Finance In Malaysia Research Articles

REVISITING TEMPORAL CAUSALITY BETWEEN ISLAMIC FINANCE INSTRUMENTS AND OUTPUT

With the onset of the COVID-19 pandemic, financing would again be the crux of the recovery process. This paper revisits existing literature on how financial development promotes growth by focusing on the role of Islamic finance in Malaysia. Specifically, the role of sukuk and loans by Islamic banks on output is examined in Malaysia. The main objective of this paper is to investigate the causal nexus between sukuk, Islamic banking loan, and output using a bootstrap causality test applied to both full sample and rolling window sub-samples. Data ranges from 2000M1-2021M6 for the sukuk market and 2006M12-2021M6 for Islamic banking loans. We rely on bootstrap rolling windows which allow for time-varying causalities within time-series data. Results indicate evidence that Islamic financing instruments, in this case, sukuk and loans by Islamic banks Granger-cause output in the long run. Even in the long run, non-constancy in the parameters is detected for total sukuk, sukuk for finance, and sukuk for transport. The parameter stability tests indicate parameter non-constancy in the short run for total sukuk, sukuk for finance, sukuk for transport, and sukuk for utility for the output - sukuk equation. In the case of Islamic financing via loans, short-run parameter instability is prevalent for all loan–output equations. We take the analysis further by examining the direction of the lead variables on a multi-time scale using continuous wavelet transforms and wavelet coherence. Results show that causality runs from sukuk output for total sukuk, transport, and utility sukuk whereas construction sukuk seems to exhibit a mixed behaviour. In the case of sukuk for finance, the impact is more pronounced in the very-long run. These findings could be a guide for countries intending to use Islamic financing instruments as one of the tools for fiscal stimulus or post-pandemic economic recovery.

Examining The Value Relevance of Biological Assets and Their Fair Value Change in Malaysia

The Malaysian Financial Reporting Standard 141 (MFRS 141) on agriculture requires all agriculture companies to measure their biological assets based on fair value less cost to sell. Some researchers argue that fair values of biological assets are not reliable and relevant whereas the others suggest that they are value relevant. The purpose of this study is to investigate the value relevance of biological assets and the change in the fair value of biological assets in Malaysia, as measured in accordance with the MFRS 141. Specifically, this investigation looked into whether or not biological assets and changes in fair value over time are relevant to market value. In particular, the study concentrated on assessing whether biological assets and changes in their fair values have a substantial influence on the market value. The sample for this study is made of agriculturally-related companies that had their shares listed on a public stock exchange in Malaysia between 2018 and 2020. The research project was carried out in Malaysia. The investigation was conducted in a manner that adhered to the value relevance technique that Ohlson (1995) recommended. It was revealed that the biological asset and the change in fair value that was established by using MFRS 141 are both major factors that play a role in the process of determining market value. The results lead the researchers to the conclusion that the adoption of MFRS 141 - Agricultural resulted in an improvement in the quality of financial reporting of biological assets in Malaysia. Future studies should include sample from ASEAN, Asia or developed countries so that the results can be generalised.

SHORT-RUN AND LONG-RUN RELATIONSHIP OF ISLAMIC HOME FINANCING IN MALAYSIA: ANALYSIS ON ISLAMIC BANKS

Islamic home financing is a service offered by Islamic banks according to the Islamic principle. In Malaysia, it has been offered since the early 1980s. The demand for Islamic home financing in Malaysia has increased over time. Therefore, this study would like to delve into the short-run and long-run relationship between the factors involved in Islamic home financing. Past studies highlighted the microeconomic factors and macroeconomic factors in Islamic banks that contribute to the growth of Islamic home financing in Malaysia. Thus, this study would include four factors comprised of deposits, liabilities, GDP, and government expenditure. Deposits and liabilities are categorized into microeconomic factors, whereas GDP and government expenditure are macroeconomic factors. The first objective is to identify the short-run and long-run relationship between the factors mentioned above on Islamic home financing in Malaysia. The second objective is to analyze the causality effects of the factors on Islamic home financing in Malaysia. The methodology comprises of quantitative research design. Data collection is based on secondary data collection, which was retrieved through documentation review and statistical highlights from Bank Negara Malaysia. The data comprise the first quarter of 2010 until the second quarter of 2021. Analysis data is conducted through an econometric approach within time series data which is the ARDL test and Granger causality test. The findings of this study would emphasize the importance of microeconomic factors and macroeconomic factors on Islamic home financing. It would encourage the supply and growth of Islamic home financing by Islamic banks in Malaysia in the future.

EXPLORING THE REGULATORY FRAMEWORK OF SUSTAINABLE FINANCE IN MALAYSIA: DRIVING FORCE FOR ESG INSTITUTIONAL INVESTORS

Since the introduction of the United Nation Millennium Development Goals (2000) and Sustainable Development Goals (2015), sustainable finance had grown exponentially via the strong support of regulators introducing a framework to support the financing of sustainable development. Malaysian regulatory bodies played an active role in pushing the sustainable agenda via its capital market, banking, and takaful sectors. The introduction of the regulatory framework for sustainable finance aims to serve as a guide for the industry players to take part in sustainable investment in these sectors. Institutional investors as the largest asset owners and financial sector players are key to reshaping the Environment, Social and Governance (ESG) development. By employing qualitative library research method, an analysis is made specifically from documents, speeches, newspaper releases, peer-reviewed journals, and texts related to sustainable finance in Malaysia. This paper provides an oversight of the historical development and Malaysian experience in developing their sustainable finance regulatory framework in the capital market, banking and takaful sectors. This paper is of the view that the development of the sustainable framework plays a significant role that acts as a driving force for the ESG institutional investors in Malaysia.

A Preliminary Study of QAFSCALE Measuring Waqf-Based Qardhul Hassan Financing Receptiveness

Understanding the elements favoured by waqif (donor) in engaging in waqf-based qardhul hassan financing has been a major topic of Islamic social finance, should and if it is implemented to better assist ummah amid financial and health crises, primarily in Malaysia. Previous studies, on the other hand, represented a narrow theoretical viewpoint and disregarded the significance of maqasid al-Shariah and its relationship to customers. Thus, using an Attia's maqasid method (Attia, 2010), this research constructs QAFSCALE to quantify waqif preference of waqf-based qardhul hassan financing in Malaysia. A total of 292 prospective donors responded in Kota Kinabalu, Sabah, Malaysia. Statistical Package of Social Science (SPSS) 21 was used to analyse the data. The results show that the family factor, consumer factor and the ummah factor were found important as constructs representing the QAFSCALE. Interestingly, this study introduces new QAFSCALE that measures waqif preference to donate in waqf-based qardhul hassan financing.

Digitalization and Working Hours: A Viewpoint of Future Accountants

The global industrial landscape has changed because of the Fourth Industrial Revolution (IR4.0) with the increased reliance on digital software and automated robotic functions to replace human labour. Since the advent of the internet, corporations have been undergoing a digital transformation. People today find it impossible to envision their personal or professional life without digital tools. For enterprises, digitalization has brought up a variety of challenges as well as excellent opportunities. It similarly goes to the accounting profession. Thus, this study attempts to look into the effect of digitalization on working hours either as an opportunity or risk, from the viewpoint of future accountants. In total, 546 questionnaires were distributed via online to accounting interns from the top six public universities for accounting and finance in Malaysia. The findings show that future accountants view the effect of digitalization on working hours, as both an opportunity and a risk to the accounting profession. As workplace digitization presents both opportunity and risk in relation to working hours, managers must comprehend these issues fully, to reduce risks and maximize positive outcomes. The findings allow managers to gain a better understanding of the significance and effects of digitalization.

Determinants of Intention to Adopt Equity-Based Financing During the Covid-19 Pandemic: A Malaysian Perspective

The purpose of this paper is to empirically investigate the factors that affect Malaysian users’ financing to participate in using Equity-based Financing (Musharakah & Mudharabah) or known as EBF. This study applied the theory of planned behavior (TPB) as the underlying theory to analyze the determinants that influence the intention of Malaysian users’ of financing to participate in EBF. The analysis was conducted using Structural Equation Modelling (SEM), with a total of 250 respondents. According to the findings, only attitudes (ATT) about equity-based financing (EBF) had a positive and significant impact on Malaysian users of financing involvement in EBF during pandemic Covid-19. Subjective Norms (SNORMS) and Perceived Behavioral Control (PBControl) turn out to be non-significant factors for users of financing in Malaysia. The results of the study could lead to advancements towards Islamic banking and finance, as well as positive implications for practitioners. Focusing on ATT to establish customer-oriented products of financing connections within banks could help EBF applications be better managed. This study applied TPB for the first time to Malaysian users’ financial decisions in the area of EBF during the pandemic Covid-19.

Determinants of Malaysian Financial Literacy: A Financial Socialization Perspective

Objective - The study aims to examine the financial literacy level of Malaysian households and the role of financial socialization in improving an individual’s financial literacy level. Methodology/Technique – Convenience sampling was used to select respondents in Malaysian households through questionnaires distributed between August and December of 2021 with a total of 132 retrieved responses. Findings - The results indicated that the Malaysian financial literacy level is above average. Financial education and financial socialization significantly enhanced an individual's financial literacy level. Novelty - The study is based on the Social Learning Theory and demonstrated the importance of financial socialization in improving an individual’s financial literacy level. Hence, measures should be taken to enhance the role of social agents (family or friends) in informal financial education. Type of Paper: Empirical. JEL Classification: I22, M29 Keywords: Financial literacy, financial socialization, financial education, drivers of financial literacy, social agents Reference to this paper should be referred to as follows: Rahim, N.M; Ali, N. (2022). Determinants of Malaysian Financial Literacy: A Financial Socialization Perspective, Acc. Fin. Review, 7(1), 51 – 61. https://doi.org/10.35609/afr.2022.7.1(2)

Covid-19, Financial Market Vulnerabilities and Dynamics Monetary Policy: Comparative Analysis

This study aims to analyze a comparative study of the response of the Indonesian and Malaysian Financial Markets to the dynamics of Monetary Policy implemented during the COVID-19 Pandemic during January 2019 to June 2021. This study builds three e.i interbank money market, bond market, and stock market. The methodology of this study is Ordinary Least Square (OLS). The result shows that COVID-19 has no effect on financial markets, either in Indonesia or in Malaysia. However, when the lockdown was implemented in Malaysia, it had a significant effect on the Malaysian bond market. Furthermore, monetary policy with interest rate instruments has a significant and negative effect on the stock market in Indonesia. The monetary policy through the reserve ratio has a significant and positive effect on the Malaysian bond market. It suggests that there are differences in the dynamics of monetary between Indonesia and Malaysia so that they have different impacts on their respective financial markets.

Impact of Health Financing on Healthcare Quality and Affordability in Malaysia: A Conceptual Review

In comparison to the majority of essential health indices, the health care system in Malaysia has performed exceptionally well. Despite this, it is still behind the techniques used in many other Asian countries, despite its great potential. The primary reason for this is that patients in Malaysia are subjected to a significant amount of financial risk while seeking medical treatment. The implications of health care finance in Malaysia are investigated in this study, with a particular focus on access and equality issues. This exemplifies the urgent requirement for novel ways to the financing of medical care that are compliant with the norms that have been established. According to the findings of this study, it is recommended that efforts should be increased by employing policy changes to include money pooling and risk sharing, subsidization for the poor and the vulnerable, and mandatory enrollment. In addition, it is recommended that the efforts be increased by employing policy changes to include money pooling and risk sharing. Finally, the implication for public policy indicates that the government ought to commit to the tremendously feasible improvement of the nation's healthcare system through spending.

Factors Influencing the Awareness of Financial Planning Among Working Adults in Penang

Financial planning is defined as a planning process between an individual and a financial planner that integrates relevant situation of the individual's financial circumstance, in order to assist the individual achieve financial goals and objectives (Bogan, et al., 2020). Additionally, Grozdanovska et al. (2017) stated that financial planning is a planning process of determine the financial goals, procedures and budget that refer to financial activities. According to Malaysian Financial Planning Council (2021), there are six steps in financial planning process. The six steps of financial process included: a) setting goals, objectives and priorities; b) gathering relevant data and information; c) analyzing information and assessing financial status; d) developing and presenting a financial plan for implementation; and e) executing the financial plan Keywords: Financial Planning, Awareness, Financial Literacy, Education Level, Income Level

Applicability of Maqasid Al-Shariah Towards Home Financing by Islamic Banks among University Staff in Malaysia

Despite their significant growth, Islamic banks only consider about avoiding riba, gharar, and maysir at the expense of maqasid al-Shariah. The banks are somewhat converged with their conventional peers. Consumers believed that the banks imitate their peers pertinent to the pricing calculations and product lines. Without effective measure, consumers may discern Islamic banks undermine their maqasid objective and continued critics of mimicking their peers are prolonged. Against this backdrop, this study examines consumer preference using a proposed index known as the Maqasid Consumer Preference Index (MCPi). Drawing upon the MCPi, the present study examines consumer preference for six Islamic banks operated in Malaysia to which Islamic home financing products are presently made available. Our data were drawn from valid 450 usable questionnaires. The results obtained report that six Islamic banks relatively have a moderate index. Of these, Bank Islam Malaysia Berhad (BIMB) is ranked first, followed by Maybank Islamic, CIMB Islamic whilst Kuwait Finance House is ranked last. This work examines a new approach to measure consumer preference using the MCPi. Our contributions are confined to these particular factors – educating customer, establishing justice, and promoting welfare in the context of Islamic home financing in Malaysia. Future works may provide a different perspective on these interrogations by considering new dimensions to extend the findings. Despite this concern, the results obtained offer improved insights for bank managers to manage Islamic home financing products effectively.

From Structure to Purpose: Green and Social Narratives, and the Shifting Morality of Islamic Finance in Kuala Lumpur

Background: The anthropology of sustainability documents and interprets diverse visions of sustainable and liveable futures. Islamic scholars and financiers are now debating the distinctive contribution of Islamic finance to global sustainability. While mainstream global finance has only recently begun to pay explicit attention to social and environmental sustainability, Islamic economics has always emphasised the need to benefit society, the community, and the environment. Objectives: We ask what has been the influence of the emergence of green and social finance upon Islamic finance in Malaysia, the global centre of Islamic finance. Methods: The study is based on collaborative, co-productive ethnography and autoethnography, and textual analysis of working documents of the Securities Commission Malaysia, focusing on how environmental requirements are expressed in new financial products, known as green sukuks, or green Islamic bonds. Results and conclusions: We have found that much of the moral debate in Islamic finance has revolved around the distribution of financial risk: when investors share the risk of failure, they can participate in society rather than merely exploiting social relations, yet the emergence of ‘green’ Islamic finance appears to shift the centre of moral gravity away from risk structuring towards technical criteria of sustainability, replicating the growth-oriented anthropocentric managerialism of mainstream finance.

The Impact of Public, Private, and Out-of-Pocket Health Expenditures on Under-Five Mortality in Malaysia.

Health financing in Malaysia is intensely subsidised by public funding and is increasingly sourced by household out-of-pocket financing, yet the under-five mortality rate has been gradually increasing in the last decade. In this context, this study aims to investigate the relationship between public, private, and out-of-pocket health expenditures and the under-five mortality rate in Malaysia using the autoregressive distributed lag (ARDL) estimation technique, whereby critical test values are recalculated using the response surface method for a time-series data of 22 years. The findings reveal that out-of-pocket health expenditure deteriorates the under-five mortality rate in Malaysia, while public and private health expenditures are statistically insignificant. Therefore, an effective health financing safety net may be an option to ensure an imperative child health outcome.

Adult learners' adjustment and its effects toward online course during pandemic: The case of Malaysia Financial Planning Council (MFPC)

Coronavirus disease (COVID-19) has had a significant effect on every country’s economy, particularly in the education sector. Some of the consequences include lockdowns, quarantines, social distancing and institutional closures. Adapting and adjusting to new learning standards was difficult due to a variety of demographic backgrounds among students, especially adult learners. Thus, the current research aims to investigate characteristics that contribute to adult adjustment and their influence on their knowledge of online courses. A quantitative study was done among 235 respondents in a Malaysian independent body namely the Malaysian Financial Planning Council located in Kuala Lumpur, Malaysia. Identifying the right elements will assist the training facility in giving the right and quality training to its audience.

Investment, Deposit Interest Rates, and Real Sector Performance: A Case Study of Islamic Finance in Malaysia

This study aims to examine the influence of interest rates, GDP, consumption, and investment on Islamic finance in Malaysia. Also, it focuses on the causal relationship between the macroeconomic and humanistic approach in understanding the role of Muslim economics. Data were analyzed using the Vector Error Correction Model and the results showed that interest rates negatively affect the real sector. Therefore, the Islamic financial system with a zero or no interest-based interest rate tends to promote a social economy

Determinants of Audit Delay: An Analysis of Post Malaysian Financial Reporting Standards (MFRS) Adoption

Determinants of Audit Delay: An Analysis of Post Malaysian Financial Reporting Standards (MFRS) Adoption

Ecologies of green finance: Green sukuk and development of green Islamic finance in Malaysia

In this paper, we analyse the recent development of green sukuk (often referred to as an Islamic green bond) since its issuance in Malaysia in 2017, and critically evaluate whether it addresses some of the existing contradictions of green finance. Using a financial ecologies approach, we examine Malaysia's configuration of green sukuk as drawing from the existing international green bond regime, partnership with the World Bank, and Malaysia's own experience and expertise in Islamic finance, with the objective of building Kuala Lumpur's competitiveness as a global Islamic financial centre. Through documents analysis and interviews with key market actors in Kuala Lumpur and other financial centres, our findings point to the emergent international adoption of green sukuk. While this achieves Malaysia's state-building objectives, specifically through expanding Malaysia's sukuk market and advancing its status as a frontier of Islamic financial innovations, the potential for improving the current green bond regime has been more doubtful. A key limitation is the incorporation of existing Green Bond Principles, which enables not only green sukuk's international acceptance but also renders it susceptible to greenwashing. By examining the intersection of different ecologies of green and Islamic finance, we reveal the contradictions and limitations of green sukuk in contributing to Malaysian state-building and climate action.

Literature review: implementation of Musharakah Mutanaqisah partnership over the world

Abstract Purpose: This study aimed to determine the implementation of Musharakah Mutanaqisah. Research methodology: This research method was a literature study with data obtained from previous research and theories relevant to the research topic. Results: The research results show that Musharakah Mutanaqisah in the two countries still needs to be encouraged for its development, because Murabahah still dominates it, Ba'i, ijarah and others financing, the results of the study also concluded that the implementation of Musharakah Mutanaqisah is equally an alternative in property financing in Malaysia, and homeownership loans in Indonesia. Limitations: This research only examined the application of MMP in Southeast Asia Contribution: Findings contribute that internationally, accounting for Musharakah Mutanaqisah refers to IFRS and FAS. In Malaysia, the regulations governing the accounting for Musharakah Mutanaqisah are regulated in the Malaysian Financial Reporting Standards (MFRS). ). In Indonesia, the regulations governing the accounting for Musharakah Mutanaqisah are not yet available, so they are still regulated in PSAK No. 106 (Musharakah Akad). Keywords: Musharakah Mutanaqisah partnership, Islamic bank, Sharia accounting

Commodity Murabahah Home Financing in Malaysia in the Case of Abandoned Housing Projects: A Shariah Analysis on Its Operation


 
 
 Commodity murabahah has received extensive exposure since the Islamic financial industry shifted from bay’ bithaman ajil for its banking and financial products. The muamalat based contract which is innovated from the classical tawarruq with certain modifications has proliferated in many of the retail products in Malaysia including home financing. This paper analyses the financing facility offered to Malaysian homebuyers to investigate the extent of safeguards present in the facility when there are project abandonments. The operation of commodity murabahah as practiced in Malaysia for houses under construction are discussed and analysed with respect to their operations to know whether they conform both in form and substance. The analysis is done via library research while semi-structured interviews on operation of the facilities are done with experts in the field. The study finds that the commodity murabahah facility catered lacks the necessary safeguards for customers of Islamic banks. This can further aggravate the situation of homebuyers who have no proper recourse when their under constructed houses are left abandoned by developers. The paper calls for a more Shariah based oriented facility for houses under construction which is close to its muamalat nature in order for the rights and obligations of parties involved in home financing be inherent.