HOUSE PRICE CHANGES AND ISLAMIC BANK STABILITY: EVIDENCE FROM MALAYSIA
In this paper, we examine the relationship between house price and Islamic bank stability in Malaysia. In particular, in relating to Islamic bank stability to Malaysian house price changes, we evaluate the nature of the relationship from the perspective of nonlinearities. The Autoregressive Distribu...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Bank Indonesia
2019-05-01
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| Series: | Journal of Islamic Monetary Economics and Finance |
| Subjects: | |
| Online Access: | http://jimf-bi.org/index.php/JIMF/article/view/1044 |
| _version_ | 1819037535793315840 |
|---|---|
| author | Shiau Hui Kok Normaz Wana Ismail |
| author_facet | Shiau Hui Kok Normaz Wana Ismail |
| author_sort | Shiau Hui Kok |
| collection | DOAJ |
| description | In this paper, we examine the relationship between house price and Islamic
bank stability in Malaysia. In particular, in relating to Islamic bank stability to
Malaysian house price changes, we evaluate the nature of the relationship from the
perspective of nonlinearities. The Autoregressive Distributed Lag (ARDL) model
is applied to a sample that consists of 9 Islamic banks in Malaysia for the period
of 2000-2016. Our results indicate that there is an inverted U-shaped relationship
between house price and Islamic bank stability in the long run. Meanwhile, the
relationship is insignificant in the short-run. To put it differently, initially, the
higher house prices, the more stable the bank. Then, the impact of house prices on
bank stability becomes negative when house prices surpass the threshold point.
As far as the bank-specific characteristics are concerned, the cost to income ratio
is found to significantly and negatively related to the bank stability. Such a result
has policy implications in which it is crucial for achieving balance in the housing
market, and efficiently managing the cost is equally important to ensure Islamic
bank soundness. |
| first_indexed | 2024-12-21T08:22:58Z |
| format | Article |
| id | doaj.art-9c3318f31f5c4461acfb24d9f7fc21c0 |
| institution | Directory Open Access Journal |
| issn | 2460-6146 2460-6618 |
| language | English |
| last_indexed | 2024-12-21T08:22:58Z |
| publishDate | 2019-05-01 |
| publisher | Bank Indonesia |
| record_format | Article |
| series | Journal of Islamic Monetary Economics and Finance |
| spelling | doaj.art-9c3318f31f5c4461acfb24d9f7fc21c02022-12-21T19:10:23ZengBank IndonesiaJournal of Islamic Monetary Economics and Finance2460-61462460-66182019-05-015112010.21098/jimf.v5i1.10441044HOUSE PRICE CHANGES AND ISLAMIC BANK STABILITY: EVIDENCE FROM MALAYSIAShiau Hui Kok0Normaz Wana Ismail1Sunway CollegeUniversity Putra MalaysiaIn this paper, we examine the relationship between house price and Islamic bank stability in Malaysia. In particular, in relating to Islamic bank stability to Malaysian house price changes, we evaluate the nature of the relationship from the perspective of nonlinearities. The Autoregressive Distributed Lag (ARDL) model is applied to a sample that consists of 9 Islamic banks in Malaysia for the period of 2000-2016. Our results indicate that there is an inverted U-shaped relationship between house price and Islamic bank stability in the long run. Meanwhile, the relationship is insignificant in the short-run. To put it differently, initially, the higher house prices, the more stable the bank. Then, the impact of house prices on bank stability becomes negative when house prices surpass the threshold point. As far as the bank-specific characteristics are concerned, the cost to income ratio is found to significantly and negatively related to the bank stability. Such a result has policy implications in which it is crucial for achieving balance in the housing market, and efficiently managing the cost is equally important to ensure Islamic bank soundness.http://jimf-bi.org/index.php/JIMF/article/view/1044house prices;islamic bank stability;ardl;non-linear;malaysia |
| spellingShingle | Shiau Hui Kok Normaz Wana Ismail HOUSE PRICE CHANGES AND ISLAMIC BANK STABILITY: EVIDENCE FROM MALAYSIA Journal of Islamic Monetary Economics and Finance house prices; islamic bank stability; ardl; non-linear; malaysia |
| title | HOUSE PRICE CHANGES AND ISLAMIC BANK STABILITY: EVIDENCE FROM MALAYSIA |
| title_full | HOUSE PRICE CHANGES AND ISLAMIC BANK STABILITY: EVIDENCE FROM MALAYSIA |
| title_fullStr | HOUSE PRICE CHANGES AND ISLAMIC BANK STABILITY: EVIDENCE FROM MALAYSIA |
| title_full_unstemmed | HOUSE PRICE CHANGES AND ISLAMIC BANK STABILITY: EVIDENCE FROM MALAYSIA |
| title_short | HOUSE PRICE CHANGES AND ISLAMIC BANK STABILITY: EVIDENCE FROM MALAYSIA |
| title_sort | house price changes and islamic bank stability evidence from malaysia |
| topic | house prices; islamic bank stability; ardl; non-linear; malaysia |
| url | http://jimf-bi.org/index.php/JIMF/article/view/1044 |
| work_keys_str_mv | AT shiauhuikok housepricechangesandislamicbankstabilityevidencefrommalaysia AT normazwanaismail housepricechangesandislamicbankstabilityevidencefrommalaysia |