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

July 1, 2011

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Format: Chicago

Joshua Charap, and Serhan Cevik. The Behavior of Conventional and Islamic Bank Deposit Returns in Malaysia and Turkey, (USA: International Monetary Fund, 2011) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Bank deposits, Banking, Deposit rates, Financial services, Financial statements, Islamic banking, National accounts, Public financial management (PFM), Return on investment

Keywords: Bank, Bank deposits, Causality, Cause change, Compliant bank, Deposit, Deposit collection, Deposit rates, Financial statements, Global, Interest rate, Interest rates, Interest rates granger, Islamic banking, Islamic banks, Participation bank, PLS account, PLS instrument, PLS model, PLS paradigm, PLS return, Rate, Rate of PLS return, Rate of return, Rates granger, Return on investment, Time-varying volatility correlation, WP

Publication Details

Pages:

23
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/156
Stock No:

WPIEA2011156
ISBN:

9781455293704
ISSN:

1018-5941

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