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

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.
Publication date: July 2011
ISBN: 9781455293704
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Economics- Macroeconomics , Economics / General , International - Economics , bank deposit , bank deposit rates , cointegration , correlation , granger causality , standard deviation , statistics , equation , significance level , statistic , probability , time series , banking system , standard errors , equations , banking model , free banking , banking system asse

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