ALTERNATIVE OF MONETARY POLICY INDICATOR: PANEL DATA ANALYSIS FROM ISLAMIC BANKS IN MALAYSIA

Zuriyati Ahmad () and Abdul Ghafar Ismail ()
Additional contact information
Zuriyati Ahmad: Universiti Teknologi MARA
Abdul Ghafar Ismail: Professor of Banking and Financial Economics and Chairperson Organization of Islamic Economic Studies and Thoughts Organization of Islamic Economic Studies and Thoughts

Journal of Islamic Monetary Economics and Finance, 2018, vol. 4, issue 2, 279-292

Abstract: The monetary policy indicators such as monetary aggregates, interest rates andMonetary Condition Index (MCI) are the traditional monetary policy indicatorsused in order to obtain early indication of the impact of monetary policy. Theseindicators could function as appropriate monetary policy indicators that will provideinformation to the monetary policy makers. The development in Islamic financialsystem however creates a challenge to find a monetary policy indicator, which is inconformity with Islamic teaching. Therefore, this paper is aimed to examine the futuregrowth of nominal GDP as an alternative variable for monetary policy indicator inIslamic monetary system. The investigation will benefit from data of 17 Islamic banksin Malaysia which implement full fledge or Islamic windows scheme spanning from2005 to 2010. GMM system method is used to analyze the data in hope to validatethe appropriateness of the alternative monetary policy indicator. The result suggeststhat the future growth of nominal GDP is significant as monetary policy indicator andcould be applied by the central bank in implementing the monetary policy especiallyin the dual banking system.

Keywords: Monetary Policy; Monetary Policy Indicators; Bank Financing (search for similar items in EconPapers)
JEL-codes: C33 E52 E58 G21 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://jimf-bi.org/index.php/JIMF/article/download/1017/733 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:idn:jimfjn:v:4:y:2018:i:2e:p:279-292

DOI: 10.21098/jimf.v4i2.1017

Access Statistics for this article

Journal of Islamic Monetary Economics and Finance is currently edited by Dr. Ali Sakti

More articles in Journal of Islamic Monetary Economics and Finance from Bank Indonesia Contact information at EDIRC.
Bibliographic data for series maintained by Lutzardo Tobing ( this e-mail address is bad, please contact ) and Jimmy Kathon ().