The causality between returns of interest-based banks and Islamic banks: the case of Turkey

Ergeç, Etem Hakan; Kaytanci, Bengül Gülümser

doi:10.1108/imefm-07-2014-0072

Cited by 20 publications

(4 citation statements)

References 12 publications

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“…Some existing studies using the symmetric relationship between IDRs and CDRs found that CDRs are an anchor for the IDRs in Malaysia's Islamic banking industry (Chong & Liu, 2009;Zainol & Kasim, 2010;Anuar et al, 2014;Saeed et al, 2021). Numerous studies also documented that the IDRs mimic the CDRs in Turkey (Ergeç & Arslan, 2013;Ergec & Kaytanci, 2014;Cevik & Charap, 2015;Saraç & Zeren, 2015). Kasri and Kassim (2009) further found that the CDR significantly affects the IDR in Indonesia.…”

Section: Review Of Literature Islamic and Conventional Deposit Ratesmentioning

confidence: 99%

The Dynamic Link Between Islamic and Conventional Deposit Rates in a Dual Banking System

Widarjono¹,

Alam²,

Rafik³

2023

IJIF

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Purpose — This study empirically assesses the extent to which the conventional deposit rate (CDR) affects the Islamic deposit rate (IDR) in Indonesia and Malaysia within the dual banking system. Design/Methodology/Approach — This study uses non-linear autoregressive distributed lag (NARDL) and panel cointegration. Monthly data are employed, but the time period for the two countries examined is different because of data availability. The study thus covers the period 2009:M1 to 2020:M12 for Indonesia and 2000:M1 to 2020:M12 for Malaysia. Findings — The findings confirm evidence of the long-run link between IDR and CDR, where the IDRs in Indonesia and Malaysia asymmetrically respond to changes in CDRs. In addition, Indonesia’s IDRs adjust faster in response to the decline in CDRs compared to increases in CDRs. However, Malaysia’s IDRs adapt faster in response to increases in CDRs than their decreases. The panel cointegration results reinforce the asymmetric findings. Originality/Value — To the best of our knowledge, this paper is the first study to examine the extent to which IDRs asymmetrically respond to CDRs in a dual baking system in Indonesia and Malaysia. Practical Implications — Islamic banks (IBs) follow CDRs in determining IDRs due to uncompetitive IDRs, implying that IBs suffer from displaced commercial risk. Therefore, IBs may adopt a policy to address liquidity issues through investment risk reserves (IRR) and profit equalization reserves (PER) to reduce the distinctive gap between IDRs and CDRs.

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Section: Review Of Literature Islamic and Conventional Deposit Ratesmentioning

confidence: 99%

The Dynamic Link Between Islamic and Conventional Deposit Rates in a Dual Banking System

Widarjono¹,

Alam²,

Rafik³

2023

IJIF

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“…The proceeds from Islamic banks Side assets become a profit sharing (Awadzi et al, 2015). Penelitian (Ergec ̧ and Arslan, 2013;Ergec and Kaytanci., 2014) found1that1the1difference1in conventional banks is1in interest rates that affect the activities of Islamic banks and depositors (Aysan et al, 2017b) in Turkey. The research1is1consistent1with1other studies conducted in developing countries such as Indonesia and Malaysia (Akhatova et all.…”

Section: Islamic1banking1issuesmentioning

confidence: 99%

Islamic Banking Literature Review. Is Islamic Banking in Accordance with Sharia Principles?

Harsono,

Atina

2023

Amwaluna

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The purpose of this study is to explore the meaning and issues of Islamic banking between 2012 and 2022. Data acquisition based on Scopus and Google Scholar databases using systematic literature reviews (SLR). We identified the need for SLR in Islamic Banking publications. The purpose of this study is to overcome differences in viewpoints in the context of Islamic banking to provide a clear classification view of the resulting research articles. This article highlights the current collaboration between the authors, to identify gaps in the review of Islamic banking literature. This research is a descriptive qualitative research by explaining the meaning and issues of previous research based on the similarity of titles and related differences to find results that are more relevant to the current condition of Islamic banking. The result of the study found that researchers generally define Islamic banks as banks based on sharia principles that promote mutual prosperity and optimal social achievement.

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“…The study found that LIBOR does not precisely reflect the bank’s borrowing cost. Existing literature such as Bacha (2004), Hakan and Gulumser (2011) and Rosly (1999) has alluded that financing that relies on interest rates has adverse impacts on the real economy as well as the Islamic and conventional banking institutions. These studies found that Islamic financing is exposed to interest rate risk.…”

Section: Related Literaturementioning

confidence: 99%

Interest rates and Islamic commercial property financing: can there be a possible solution?

Harun

Yusof

Wahab

et al. 2023

JIABR

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Purpose This study aims to investigate the dynamic interaction between interest rates and commercial property financing offered by Islamic banks in Malaysia. Design/methodology/approach The authors use the autoregressive distributed lag (ARDL) cointegration methodology to analyse the short- and long-run effect of the interest rates and rental rates on commercial property financing of Islamic banks in Malaysia between 2010: Q1 and 2018: Q2. Findings The findings reveal that changes in interest rates affect Islamic commercial property financing. This indicates that Islamic banks still rely on interest rates as a benchmark without fully implementing Islamic rental rates. This corroborates the subsequent finding, where overnight policy rates influence commercial property financing. Research limitations/implications Despite the authors’ attempt to provide insights into Islamic commercial property financing, the study is limited to secondary data; further research can use survey information to obtain other details that are not included in this study. Similarly, this study does not cover the operation and financial lease debate in Musharakah Mutanaqisah. Future studies can examine the challenges faced by the financial institution towards implementing rental rates in other emerging and developing countries using a different methodology. Originality/value This study is the first to investigate the dynamic changes in overnight policy rates, average lending rates and rental rates on Islamic commercial property financing in Malaysia using ARDL techniques. The authors uncover the research and institutional implications of Islamic commercial property financing rates and provide policy and future research directions coupled with the proposed modified rental rate to be developed.

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The causality between returns of interest-based banks and Islamic banks: the case of Turkey

Cited by 20 publications

References 12 publications

The Dynamic Link Between Islamic and Conventional Deposit Rates in a Dual Banking System

The Dynamic Link Between Islamic and Conventional Deposit Rates in a Dual Banking System

Islamic Banking Literature Review. Is Islamic Banking in Accordance with Sharia Principles?

Interest rates and Islamic commercial property financing: can there be a possible solution?

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