Exchange rate behaviour and management in Malaysia: empirical study across regimes / Azlul Kalilah Zaghlol

economic developments, a study on exchange rate behaviour becomes crucial for the economic stability and achievement of macroeconomic objectives. There have been claims that fixed exchange rate regime is more prone to overvaluation and responsible for devastating currency crises. However, empirical studies on exchange rate behaviour do not seem to have established whether currency misalignment and the regime choice are the ones potentially responsible. This study thus examines the behaviour of exchange rates and its management given the unique experience in Malaysia during the 1997 financial crisis. Firstly, its objective is to measure real exchange rate misalignment (RERMIS) upon estimation of its equilibrium level. Secondly, this study tests the Fixed Exchange Rate Regime-Misalignment (FERRM) hypothesis in establishing whether the pegged regime contributed to the worsening of misalignment. The third objective looks into the exchange market pressure (EMP) and its associated intervention. It answers the question of “deliberateness” with regard to exchange rate management policy, specifically whether it is a resulting behaviour of deliberate action or merely due to the market forces

A Cointegration Study of Life Insurance Demand in Malaysia

The expansion of the insurance sector has a profound effect on a country's economy. Insurance companies experienced a slowdown in premiums during the COVID-19 pandemic, particularly in the life sector. Due to consumers' discretionary decision to spend less on life insurance policies, premium volumes decreased globally. One way to provide income protection for dependents or beneficiaries upon the death of an insured person, total permanent disability, or policy contract maturity is through life insurance. This study, therefore, this study considers recent events as it examines the factors that influence the demand for life insurance in Malaysia. The ordinary least square (OLS) method is employed using 34 years of data spanning from 1988 until 2021.  The result of VECM showed that Income positively affects demand in the long run, while the other two variables, savings, and unemployment negatively affect demand in the long run. The empirical findings are expected to enrich the existing literature and to create awareness of the benefits that life insurance may offer in potential risks transferred to the insurer. Furthermore, the research findings could also help policymakers create preventative measures to protect life insurance companies from the consequences of diminished market confidence in the slowdown of the business cycle

Financial Risk and International Inbound Tourism: A Malaysian Illustration

The impact of financial risk on inbound tourism is explored in this study by examining the effect of shocks in foreign debt level and debt service stability on the tourist arrival rate in Malaysia, based on the Theory of Planned Behavior (TPB). Quarterly data from 2010 to 2020 were obtained from multiple sources, which include the Malaysia Tourism corporate website, the official portal of the Ministry of Economy Malaysia, the Department of Statistics Malaysia, and the Federal Reserve (FRED) Economic statistical website. A VAR model was estimated, together with the Granger causality test, to identify the relationship between financial risk, control variables, and the tourist arrival rate in Malaysia. We specifically consider the effects of financial risk on estimated impulse responses and variance decompositions for the studied variables. Empirical results indicate that there is a unidirectional causality running from foreign debt level stability, debt service stability, and industrial production to tourist arrivals. In addition, there is also bidirectional causality from the effective exchange rate to tourist arrivals and from tourist arrivals to the effective exchange rate. This study is the first of its kind to explore the effect of financial risks in the context of foreign debt levels and debt service stability in Malaysia. The study emphasizes the importance of monitoring the country’s debt financing threshold to maintain financial stability, which if violated would be detrimental to tourism

Empirical Evidence on Tourism, Geopolitical Risk and Economic Policy Uncertainty Relationships in Malaysia

Malaysia, celebrated for its rich cultural diversity, vibrant cities, and pristine natural landscapes, stands prominently on the global tourism map. However, the tourism industry is susceptible to the impact of geopolitical risk and economic policy uncertainty. These external factors, shaped by global events and policy changes, can significantly influence the tourism landscape in Malaysia. Given this significance, the study aims to empirically investigate the cointegrating relationship between international inbound tourism levels (tourist arrivals), geopolitical risk (GPR index), and economic policy uncertainty (EU index) in Malaysia. The analysis uses quarterly observations from the first quarter of 2000 to the fourth quarter of 2022. The study employs the Granger Causality test, supported by structural VAR impulse functions and variance decomposition analysis to illustrate how economic policy uncertainty responds to shocks in tourist arrivals. The significant causal relationship observed moves from tourist arrivals to economic policy uncertainty. In other words, the study implies that variations in tourist arrivals have a lasting impact on economic policy uncertainty but not necessarily on geopolitical risk. This study provides valuable implications for policy planning and decision-making. Policymakers should consider the implications of shifts in tourism patterns for economic policy uncertainty. The absence of a long-term relationship between tourist arrivals and geopolitical risk may suggest conducting separate risk assessments to manage geopolitical risks that may affect the tourism industry in Malaysia

Factors Affecting the Intention to Invest in Islamic SRI in Malaysia

Islamic SRI has shown a flourishing expansion over the last three decades. This demonstrates that there will be a significant opportunity to enhance the Islamic SRI in the Islamic Finance sector.  Islamic SRI is a type of investment that facilitates the creation of the ecosystem and promotes responsible investing. The study attempts to look at the factors affecting the intention to invest in Islamic SRI.  The theoretical framework is built on the Theories of Planned Behavior (TPB) and Theory of Reasoned Action (TRA). Since the study focuses on the desire to engage in Islamic SRI, the theories are expanded to include three more antecedents: environmental and societal concern, knowledge, and religion. Due to the study’s emphasis on Islamic SRI perspectives, these variables ought to be included. According to the multiple regression analysis, four components, namely attitude, subjective norm and environmental and social factors, were revealed to be positively significant on the intention to invest in Islamic SRI. The study employs quantitative research through an online survey questionnaire. The sampling technique for this study is non-probability sampling by applying the convenience sampling technique. Besides, the targeted population of this study is the potential private investors who reside in the states of Kuala Lumpur and Selangor, while the total sample size of the study is 380

Using the ARDL Approach to Investigate the Nexus Between Financial Risk and Sukuk Market Development

The purpose of this paper is to examine the effect of financial risk factors on Sukuk market development in Malaysia during the period 2015 to year 2021. To capture the effect of financial risk factors on Sukuk market development, the authors estimated the long-run linkage by using ARDL bounds testing approach to cointegration. This study confirmed the existence of both long-run and short-run relationships between the financial risk factors and Sukuk market development. The authors also found that the coefficient for international liquidity stability is positive and statistically significant in the long-run, but negative and statistically significant in the short-run. Findings obtained in this research can further justify the premium price to be paid in purchasing Sukuk as compared to conventional bond which may be beneficial to Sukuk market players in understanding these securities better in capitalizing its benefit to portfolio diversification. The use of ARDL approach that examines the long-run and short-run effects of financial risk factors on Sukuk market development in Malaysia makes the current study value added to the literature since there is scant research conducted in the same area using samples from an emerging Asian market. Research paper Keywords: Industry 4.0; Logistics; Innovation; Technology; Malaysia Reference to this paper should be made as follows: Roslen, S. N. M, Zaghlol, A. K., & Abdul Aziz, M. R. (2022). Using the ARDL Approach to Investigate the Nexus Between Financial Risk and Sukuk Market Development. Journal of Entrepreneurship, Business and Economics, 10(2S1), 95–123.     &nbsp

Using the ARDL Approach to Investigate the Nexus Between Financial Risk and Sukuk Market Development

The purpose of this paper is to examine the effect of financial risk factors on Sukuk market development in Malaysia during the period 2015 to year 2021. To capture the effect of financial risk factors on Sukuk market development, the authors estimated the long-run linkage by using ARDL bounds testing approach to cointegration. This study confirmed the existence of both long-run and short-run relationships between the financial risk factors and Sukuk market development. The authors also found that the coefficient for international liquidity stability is positive and statistically significant in the long-run, but negative and statistically significant in the short-run. Findings obtained in this research can further justify the premium price to be paid in purchasing Sukuk as compared to conventional bond which may be beneficial to Sukuk market players in understanding these securities better in capitalizing its benefit to portfolio diversification. The use of ARDL approach that examines the long-run and short-run effects of financial risk factors on Sukuk market development in Malaysia makes the current study value added to the literature since there is scant research conducted in the same area using samples from an emerging Asian market. Research paper Keywords: Industry 4.0; Logistics; Innovation; Technology; Malaysia Reference to this paper should be made as follows: Roslen, S. N. M, Zaghlol, A. K., & Abdul Aziz, M. R. (2022). Using the ARDL Approach to Investigate the Nexus Between Financial Risk and Sukuk Market Development. Journal of Entrepreneurship, Business and Economics, 10(2S1), 95–123.     &nbsp