Monetary policy shocks and Islamic banks' deposits in a dual banking system: empirical evidence from Malaysia and Bahrain

Mohd Yusof, Rosylin and Al Wosabi, Mohammed and Abd. Majid, M. Shabri (2009) Monetary policy shocks and Islamic banks' deposits in a dual banking system: empirical evidence from Malaysia and Bahrain. Journal of Economic Cooperation and Development, 30 (2). pp. 1-26. ISSN 1308-7800

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Abstract

The objective of this paper is to empirically explore the dynamic inter-relationships between deposits of Islamic banks with monetary policy variables in Bahrain and Malaysia covering are being dubbed as the worlds' largest International Islamic Financial Hubs (Qorchi, 2005). A comparative analysis between these two countries highlights the differences and similarities of the impact of monetary policy shocks on the Islamic banks' deposits. The analysis comprises of two major testing approaches. First, the auto-regressive distributed lag (ARDL) model is used to examine the long-run dynamics among the variables. Compared to the Malaysian Islamic banks' deposits, the study finds that the Islamic banks' deposits in Bahrain are sensitive to monetary policy changes. This implies that the Bahraini Islamic banks are less capable of offset the destabilizing impact of monetary policy as compared to its Malaysian counterpart.

Item Type:	Article (Journal)
Additional Information:	5058/8112
Uncontrolled Keywords:	monetary policy, Islamic bank, dual banking system
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HB Economic Theory H Social Sciences > HC Economic History and Conditions
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Economics and Management Sciences
Depositing User:	Nur' Aini Abu Bakar
Date Deposited:	18 Apr 2012 15:47
Last Modified:	18 Apr 2012 15:47
URI:	http://irep.iium.edu.my/id/eprint/8112

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