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Does Inter-Bank Investments Restraints Financing Performance of Islamic Banks?

Does Inter-Bank Investments Restraints Financing Performance of Islamic Banks?
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Author(s): Mohammad Taqiuddin Mohamad (University of Malaya, Malaysia) and Munazza Saeed (University of Malaya, Malaysia)
Copyright: 2019
Pages: 15
Source title: Advanced Methodologies and Technologies in Business Operations and Management
Source Author(s)/Editor(s): Mehdi Khosrow-Pour, D.B.A. (Information Resources Management Association, USA)
DOI: 10.4018/978-1-5225-7362-3.ch003

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Abstract

The purpose of this study is to investigate the effect of interbank investment and changes in monetary policy on financing behavior of Islamic banks in Malaysia. The change occurring in bank specifications and changes in monetary policy will lead financial authorities generally, banking management specifically, to make modifications on financing. In order to achieve the objective, this study employs a panel data estimation of 17 Malaysian banks for the period of 1994-2014. Findings revealed that the pattern and behavior of Islamic banking in offering financing is influenced by the investment in interbank investment and also by the factors such as level of past financing, the exposure to risk, size and structure of the capitalization level. While for monetary policy factor, financing behavior of Islamic banking is influenced by Malaysian government securities (MGS). Next to the economic environment, the study showed no significant relationship to the behavior of the Malaysian Islamic banking financing.

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