The mediation role of interest rate between financial liberalisation and financial stability

Muhamad Arifin, Nur Afizah and Mohd Ariffin, Noraini and Ramly, Zulkufly and Mohd Hashim, Maryam Jameelah (2021) The mediation role of interest rate between financial liberalisation and financial stability. Global Business and Management Research: An International Journal, 13 (4). pp. 250-262. ISSN 1947-5667

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Abstract

As a financial intermediary, the banking industry is critical in mobilising funds between surplus and deficit firms. The global financial market has changed dramatically as a result of the transition from financial repression to financial liberalisation, which has resulted in increased cross-border capital flows and financial sector expansion. Liberalisation of the banking industry has pushed commercial banks to take on more risk, which may have a detrimental effect on financial stability and the survival of smaller banks. As a result, the purpose of this study was to examine the function of interest rates as a mediating factor in the link between financial liberalisation and financial stability in Malaysian conventional and Islamic banks. Due to Shariah constraints, Islamic banks' mediating effects may differ from those of conventional banks. PLS-SEM analysis of the research model found that interest rates strongly mediated the association between financial liberalisation and financial stability. Islamic banks, on the other hand, must preserve their stability through interest rate mediation in the context of financial liberalisation

Item Type:	Article (Journal)
Uncontrolled Keywords:	Financial Liberalization, Financial Stability, Interest Rate, PLS-SEM
Subjects:	H Social Sciences > HG Finance > HG1501 Banking H Social Sciences > HG Finance > HG3368 Islamic Banking and Finance
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Economics and Management Sciences > Department of Finance
Depositing User:	Dr Zulkufly Ramly
Date Deposited:	31 Jan 2022 12:25
Last Modified:	31 Jan 2022 12:25
URI:	http://irep.iium.edu.my/id/eprint/96542

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