Does conventional interest rate influence islamic deposit rate of return or the other way around ? evidence from Malaysia

Yazid Isa and Abul Masih

MPRA Paper from University Library of Munich, Germany

Abstract: In theory, the Islamic deposit rate of return should be free from the influence of conventional rate of interest. But it is alleged that the Islamic deposit rate of return is not independent of the conventional rate of interest. The focus of this paper is to investigate whether the Islamic deposit rate of return is indeed free or not from the influence of the conventional rate of interest. Malaysia is taken as a case study. The standard time series techniques are employed for the investigation. The findings tend to indicate that the conventional rate of interest does indeed affect both the conventional deposit rate of return and the Islamic deposit rate of return at least in the context of Malaysia. The findings have strong policy implications.

Keywords: Islamic deposit rate of return; conventional deposit rate of return; interest rate; Malaysia (search for similar items in EconPapers)
JEL-codes: C22 C58 E44 (search for similar items in EconPapers)
Date: 2017-07-18
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