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The Behavior of Conventional and Islamic Bank Deposit Returns in Malaysia and Turkey

Joshua Charap and Serhan Cevik ()

No 11/156, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the empirical behavior of conventional bank deposit rates and the rate of return on retail Islamic profit-and-loss sharing (PLS) investment accounts in Malaysia and Turkey, using monthly data from January 1997 to August 2010. The analysis shows that conventional bank deposit rates and PLS returns exhibit long-run cointegration and the time-varying volatility of conventional bank deposit rates and PLS returns is correlated and is statistically significant. The pairwise and multivariate causality tests show that conventional bank deposit rates Granger cause returns on PLS accounts. These findings have policy implications in terms of price stability and financial stability.

Keywords: Cross country analysis; Malaysia; Profit margins; Turkey; Interest rates, Islamic banks, causality, time-varying volatility correlation, bank deposit, interest, balance sheet, debt (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ara, nep-cwa and nep-sea
Date: 2011-07-01
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Journal Article: The Behavior of Conventional and Islamic Bank Deposit Returns in Malaysia and Turkey (2015) Downloads
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