Munich Personal RePEc Archive

Determinants of islamic banking investment account rates: Malaysia’s evidence

Ariffin, Kartina and Masih, Mansur (2018): Determinants of islamic banking investment account rates: Malaysia’s evidence.

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Abstract

This paper makes an attempt to discern the determinants of the Islamic banks’ investment account rates (IBIA). Malaysia is used as a case study. The standard time series techniques are employed for the analysis. The findings tend to indicate that the IBIA is the most endogenous (dependent) of all the variables in that it is driven by the most exogenous (independent) variable unemployment rate followed by the exchange rate, CPI and treasury bill rate. It appears that the IBIA is benchmarked against the treasury bill rate raising questions about the Shariah (Islamic) compliance of the Islamic banks’ investment account rates. The findings have strong policy implications.

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