Foreign Portfolio Investment and Economic Growth in Malaysia

This study examines the relationship between foreign portfolio investment (FPI) and Malaysia’s economic performance. In particular, the study analyses the relationship between FPI and real gross domestic product (GDP) using the widely adopted Granger causality test and the more recent Toda and Yamamoto’s (1995) non-causality test to establish the direction of causation between the two variables. Similar method is also applied on the relationship between volatility of FPI and real GDP. Additionally, the study uses an innovation accounting by simulating variance decompositions and impulse response functions for further inferences. Using quarterly data covering the period from 1991 to 2006, the study finds evidence that economic growth causes changes in the FPI and its volatility and not vice versa.. The findings suggest that economic performance is the major pull factor in attracting FPI into the country. Thus, it must be ensured that the Malaysian economy remains on a healthy and sustainable growth path so as to maintain investor confidence in the economy.Foreign Portfolio Investment, Economic Growth, Granger Causality, Toda-Yamamoto Non-causality, Variance Decomposition

Foreign Portfolio Investment and Economic Growth in Malaysia

This study examines the relationship between foreign portfolio investment (FPI) and Malaysia’s economic performance. In particular, the study analyses the relationship between FPI and real gross domestic product (GDP) using the widely adopted Granger causality test and the more recent Toda and Yamamoto’s (1995) non-causality test to establish the direction of causation between the two variables. Similar method is also applied on the relationship between volatility of FPI and real GDP. Additionally, the study uses an innovation accounting by simulating variance decompositions and impulse response functions for further inferences. Using quarterly data covering the period from 1991 to 2006, the study finds evidence that economic growth causes changes in the FPI and its volatility and not vice versa.. The findings suggest that economic performance is the major pull factor in attracting FPI into the country. Thus, it must be ensured that the Malaysian economy remains on a healthy and sustainable growth path so as to maintain investor confidence in the economy. JEL classification: G15, C32, C12 Keywords: Foreign Portfolio Investment, Economic Growth, Granger Causality, Toda-Yamamoto Non-causality, Variance Decompositio

Time-Varying Integration Among Asean-5 Economies

Abstract - This study explores the economic integration among the ASEAN-5 economies over two sample periods; the pre-crisis period (1990 to 1996) and post-crisis period (2000 to 2006). Using the output-price approach, it attempts to determine if the nature of integration among these economies has changed due to the Asian financial crisis in 1997. In methodology, the study adopts the Autoregressive Distributed Lag (ARDL) approach and Vector Error Correction Model (VECM). The results show that the crisis has a deep imprint on the degree of economic integration among these countries. The results provide important inputs for macroeconomic policy formulation at the regional level

The information content of the Islamic interbank money market rate in Malaysia

The purpose of this paper is to analyze the information content of the Islamic interbank money market rate (IIMMR), with respect to several macroeconomic indicators such as output, inflation, exports, imports, bank loans and stock market index, and compare it against that of the conventional interbank money market rate using the Malaysian data

Evaluating Monetary Transmission Mechanism in Indonesia Through Exchange Rate Channel

:This study aims to evaluate the role of exchange rate channel in transmitting mone­tary policy effects in Indonesia by addressing the following questions: (i) to what extent is the contribution of the exchange rate in inflation rate fluctuations in Indonesia? (ii) What are the effects of exchange rate channel in explaining the direct pass through effect in Indonesia; and (iii) can the exchange rate channel explain the trade competitiveness in Indonesia? The study utilizes monthly data spanning from January 1990 to April 2009 and is divided into four sub-periods, namely (i) pre-crisis period: January 1990-July 1997; (ii) crisis period: August 1997-December 2000; (iii) post-crisis period: January 2001-June 2005; and (iv) post-ITF period: July 2005-April 2009. By adopting the standard Vector Autoregression model, the study finds changing nature of the exchange rate channel during the various sub-periods of the study

EFFECTIVENESS OF ZAKAT-BASED PROGRAMS ON POVERTY ALLEVIATION AND ECONOMIC EMPOWERMENT OF POOR WOMEN: A CASE STUDY OF BANGLADESH

Among the many problems facing Bangladesh, poverty remains a key problem affecting millions of lives. During the past few decades, many initiatives have been implemented such as microcredit and cash transfer programs, yet the results seemed to be ambiguous. New frontiers are now sought to find new sources of finance which could offer a more effective and sustainable solution to the root cause of the poverty problem. Considering the idea of entrepreneurship and group-based development approach of microcredit, a zakat-based development approach was initiated in Bangladesh at a private level by an organization called Center for Zakat Management (CZM) for poverty alleviation and sustainable economic empowerment targeting poor women in rural areas. This paper aims to assess the effectiveness of the CZM efforts in utilizing zakat funds for promoting entrepreneurship among poor rural women. Focusing on the case of Bangladesh, this study assesses the effectiveness of zakat on aspects such as income, house hold expense and fixed asset accumulation of the poor client based on the “before and after” approach. Groups comprising of poor individuals and families are given equity capital/seed money and are encouraged to embark on small businesses according to their own liking. The groups are supervised for a period of a minimum of three years to ensure all individuals within the group are able to continue with their activities and ultimately, free themselves from the shackles of poverty and graduate into sustainable livelihood. Results indicate a significant nominal and real increase in average monthly income, increase in fixed assets and an increase in monthly average household expenditure before and after receiving zakat money. Results also demonstrate factors such as age of the entrepreneur, family size, type of business involved and the amount of zakat received to have a strong influence in determining the success of women entrepreneurs. Education level of the entrepreneur, on the other hand, does not seem to have significant impact on the success or failure of the entrepreneur. The findings from this paper shed light on the effectiveness of zakat-based approach in alleviating poverty and ensuring sustainable economic empowerment of the poor rural women. &nbsp

Shariah compliance of green banking policy in Bangladesh

Purpose – This paper aims to critically evaluate whether the policies of green banking set by Bangladesh Bank are Shariah compliant; according to the main sources of the Shariah – Quran and Sunnah. Design/methodology/approach – Green policy and guidelines have been divided into different categories such as environment protection, conservation of resources, risk management, educating people about green financing, transparency and disclosure and investing in green projects according to the common measures as stated in three different phases of the policy and guidelines. Subsequently, these major aspects of the green policy and guidelines are linked to the main references of the Shariah, i.e. the holy Quran and Sunnah of Prophet [peace be upon him (pbuh)]. Findings – Various verses of the holy Quran and teachings of Prophet (pbuh) related to the major categories of Green policy and guidelines are being presented to show the compliance with Shariah. Practical implications – The Green policy and guidelines are very much in-line with Shariah. Though all types of banks in Bangladesh are bound to implement the green banking policy, however, Shariah compliance of green banking policy will be encouraging for all Islamic Banks of Bangladesh for their further and profounder involvement in it. Social implications – As green policies are found to be Shariah complaint, the Islamic banks are expected to contribute more to the sustainable economic growth of the country by successfully implementing the green financing policies compare to their conventional counterpart. Originality/value – Verses of holy Quran and authentic Hadiths related to environmental sustainability concept show that Islam is a green religion as well as green banking policy is Islamic. Keywords Green banking, Green banking policy of Bangladesh, Shariah complianc

Multi-messenger observations of a binary neutron star merger

On 2017 August 17 a binary neutron star coalescence candidate (later designated GW170817) with merger time 12:41:04 UTC was observed through gravitational waves by the Advanced LIGO and Advanced Virgo detectors. The Fermi Gamma-ray Burst Monitor independently detected a gamma-ray burst (GRB 170817A) with a time delay of ~1.7 s with respect to the merger time. From the gravitational-wave signal, the source was initially localized to a sky region of 31 deg2 at a luminosity distance of 40+8-8 Mpc and with component masses consistent with neutron stars. The component masses were later measured to be in the range 0.86 to 2.26 Mo. An extensive observing campaign was launched across the electromagnetic spectrum leading to the discovery of a bright optical transient (SSS17a, now with the IAU identification of AT 2017gfo) in NGC 4993 (at ~40 Mpc) less than 11 hours after the merger by the One- Meter, Two Hemisphere (1M2H) team using the 1 m Swope Telescope. The optical transient was independently detected by multiple teams within an hour. Subsequent observations targeted the object and its environment. Early ultraviolet observations revealed a blue transient that faded within 48 hours. Optical and infrared observations showed a redward evolution over ~10 days. Following early non-detections, X-ray and radio emission were discovered at the transient’s position ~9 and ~16 days, respectively, after the merger. Both the X-ray and radio emission likely arise from a physical process that is distinct from the one that generates the UV/optical/near-infrared emission. No ultra-high-energy gamma-rays and no neutrino candidates consistent with the source were found in follow-up searches. These observations support the hypothesis that GW170817 was produced by the merger of two neutron stars in NGC4993 followed by a short gamma-ray burst (GRB 170817A) and a kilonova/macronova powered by the radioactive decay of r-process nuclei synthesized in the ejecta

Evidence of Global Financial Shocks Transmission: Changing Nature of Stock Markets Integration during the 2007/2008 Financial Crisis

The study aims to empirically examine the nature of integration among the Malaysian stock market with two of the world's biggest stock markets, namely the US and Japan, during the global financial crisis in 2007/2008. By assessing the changes in the nature of integration among these markets during the crisis, the study aims to find evidence on the international transmission of the financial shocks through the global stock markets. The study covers the period from September 1, 2006 to May 30, 2009. In efforts to capture the changing nature of integration among the stock markets, the sample period is divided into three subperiods, namely the pre-crisis period, during crisis period I and during crisis period II. In methodology, the study relies on the recent empirical tests of cointegration, impulse response functions and variance decomposition analysis. The study finds that the nature of integration among the these markets changes over the three periods due to the crisis. In particular, the markets are shown to be highly integrated at the initial stage of the crisis. However, as information became clearer and it is evident that the crisis is prolonged, investors opt for other types of investment than the equity markets, resulting in all the markets to perform independently