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Article
Publication date: 16 January 2019

Mohamed Aseel Shokr, Zulkefly Abdul Karim and Mohd Azlan Shah Zaidi

This paper aims to examine the effects of monetary policy and foreign shocks on output, inflation and exchange rate in Egypt.

Abstract

Purpose

This paper aims to examine the effects of monetary policy and foreign shocks on output, inflation and exchange rate in Egypt.

Design/methodology/approach

This paper studies the effects of monetary policy and foreign shocks on output, inflation and exchange rate by using non-recursive SVAR model and quarterly data.

Findings

First, the empirical results reveal that monetary policy shocks, through changes in interest rate or money supply, have a significant effect on output, inflation and exchange rate in Egypt. Second, the world oil prices and foreign output have significant impacts on output, inflation and exchange rate in Egypt, while foreign interest rate has a significant effect on domestic output and inflation.

Research limitations/implications

The limitation of the study is examining one country only.

Practical implications

The Central Bank of Egypt (CBE) should adjust interest rate to stabilize inflation, output and exchange rate. By stabilizing inflation, output and exchange rate, the CBE would be able to achieve the ultimate targets of monetary policy, namely, price stability and economic growth.

Social implications

It is important for the CBE because it shows the significant effect of monetary policy on macroeconomic variables in Egypt. Also, it is important for people because it shows the important role for the CBE.

Originality/value

It is important for the CBE because it examines the effect of monetary policy and foreign shocks on macroeconomic variables.

Details

Journal of Financial Economic Policy, vol. 11 no. 3
Type: Research Article
ISSN: 1757-6385

Keywords

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Article
Publication date: 8 March 2021

Zulkefly Abdul Karim, Danie Eirieswanty Kamal Basa and Bakri Abdul Karim

This paper aims to investigate the relationship between financial development (FD) and monetary policy effectiveness (MPE) on output and inflation in ASEAN-3 countries…

Abstract

Purpose

This paper aims to investigate the relationship between financial development (FD) and monetary policy effectiveness (MPE) on output and inflation in ASEAN-3 countries (Singapore, Malaysia and the Philippines).

Design/methodology/approach

This study uses an open economy structural vector autoregressive model to generate MPE. Then, an autoregressive distributed lagged (ARDL) model is used to analyze the effect of FD on MPE across countries.

Findings

The findings revealed that FD plays a different role in MPE across countries. In Malaysia, a more developed financial system tends to reduce the MPE on output, whereas in Singapore, results show that the more developed financial system (stock market capitalization) tends to increase MPE on output. However, in the Philippines, the main results show that the effect of FD (liquid liabilities) upon MPE on output is depending on the policy variable (interest rates or money supply).

Originality/value

This paper fills this gap by providing the first study of ASEAN-3 countries in examining how effective is a monetary policy in response to the development of the financial market across the country. Second, this paper considers two FD indicators, namely, the banking sector and capital market development in investigating its effect on MPE on output and inflation. Third, the authors construct the MPE in each country using a structural (identified) VAR model by aggregating the response of output growth and inflation rate on monetary policy changes (interest rate and money supply) using impulse–response function. Regarding this, the results of this study provide new empirical evidence and insight into the long debate on the relationship between FD and the MPE.

Details

Journal of Financial Economic Policy, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1757-6385

Keywords

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Article
Publication date: 28 September 2012

Zulkefly Abdul Karim

The purpose of this paper is to explore the role of monetary policy transmission mechanism channel on firms' investment spending. The focal point is to investigate the…

Abstract

Purpose

The purpose of this paper is to explore the role of monetary policy transmission mechanism channel on firms' investment spending. The focal point is to investigate the differential of monetary policy effects across sub‐sector firms' investment by examining the role of interest rates, and broad credit channel of monetary transmission.

Design/methodology/approach

The following research design has been employed in examining the relevance of both monetary policy channels. First, the firm user cost of capital as a proxy for the interest rates channel is constructed. Second, the neoclassical model of firm‐level investment function has been estimated using the dynamic panel data technique.

Findings

The results revealed that the monetary policy transmission mechanism works through both interest rate, and broad credit channels in influencing firms' investment spending in the Malaysian economy. Monetary policy has heterogeneous effects in respect of sub‐sectors of the economy. In the long‐run, the firm investment in the consumer products and services sectors are significantly affected by the interest rate and broad credit channels. However, the firm investment in the industrial products and property sectors has only been significantly affected by interest rates and broad credit channel, respectively.

Originality/value

The empirical results provide new evidence on the microeconomic effects of monetary policy in a small open economy (i.e. Malaysia) in two dimensions. First, this finding has supported the relevance of interest rates and broad credit channel of monetary transmission in a small open economy. Second, monetary policy effects are also heterogeneous by sub‐sectors of the economy, as some sectors (for example, consumer products, industrial products, and services) are significantly affected by monetary policy, and other sub‐sectors (for example, property) are not affected.

Details

Studies in Economics and Finance, vol. 29 no. 4
Type: Research Article
ISSN: 1086-7376

Keywords

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Article
Publication date: 25 January 2019

Youssef Mohamed Riahi

The purpose of this paper is to investigate the impact of discretionary loan loss provisions (DLLPs) and non-performing loans (NPLs) on the liquidity risk of both Islamic…

Abstract

Purpose

The purpose of this paper is to investigate the impact of discretionary loan loss provisions (DLLPs) and non-performing loans (NPLs) on the liquidity risk of both Islamic banks (IBs) and conventional banks (CBs) before and after the global crisis that hit nations belonging to the Gulf Cooperation Council (GCC).

Design/methodology/approach

This empirical study uses balanced panel data on 16 IBs and 58 CBs operating in the six Gulf Cooperation states covering 2000–2014. The data were obtained from the Bankscope database and the banks’ annual reports.

Findings

The results indicate that NPLs affect liquidity risk differently across the banks – specifically, there is a significant difference in the funding and managing of liquidity between the two bank types. The authors find that the influence of DLLPs does not vary across the banks in the overall analysis and before the crisis. This finding provides insights into the unique nature of banking risks in dual banking systems. The authors also find that after the crisis, the discretionary LLPs affected liquidity risk differently across the banks.

Practical implications

This study has several practical implications. First, the findings suggest that the Islamic Financial Services Board and other IBs regulators should reassess several regulations, principles and products in order to reduce their credit and liquidity risks. Second, the study emphasizes the need for banks to perform a careful assessment of the effects of their LLP policies. Finally, the findings are also relevant to bankers, as they provide empirical evidence on the effect of loan growth on bank liquidity, suggesting that bankers should improve their loan management.

Originality/value

First, this is the first study to examine discretionary LLPs, NPLs and liquidity risk in IBs; it is also the first comparative study between Islamic and CBs. Second, the study provides evidence on how the global crisis impacted the banking sector and identifies some of the main determinants of liquidity risk for both Islamic and CBs operating in GCC countries.

Details

Managerial Finance, vol. 45 no. 2
Type: Research Article
ISSN: 0307-4358

Keywords

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Article
Publication date: 25 March 2021

Rahmatina Awaliah Kasri and Syafira Rizma Chaerunnisa

This study aims to determine the role of knowledge, trust and religiosity in influencing the intention to donate cash waqf online among Muslim millennials in Indonesia.

Abstract

Purpose

This study aims to determine the role of knowledge, trust and religiosity in influencing the intention to donate cash waqf online among Muslim millennials in Indonesia.

Design/methodology/approach

Using a framework based on the theory of planned behavior, primary data was collected from 418 Muslim millennials who domiciled in large cities in Indonesia and subsequently analyzed using the structural equation modeling method.

Findings

The main findings suggest that knowledge, trust and religiosity play a positive role in explaining the intention to donate cash waqf online among Indonesia’s millennials. Religiosity is found to be the most powerful factor in influencing attitude, while knowledge is the least significant factor influencing the attitude, which subsequently influences the intention to engage in online cash waqf. Social norms and perceived behavioral control are also positively influencing such intention.

Practical implications

These results imply that it is important for waqf institutions to reflect strong Islamic values in their cash waqf products and to more strongly communicate religious messages about the benefits of giving cash waqf to the millennials. It is also crucial to increase waqf literacy through appropriate campaigns. Moreover, they need to be more transparent and accountable to establish, maintain and enhance trust in their organizations. Overall, these findings are expected to provide insights enabling waqf institutions to devise effective marketing strategies for raising the level of online cash waqf donation in Indonesia.

Originality/value

This is thought to be one of the first studies to investigate the factors influencing online cash waqf donations among Muslim millennials in Indonesia.

Details

Journal of Islamic Marketing, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0833

Keywords

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