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Ibrahim M.H.,International Center for Education in Islamic Finance | Law S.H.,University Putra Malaysia
Habitat International | Year: 2014

The paper investigates the long run behavior of house prices and their dynamic interactions with bank credits, real output and interest rate for the case of Malaysia. Apart from the aggregate house prices, the analysis also covers various house price sub-indices, namely, the terraced house price index, the semi-detached house price index, the detached house price index and the high-rise price index. From the aggregate perspective, we note the presence of a long run relation among the variables. Moreover, the findings suggest the long run causality that runs from the included variables to both the aggregate house prices and bank credits. Dynamic interactions between house prices and bank credits are further reflected by the generated impulse-response functions. The disaggregate analysis indicates that only the terraced house price index forms a long run relation with bank credits, real output and interest rate with their dynamic interactions to mimic well the aggregate systems. Still, a further analysis reveals that shocks to the terraced house price tend to diffuse to other segments of housing markets. Among the housing types, the detached house price is relatively segmented and affected only indirectly through the diffusion/ripple effect. These findings bear important implications for macroeconomic stability, monetary policy and investment decisions. © 2013 Elsevier Ltd. Source


Ibrahim M.H.,International Center for Education in Islamic Finance | Chancharoenchai K.,Kasetsart University
Journal of the Asia Pacific Economy | Year: 2014

The present paper analyzes the inflationary effects of oil prices at the aggregate and disaggregated levels for Thailand using symmetric and asymmetric cointegration and error-correction modeling approaches. The cointegration test results suggest the presence of long-run relations between oil prices and the following price indices: aggregate consumer price index, non-food and beverage price index, housing and furnishing price index, energy price index, non-raw food and energy price index and transportation and communication price index. Meanwhile, food and beverage price index and raw food price index are not cointegrated with the oil prices. From the dynamic analyses, we uncover evidence for asymmetric adjustments of the aggregate consumer prices, the non-food and beverage prices and the housing and furnishing prices towards their long-run values. Further, the effects of oil prices on inflation are observed to be significant in all goods sectors in the short run. The largest impacts of oil price changes are on the energy price inflation followed by the transportation and communication price inflation and the non-raw food and energy price inflation. © 2013 © 2013 Taylor & Francis. Source


Duasa J.,International Islamic University Malaysia | Ahmad N.,Universiti Sains Islam Malaysia | Ibrahim M.H.,University Putra Malaysia | Zainal M.P.,International Center for Education in Islamic Finance
Journal of Forecasting | Year: 2010

This paper aims to identify the best indicator in forecasting inflation in Malaysia. In methodology, the study constructs a simple forecasting model that incorporates the indicator/variable using the vector error correction (VECM) model of quasi-tradable inflation index and selected indicators: commodity prices, financial indicators and economic activities. For each indicator, the forecasting horizon used is 24 months and the VECM model is applied for seven sample windows over sample periods starting with the first month of 1980 and ending with the 12th month of every 2 years from 1992 to 2004. The degree of independence of each indicator from inflation is tested by analyzing the variance decomposition of each indicator and Granger causality between each indicator and inflation. We propose that a simple model using an aggregation of indices improves the accuracy of inflation forecasts. The results support our hypothesis. Copyright © 2009 John Wiley & Sons, Ltd. Source


Nagayev R.,International Center for Education in Islamic Finance | Disli M.,Ghent University | Inghelbrecht K.,Ghent University | Ng A.,International Center for Education in Islamic Finance | Ng A.,University of Oxford
Energy Economics | Year: 2016

This paper investigates whether commodities offer potential diversification benefits for Islamic equity index investors in light of possible financialization of commodity markets. Using MGARCH-DCC and Wavelet Coherence analyses, our findings reveal that correlations between commodity markets and the Dow Jones Islamic Market World Index are time-varying and highly volatile throughout the January 1999–April 2015 period. A substantial and persistent increase was observed in the return correlations between commodities and Islamic equity at the onset of the 2008 financial crisis. However, trends in the recent two years suggest that this association is heading towards its pre-crisis levels, offering again diversification benefits for Islamic equity holders. These benefits vary across different commodities in various time scales. Overall, gold, natural gas, soft commodities, grains and livestock are better portfolio diversifiers than oil and other metals. Relative to medium-to-long term investors, short-term investors (less than 32 days horizon) gained better diversification benefits in most commodities during bullish, bearish and market recovery periods. These findings have implications for investors who are heterogeneous in risk tolerance and time preference as well as for policymakers who are concerned with market stability. © 2016 Elsevier B.V. Source


Ariff M.,International Center for Education in Islamic Finance | Rosly S.A.,International Center for Education in Islamic Finance
Asian Economic Policy Review | Year: 2011

This paper explores the Islamic banking business in Malaysia since its beginning in 1983. The Islamic banking sector has achieved its target of 20% market share in assets and deposits in 2010. To boost the industry's competitiveness and efficiency, the demands of the market forces will have to be delicately balanced with the dictates of the Shari'ah. The search for niche Islamic banking products warrants enhancements in the current regulatory, legal, and fiscal infrastructure for Islamic banking, without which these products cannot be a viable alternative to the conventional ones. While the prevailing infrastructure is conducive to Islamic banking products that hold similar characteristics with interest-bearing loans, Shari'ah compliance can be a futile exercise when the purpose of the law (maqasid al-shari'ah) is overlooked, for there is much more to Islamic banking than the elimination of interest. © 2011 The Authors. Asian Economic Policy Review © 2011 Japan Center for Economic Research. Source

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