Exposure to Interbank Investment and Financing Risk by Islamic Banks: a Dynamic Panel Analysis of Malaysia
The government of Malaysia has developed an Islamic Interbank Money Market (IIMM) since January 1994 with the objective to facilitate funding for the Islamic banking sector in the country. This platform also enables Islamic banks to obtain Shariah-compliant funds from other Islamic banks. This art...
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| Format: | Article |
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2019
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| Online Access: | https://library.oum.edu.my/repository/1280/ |
| _version_ | 1848801656651644928 |
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| author | Mohammad Taqiuddin Mohamad, Ahmad Azam Sulaiman, Khairul Hamimah Mohammad Jodi, Nazri Muslim, |
| author_facet | Mohammad Taqiuddin Mohamad, Ahmad Azam Sulaiman, Khairul Hamimah Mohammad Jodi, Nazri Muslim, |
| author_sort | Mohammad Taqiuddin Mohamad, |
| building | OUM Institutional Repository |
| collection | Online Access |
| description | The government of Malaysia has developed an Islamic Interbank Money Market (IIMM) since January 1994 with the
objective to facilitate funding for the Islamic banking sector in the country. This platform also enables Islamic banks to
obtain Shariah-compliant funds from other Islamic banks. This article examines the effects of interbank investment and
financing risk on the financing decisions of Malaysia’s Islamic bank between 1994-2015. The financing decisions are
used as financing measures to determine the effect of investing in the interbank market and financing risk indicators on
financing. Research methodology are the descriptive, correlation and dynamic panel analysis results are derived with
the help of Limdep 9.0 software. The study found a negative relationship between the interbank investment variable
with the financing decisions of Islamic banks. This reflects that an increase in interbank investment leads Islamic banks
to reduce their level of financing. These findings prove the investment activities between Islamic banks had a
“substitution effect” and decreased their capability of financing because of their tendency to maintain liquidity. Islamic
banks are confident that they will generate higher profits in the coming financial year. The economic conditions of
Malaysia do not influence Islamic banks’ financing decisions, whereas Islamic banks in this study are more dependent
on the balance sheet indicators. (Abstract by authors) |
| first_indexed | 2025-11-14T21:10:56Z |
| format | Article |
| id | oai:eprints.oum.edu.my:1280 |
| institution | Open University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T21:10:56Z |
| publishDate | 2019 |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | oai:eprints.oum.edu.my:12802020-12-15T04:50:13Z Exposure to Interbank Investment and Financing Risk by Islamic Banks: a Dynamic Panel Analysis of Malaysia Mohammad Taqiuddin Mohamad, Ahmad Azam Sulaiman, Khairul Hamimah Mohammad Jodi, Nazri Muslim, HB Economic Theory HC Economic History and Conditions The government of Malaysia has developed an Islamic Interbank Money Market (IIMM) since January 1994 with the objective to facilitate funding for the Islamic banking sector in the country. This platform also enables Islamic banks to obtain Shariah-compliant funds from other Islamic banks. This article examines the effects of interbank investment and financing risk on the financing decisions of Malaysia’s Islamic bank between 1994-2015. The financing decisions are used as financing measures to determine the effect of investing in the interbank market and financing risk indicators on financing. Research methodology are the descriptive, correlation and dynamic panel analysis results are derived with the help of Limdep 9.0 software. The study found a negative relationship between the interbank investment variable with the financing decisions of Islamic banks. This reflects that an increase in interbank investment leads Islamic banks to reduce their level of financing. These findings prove the investment activities between Islamic banks had a “substitution effect” and decreased their capability of financing because of their tendency to maintain liquidity. Islamic banks are confident that they will generate higher profits in the coming financial year. The economic conditions of Malaysia do not influence Islamic banks’ financing decisions, whereas Islamic banks in this study are more dependent on the balance sheet indicators. (Abstract by authors) 2019-11 Article PeerReviewed text https://library.oum.edu.my/repository/1280/1/library-document-1280.pdf Mohammad Taqiuddin Mohamad, and Ahmad Azam Sulaiman, and Khairul Hamimah Mohammad Jodi, and Nazri Muslim, (2019) Exposure to Interbank Investment and Financing Risk by Islamic Banks: a Dynamic Panel Analysis of Malaysia. International Journal of Business and Social Science, 10 (11). https://library.oum.edu.my/repository/1280/ |
| spellingShingle | HB Economic Theory HC Economic History and Conditions Mohammad Taqiuddin Mohamad, Ahmad Azam Sulaiman, Khairul Hamimah Mohammad Jodi, Nazri Muslim, Exposure to Interbank Investment and Financing Risk by Islamic Banks: a Dynamic Panel Analysis of Malaysia |
| title | Exposure to Interbank Investment and Financing Risk by Islamic Banks: a Dynamic Panel Analysis of Malaysia |
| title_full | Exposure to Interbank Investment and Financing Risk by Islamic Banks: a Dynamic Panel Analysis of Malaysia |
| title_fullStr | Exposure to Interbank Investment and Financing Risk by Islamic Banks: a Dynamic Panel Analysis of Malaysia |
| title_full_unstemmed | Exposure to Interbank Investment and Financing Risk by Islamic Banks: a Dynamic Panel Analysis of Malaysia |
| title_short | Exposure to Interbank Investment and Financing Risk by Islamic Banks: a Dynamic Panel Analysis of Malaysia |
| title_sort | exposure to interbank investment and financing risk by islamic banks: a dynamic panel analysis of malaysia |
| topic | HB Economic Theory HC Economic History and Conditions |
| url | https://library.oum.edu.my/repository/1280/ |