Does Islamic Interbank Rate Influence Bank Characteristics and Economic Cycle in Malaysian Monetary Transmission?
This study aims to determine the effectiveness of Islamic Interbank Rate as the intermediary target by monetary policymakers in achieving economic goals. Via Islamic banking institutions as the mediator to channel the policy effect, the relevancy of this tool is identifiable. To attain this objective, a credit channel model was used by adapting macroeconomic variables and also bank specific variables. Data from 1997 until 2010 was regressed by using the Panel Data method with the application of interaction approach. The analysis finding shows that the IIR is capable in influencing the bank specific variables. accordingly, Islamic banks are the significant intermediaries in ensuring the effect of policy implementation provides stimulation to the achievement of the desired economic goals. Besides, the significant pro cyclical nature through the interaction with the GDP, indicates the effect of this policy tool in influencing bank behavior to offer financing for the economic sectors parallel to the current economy.
Submission of an article implies that the work described has not been published previously (except in the form of an abstract or as part of a published lecture or academic thesis), that it is not under consideration for publication elsewhere, that its publication is approved by all authors and tacitly or explicitly by the responsible authorities where the work was carried out, and that, if accepted, will not be published elsewhere in the same form, in English or in any other language, without the written consent of the Publisher. The Editors reserve the right to edit or otherwise alter all contributions, but authors will receive proofs for approval before publication.
Copyrights for articles published in MTI journals are retained by the authors, with first publication rights granted to the journal. The journal/publisher is not responsible for subsequent uses of the work. It is the author's responsibility to bring an infringement action if so desired by the author.