Oil price shocks: A comparative study on the impacts of oil price movements in Malaysia and the UK economies

The study investigates the relationship between changes in crude oil prices and Malaysia and the UK macro-economy. A multivariate VAR analysis is carried out among five key macroeconomic variables: real gross domestic product, short term interest rate, real effective exchange rates, long term interest rate and money supply. From the VAR model, the impulse response functions reveal that oil price movements cause significant reduction in aggregate output and increase real exchange rate. The variance decomposition shows that crude oil prices significantly contribute to the variability of real exchange rate long term interest rate in the Malaysia economy while oil price shocks are found to have significant effects on money supply and short term interest rate in the UK economy. Despite these macro-econometric results, caution must be exercised in formulating energy policies since future effects of upcoming oil shocks will not be the same as what happened in the past. Explorations and development of practicable alternatives to imported fuel energy will cushion the economy from the repercussions of oil shocks

Financing risk and debt financing modes of Islamic bank in Malaysia: A theoretical perspective

The purpose of this paper is to discuss the financing risk in Islamic banks and to explain it from the theoretical perspectives why Islamic banks concentrate on debt based financing modes. From this stance, this study focuses on the issue on how the debt financing mode could trigger financing risk.Specifically, there are two questions regarding on this issue.First, what is the nature of Islamic debt financing modes that could trigger Islamic Bank financing risk? Second, what are the important variables used by Islamic banks to monitor their financing risk? To answer these questions, this paper attempt to explain this issue utilizing agency theory, financial inter mediation theory and portfolio theory in the context of Islamic banking model.Based on these theories, this study find that the endogenous factors such as the level of capital, the management cost and efficiency and the level of asset play an important role in the financing risk management of Islamic banks and highlight the reason why Islamic Bank prefer debt-financing modes

Evidence of Inflation-Poverty Causality in Nigeria based on the Toda-Yamamoto Dynamic Causality Test.

Purpose: One of the known global consequences of inflation is increasing and causing poverty. Most studies follow suit and empirically investigated the effect of inflation on poverty without taking into cognizance that poverty might as well cause inflation. The main aim of this study is to investigate the nature of causality between inflation and poverty in Nigeria. Methodology This research work employs the famous Toda-Yamamoto causality test to investigate the nature of causality between inflation and poverty in Nigeria for the period 1980-2016, with money supply and exchange rate as control variables. Findings: The results reveal that there is bidirectional causality between inflation and poverty, none of the variables cause money supply and none of them cause exchanges rate. Implication: Even though the money supply does not cause poverty directly, it does cause inflation, and inflation in turns causes poverty. Also, the exchange rate does not cause inflation directly, but it does cause poverty, and at the same time, poverty causes inflation. Therefore, the study calls the attention of the policymakers to be cautious in making policies concerning money supply and local currency devaluations (exchange rate) as they cause both inflation and poverty directly and indirectly, consequently, they affect the societal welfare in general

Tackling inflation in Nigeria: Monetary or fiscal policy? An empirical assessment of the effectiveness of the simultaneous implementation of the policies

The study is aimed at empirically assessing between monetary policy and fiscal policy, the most effective in combating and tackling inflation in Nigeria, especially when implemented simultaneously – the effect of the concurrent implementation of the two policies on inflation. The variables of the policies are based on market information, money market equilibrium (LM Curve) for monetary policy, and product market equilibrium (IS Curve) for fiscal policy. The research makes use of the Autoregressive Distributed Lag Model (ARDL). Data for Nigerian was used from 1970 – 2016. The findings show that monetary and fiscal policies can be implemented concurrently as monetary policy is the best for a short-run solution during the fiscal policy for a long-run solution. The findings of the study are based on Nigerian data utilized for the period 1970 – 2016 and the method of data analysis adopted – ARDL, as well as variables selection based on the general equilibrium of money and product market. The findings of the study clearly show that monetary and fiscal policies can be used simultaneously to tackle inflation in Nigeria successfully, being effective in combating inflation in different periods (short-run or long-run). The study attempted to harmonize the incompatible theories and their policies to see whether the policies can be utilized concurrently since the policies are aimed at effecting price stability. The research’s findings confirm the feasibility of implementing the two policies concurrently and their effects to be felt or realized in different periods – short-runs and long-runs

The Asymmetric Impact of Exchange Rate on the Inflation Rate in Sierra Leone

The paper is aimed at investigating empirically, the impact of exchange rate on inflation and the extent of its asymmetry. The econometrics tool of analysis utilized by this study is Autoregressive Distributed Lag Model (ARDL) and Non-linear ARDL (NARDL) using time series data of Sierra Leone for a period 1970 - 2016. The results of the ARDL indicated that the exchange rate is inflationary but only in the short-run. There is no evidence of the long- run influence of exchange rate on inflation in the country. Meanwhile, the results of the NARDL not only confirms the short-run inflationary of the positive shocks of the exchange rate, but it also signifies the disinflationary effect of the negative shocks during the long-run. The findings of the research are limited to Sierra Leone whose data were used, based on ARDL and NARDL as the econometrics techniques applied, on the countrys data from 1970 to 2016 as well as the variables that are chosen. This implies that devaluation of local currencies in Sierra Leone can immediately raise the level of prices of imported commodities, in particular, and immediately raise the level of inflation in the country in general, but such effects are limited to the short-run, while revaluation has a disinflationary effect in the long- run

Financial liberalisation and stock markets integration: further evidence from Nigeria, South Africa and Egypt

The aim of this paper is to analyse the financial liberalisation and stock markets integration of Nigeria, South-Africa and Egypt. The study is conducted for the period of 1989-2016 and comprised both the pre- and post-liberalisation era. The paper employed the Vector Autoregressive methodology. The use of the financial liberalisation dummy gives a better insight into the impact of financial liberalization on the integration of markets. The result showed there is no long-run relationship between the selected stock exchange markets. The result further showed evidence of short-run dynamics between stock exchange markets. The generalized impulse response functions showed that all the markets responded from shock. The financial liberalization dummy is positive and significant and implied its impact on the integration of the markets. The paper concluded that the stock markets are not fully integrated. As such, investors who have long-term investment plans can diversify their portfolios across the three selected stock markets

The impact of reserves debt ratio on profitability of commercial banks : lesson from Nigeria

This study attempts to explore the impact of the change in international reserves to external debt ratio positions of Nigeria on the profitability of domestic deposit money financial institutions. Using the sample of 14 listed banks operating in the market from the period 2004 to 2014, in the study we employed dynamic fixed effect (DFA) methodology to the banking institution. The result reported that a change in international reserves to debt ration position has a significant impact on bank returns during the short run period. However, in the long run, position the change affect banking return negatively.peer-reviewe

The evaluation of FDI inflows into China from selected ASEAN countries using panel estimation

China has recently embraced globalization in the area of trade and foreign direct investment (FDI) by joining WTO. Globalization has had positive results on its economic growth through trade expansion and FDI that opened new channels for economic expansion. The Fourth Ministerial Meeting of the WTO in Doha, Qatar approved China's Protocol of Accession. China's accession to the WTO means a more open China. As a result, China has transformed itself from one with virtually no foreign-invested firms to the largest developing-country destination for FDI. Giving the above scenario, the purpose of this paper is to evaluate the FDI inflows in China from the selected ASEAN countries using panel data analyses. The FDI model has been utilized in determining factors that influence FDI inflows into China from selected ASEAN countries. In panel estimation, two alternative models, one-way fixed effect model and random effect model were used to estimate factors affecting the FDI inflows into China. The results of the study are consistent with the predictions of the previous study particularly related to trade openness (OPENESS) and relative exchange rate (RELEXC). We found evidence that OPENESS and RELEXC are an important factor in influencing FDI flows between selected ASEAN countries and China

Liquidity risk underlying debt financing and economic condition: A Panel data analysis of Islamic Bank in Malaysia

The objective of this paper is to analyze the determinants of Islamic bank liquidity risk in Malaysia with special focus on debt financing. Based on this objective, this study utilized unbalanced panel dataset of 17 Islamic banks in Malaysia over the period 1998-2012.The method use is this study is panel data regression analysis. The results show that the level of capital is significant with the liquidity risk.For debt financing variable, the results signify that the higher volatility of debt financing modes will cause some liquidity risk.For macroeconomic condition, the result shows that impact of inflation rate could decrease the nominal value deposits in Islamic bank and finally the relationship of liquidity risk and Islamic bank deposit rate is negative.The implication of this study is that when the Islamic banks consider on their liquidity risk management, the have to look upon the behaviour of debt financing, inflation rate and Islamic bank deposit rate

Money supply and inflation in Nigeria: the myth of the monetarist theory of inflation

The inability of Nigeria to make its inflation rate a single digit motivates this study. This paper aims to empirically investigate whether inflation is solely caused by the increase in money supply beyond what is required by the economy, as maintained by monetarists using Nigerian data. Autoregressive Distributed Lag Model (ARDL) was used as the tool of econometric analysis on Nigerian time series data for 48 years. The ARDL was chosen because unit root tests were conducted. The results show that variables are not integrated in the same order. Money supply increment is demonstrated to be inflationary only in the short-run. The existence of other factors that influence inflation in the country is also evident. While money supply has no significant influence on inflation, the GDP and the constant have a significant influence on inflation in the long-run. Therefore, justification is provided for the myth of monetarist theory of inflation, claiming that money supply increment is a sole source of inflation, especially in Nigeria. Even though the result of the Wald test shows that the coefficients of money supply combined have a significant effect on inflation in conformity with the monetarist theoretical arguments, such effects are limited to short-run only. The findings of the research are limited to Nigeria whose data are used, based on ARDL as the econometrics techniques applied, for a period of 48 years from 1970–2017. Generally speaking, explanations for theories regarding inflation, especially in developing nations, should not be taken for granted. The research empirically demonstrates that the monetarist theory of inflation is a myth and not reality by using Nigerian data. It also suggests that other theories should be empirically tested to check which one best explain the nature of inflation dynamics in a country to proffer a better solution to a high inflation rate problem