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Commercial property market and financing in Malaysia: comparative analysis between Islamic and conventional financing

Commercial property financing (CPF) offered by Islamic and conventional banks have been an issue of deliberation in the recent years due to interest rates fluctuations mostly during the economic crisis. Islam forbids relying on interest rates in all aspects of life including commercial property fina...

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Main Author: Siti Latipah, Harun
Format: Thesis
Language:English
English
English
Published: 2020
Subjects:
HJ Public Finance
Online Access:https://etd.uum.edu.my/9479/1/s900166_01.pdf
https://etd.uum.edu.my/9479/2/s900166_02.pdf
https://etd.uum.edu.my/9479/3/s900166_references.docx
https://etd.uum.edu.my/9479/
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spelling my.uum.etd.94792022-12-28T02:58:24Z https://etd.uum.edu.my/9479/ Commercial property market and financing in Malaysia: comparative analysis between Islamic and conventional financing Siti Latipah, Harun HJ Public Finance Commercial property financing (CPF) offered by Islamic and conventional banks have been an issue of deliberation in the recent years due to interest rates fluctuations mostly during the economic crisis. Islam forbids relying on interest rates in all aspects of life including commercial property financing. Therefore, this study aims to identify the macroeconomic factors and financial factors that influence the financing of commercial property offered by Islamic banks (CPFi) and conventional banks (CPFc) in Malaysia during 2010: Q1-2018: Q2. Using ARDL, ARDL-ECM, VDC, and IRF models, the short and long run relationship between macroeconomic factors and financial factors to commercial property financing in Malaysia was analyzed. Data were collected from BNM's monthly statistics bulletin, National Property Information Center, Department of Statistics Malaysia, and International Monetary Fund. The findings show that in the long run, the conventional financing affected by changes in macroeconomic factors (IPI, REER and OPR). Unlike conventional financing, Islamic financing is deem stable because not affected by OPR changes. Surprisingly, both Islamic and conventional financing affected by interest rates (ALR) movement. This study proposed rental rates as alternative to the interest based financing as it is determined based on the real value of the property and the physical properties of the property. The proposed rental rate is not only free of the interest rate elements but fair in price as it is based on the real value of the property. Empirical evidence shows rental rates are not affected by macroeconomic factors. Therefore, this study proposes policy makers to consider rental rates as a mechanism in determining CPF and eliminating interest-based financing 2020 Thesis NonPeerReviewed text en https://etd.uum.edu.my/9479/1/s900166_01.pdf text en https://etd.uum.edu.my/9479/2/s900166_02.pdf text en https://etd.uum.edu.my/9479/3/s900166_references.docx Siti Latipah, Harun (2020) Commercial property market and financing in Malaysia: comparative analysis between Islamic and conventional financing. Doctoral thesis, Universiti Utara Malaysia.
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Electronic Theses
url_provider http://etd.uum.edu.my/
language English
English
English
topic HJ Public Finance
spellingShingle HJ Public Finance
Siti Latipah, Harun
Commercial property market and financing in Malaysia: comparative analysis between Islamic and conventional financing
description Commercial property financing (CPF) offered by Islamic and conventional banks have been an issue of deliberation in the recent years due to interest rates fluctuations mostly during the economic crisis. Islam forbids relying on interest rates in all aspects of life including commercial property financing. Therefore, this study aims to identify the macroeconomic factors and financial factors that influence the financing of commercial property offered by Islamic banks (CPFi) and conventional banks (CPFc) in Malaysia during 2010: Q1-2018: Q2. Using ARDL, ARDL-ECM, VDC, and IRF models, the short and long run relationship between macroeconomic factors and financial factors to commercial property financing in Malaysia was analyzed. Data were collected from BNM's monthly statistics bulletin, National Property Information Center, Department of Statistics Malaysia, and International Monetary Fund. The findings show that in the long run, the conventional financing affected by changes in macroeconomic factors (IPI, REER and OPR). Unlike conventional financing, Islamic financing is deem stable because not affected by OPR changes. Surprisingly, both Islamic and conventional financing affected by interest rates (ALR) movement. This study proposed rental rates as alternative to the interest based financing as it is determined based on the real value of the property and the physical properties of the property. The proposed rental rate is not only free of the interest rate elements but fair in price as it is based on the real value of the property. Empirical evidence shows rental rates are not affected by macroeconomic factors. Therefore, this study proposes policy makers to consider rental rates as a mechanism in determining CPF and eliminating interest-based financing
format Thesis
author Siti Latipah, Harun
author_facet Siti Latipah, Harun
author_sort Siti Latipah, Harun
title Commercial property market and financing in Malaysia: comparative analysis between Islamic and conventional financing
title_short Commercial property market and financing in Malaysia: comparative analysis between Islamic and conventional financing
title_full Commercial property market and financing in Malaysia: comparative analysis between Islamic and conventional financing
title_fullStr Commercial property market and financing in Malaysia: comparative analysis between Islamic and conventional financing
title_full_unstemmed Commercial property market and financing in Malaysia: comparative analysis between Islamic and conventional financing
title_sort commercial property market and financing in malaysia: comparative analysis between islamic and conventional financing
publishDate 2020
url https://etd.uum.edu.my/9479/1/s900166_01.pdf
https://etd.uum.edu.my/9479/2/s900166_02.pdf
https://etd.uum.edu.my/9479/3/s900166_references.docx
https://etd.uum.edu.my/9479/
_version_ 1753791170435088384
score 13.211869

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