Are Deposit and Investment Accounts in Islamic Banks in Malaysia Interest-Free?

Anuar, Khairul; Mohamad, Shamsher; Shah, Mohamed Eskandar

doi:10.4197/islec.27-2.2

Cited by 16 publications

(26 citation statements)

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“…Regarding interest rate, the effect is insignificant with a positive sign. The positive effect is in concurrence with the bulk of the literature (Anuar et al, 2014;Chong and Liu, 2009;Hamza, 2016;Ismal, 2011) but it could be explained that Islamic banks compensate its depositors during periods when interest rates are high, to a certain limit. In relation to oil prices, this variable as assumed had highly positive and significant effect on the rate of return on deposits in Islamic banks (p < 0.01; t-statistic = 3.45).…”

Section: Discussion Of Resultssupporting

confidence: 78%

“…The findings of Anuar et al (2014) are supported by the study by Cevik & Charap (2015), which was conducted on Malaysian and Turkish banks. Customers from Islamic banks are motivated by profit, which was established in the study by Akhtar et al (2017).…”

Section: Introductionsupporting

confidence: 65%

“…In line with this, the study by Anuar et al (2014) in Malaysia implies that there is a gap between Islamic banking theory and practice because their findings suggest that there is a link between profit rates in Islamic banks and interest rates in conventional banks.…”

Section: Introductionmentioning

confidence: 83%

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The Determinants the Rate of Return on Deposits in Islamic Banks

Al-Harbi¹

2020

JFIB

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This article aims to identify the determinates of the rate of return on deposits in Islamic banks. The study, according to the best of my knowledge, is the first study to investigate the factors affecting the rate of return in Islamic banks using cross-country data with a large sample of banks and for a prolonged period. To achieve its aim, the author used data from almost all Islamic banks in the world for a 20-year period (1989)(1990)(1991)(1992)(1993)(1994)(1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008). The data were analyzed using a two-way fixed-effect model. The empirical results demonstrate that capital adequacy (default risk), credit risk, age, economic growth, and concentration significantly and negatively influenced the return on deposits in Islamic banks. The results also suggest that foreign ownership, size, inflation, and oil prices had significant and positive effects on the rate of return. Moreover, the results indicated that deposit insurance (positive), interest rates (positive), and deposit growth (negative) are not determinants of the rate of return in Islamic banks.

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Section: Discussion Of Resultssupporting

confidence: 78%

Section: Introductionsupporting

confidence: 65%

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The Determinants the Rate of Return on Deposits in Islamic Banks

Al-Harbi¹

2020

JFIB

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“…Strong association between the profit share and interest rate was also found by Anuar et al (2014) on Malaysian market covering 1994-2012 period. They employed Granger causality and found deposit interest rates have unilateral effect on profit-sharing rates.…”

Section: Literature Reviewmentioning

confidence: 75%

Are Islamic Banks The Alternative to Commercial Banks?

Dinç¹

2019

TUJISE

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Islamic banks are financial intermediaries with the claim of being an alternative to commercial banks. Recently a considerable literature has been produced around the theme of whether or not the alternative presented in theory has been reflected in practice. However, these studies are exploratory and interpretative in nature. The quantitative researches presented thus by far provide indirect evidence for the central theoretical issue. To date, very little attention has been paid to the role of the relationship between interest rates and profit-share accruals. These studies have also suffered from shortcomings with regards to the methods applied. The primary aim of this paper is to provide empirical and theoretical evidence to the claim of Islamic banks to be alternative to commercial banks. It does so by investigating the relationship between profit share accruals and deposit rates by employing wavelet coherence method for the first time. This study uses longitudinal monthly data for the 2000 to 2018 period, particularly from Turkey, and provides an exciting opportunity to advance our knowledge about the structure of Islamic banking with focusing specifically on fund supply. The results have revealed that Islamic banks are an alternative to fund suppliers in short-term. In addition long-term maturities had shown a strong alternative characteristic in the pre-2006 period; however, they were unable to preserve it in the post-2006 period after the effectiveness of Banking Act No. 5411. Findings also show bidirectional causalities to be found in different periods. The findings have important implications for the market players and policy makers.

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“…In the mudhārabah contract, the investment amount (deposit amount) might lessen due to the nonperformance of the financing activities. Bank gives no guarantee to depositors since its status of investment account (Anuar et al, 2014;Gilani, 2015).…”

Section: Literature Review the Irregular Deposit And The Reserve Bankmentioning

confidence: 99%

Does Dual Banking System in Indonesia Differentiate Investment Account Requirement?

Syamlan

2018

TIFBR

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This paper aims to propose a model of investment account based on Islamic Financial Services Board guiding principles. The research figures out some factors affecting the process of deploying investment account, the proposed model, cost-benefit analysis as well as the steps to be taken by Islamic banking stakeholders to install the model in the future. Having reviewed many litetatures related to irregular deposit, investment account as well as the institutional theory, the study found that the adoption of investment account heavily relies on the political factor applied by Bank Indonesia. Law No. 21 Year 2008 that regulates Indonesian Islamic Banking clause 35 stated that Bank Indonesia has coercive power to drive the accounting and governance standard for the Indonesian Islamic banking. Other actors such as Financial Services Authority, National Sharia Board, and Indonesia Deposit Insurance Corporation also do affect the regulation on Investment Account. This paper informs the policy makers to set different regulation on investment account within the practice of dual banking system.

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Are Deposit and Investment Accounts in Islamic Banks in Malaysia Interest-Free?

Cited by 16 publications

References 0 publications

The Determinants the Rate of Return on Deposits in Islamic Banks

The Determinants the Rate of Return on Deposits in Islamic Banks

Are Islamic Banks The Alternative to Commercial Banks?

Does Dual Banking System in Indonesia Differentiate Investment Account Requirement?

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