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Monetary Policy and Islamic Finance: Malaysia

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Macroeconomic Policy and Islamic Finance in Malaysia

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Abstract

Against a backdrop of the shortcomings of current conventional monetary policy , there need to be monetary policy rethinking to solve the economic disorder. Islamic finance could be a solution to address crises caused by excessive debts and the interest-based financial system. There need to be a benchmark reform by way of development of new Islamic framework to allow for the guidance of policy. An empirical analysis, which includes running of tests on the possible benchmarks , is done to demonstrate how the rate of return can fulfill goals of monetary policy. Under the Islamic macroeconomic model, monetary policy is able to influence the real sector directly in addition to the existing indirect influence through the financial sector with the use of risk and profit-sharing mechanism.

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Authors and Affiliations

  1. Chartered Institute of Islamic Finance Professionals, Kuala Lumpur, Malaysia

    Azura Othman

  2. International Centre for Education in Islamic Finance, Kuala Lumpur, Malaysia

    Norhanim Mat Sari, Syed Othman Alhabshi & Abbas Mirakhor

Authors
  1. Azura Othman
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  2. Norhanim Mat Sari
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  3. Syed Othman Alhabshi
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  4. Abbas Mirakhor
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Corresponding author

Correspondence to Azura Othman .

Appendix

Appendix

Appendix 1.1 Consumption and GDP coefficients for OECD countries
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Appendix 1.2 Consumption and GDP coefficients for EM countries
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Appendix 1.3 Consumption and GDP coefficients for East Asian countries
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Appendix 2.1 Regression result for OECD countries
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Appendix 2.2 Regression result for EM countries
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Appendix 2.3 Regression result for East Asian countries
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Appendix 3.1 Co-integration coefficient estimates for OECD countries
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Appendix 3.2 Co-integration coefficient estimates for EM countries
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Appendix 3.3 Co-integration coefficient estimates for East Asian countries
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Othman, A., Mat Sari, N., Alhabshi, S., Mirakhor, A. (2017). Monetary Policy and Islamic Finance: Malaysia. In: Macroeconomic Policy and Islamic Finance in Malaysia. Financial Institutions, Reforms, and Policies in Muslim Countries. Palgrave Macmillan, New York. https://doi.org/10.1057/978-1-137-53159-9_7

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  • DOI: https://doi.org/10.1057/978-1-137-53159-9_7

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