	http://journalarticle.ukm.my/6379/ http://journalarticle.ukm.my/6379/ http://journalarticle.ukm.my/6379/1/Fast_color_scan_to_a_PDF_file_5.DOC

id	ukm-6379
recordtype	eprints
spelling	ukm-63792013-07-01T07:32:00Z http://journalarticle.ukm.my/6379/ The mudharabah deposit rate behaviour in relation to the conventional deposit rate Radziah Abdul Latiff, Noreha Halid, This study examines the relationship between the conventional and mudharabah deposit rates of Malaysian banks in two separate periods — between January 1996 and September 2004, and between October 2004 and June 2011 — which signify the implementation of a framework for calculating the Islamic bank deposit rate and the profit equalization reserve (PER). Employing the autoregressive distributed lagged (ARDL) approach, this study finds the two rates to be cointegrated in the first period similar to previous findings. However, for the second period, there is largely no evidence of a long-term relationship. The significance of this finding is that in the second period, when Islamic banks employ a regulated PER as a displacement risk mitigating mechanism, Islamic banks do not benchmark against conventional rates. They possibly engage in income smoothing for economic efficiency or for signalling purposes. An important policy implication is that PER and any type of reserve to smooth income, that is regulated, may be prescribed as it may have a positive behavioural effect. Penerbit Universiti Kebangsaan Malaysia 2012-12 Article PeerReviewed application/msword en http://journalarticle.ukm.my/6379/1/Fast_color_scan_to_a_PDF_file_5.DOC Radziah Abdul Latiff, and Noreha Halid, (2012) The mudharabah deposit rate behaviour in relation to the conventional deposit rate. Jurnal Pengurusan, 36 . pp. 59-68. ISSN 0127-2713 http://www.ukm.my/penerbit/jurus.htm
repository_type	Digital Repository
institution_category	Local University
institution	Universiti Kebangasaan Malaysia
building	UKM Institutional Repository
collection	Online Access
language	English
description	This study examines the relationship between the conventional and mudharabah deposit rates of Malaysian banks in two separate periods — between January 1996 and September 2004, and between October 2004 and June 2011 — which signify the implementation of a framework for calculating the Islamic bank deposit rate and the profit equalization reserve (PER). Employing the autoregressive distributed lagged (ARDL) approach, this study finds the two rates to be cointegrated in the first period similar to previous findings. However, for the second period, there is largely no evidence of a long-term relationship. The significance of this finding is that in the second period, when Islamic banks employ a regulated PER as a displacement risk mitigating mechanism, Islamic banks do not benchmark against conventional rates. They possibly engage in income smoothing for economic efficiency or for signalling purposes. An important policy implication is that PER and any type of reserve to smooth income, that is regulated, may be prescribed as it may have a positive behavioural effect.
format	Article
author	Radziah Abdul Latiff, Noreha Halid,
spellingShingle	Radziah Abdul Latiff, Noreha Halid, The mudharabah deposit rate behaviour in relation to the conventional deposit rate
author_facet	Radziah Abdul Latiff, Noreha Halid,
author_sort	Radziah Abdul Latiff,
title	The mudharabah deposit rate behaviour in relation to the conventional deposit rate
title_short	The mudharabah deposit rate behaviour in relation to the conventional deposit rate
title_full	The mudharabah deposit rate behaviour in relation to the conventional deposit rate
title_fullStr	The mudharabah deposit rate behaviour in relation to the conventional deposit rate
title_full_unstemmed	The mudharabah deposit rate behaviour in relation to the conventional deposit rate
title_sort	mudharabah deposit rate behaviour in relation to the conventional deposit rate
publisher	Penerbit Universiti Kebangsaan Malaysia
publishDate	2012
url	http://journalarticle.ukm.my/6379/ http://journalarticle.ukm.my/6379/ http://journalarticle.ukm.my/6379/1/Fast_color_scan_to_a_PDF_file_5.DOC
first_indexed	2023-09-18T19:46:43Z
last_indexed	2023-09-18T19:46:43Z
_version_	1777405948832251904

The mudharabah deposit rate behaviour in relation to the conventional deposit rate

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