Rozaimah Zainudin

The adoption of Islamic banking services in Malaysia

Purpose The purpose of this paper is to examine the level of understanding of Islamic banking concepts and the factors that influence Islamic banking adoption in Malaysia, based on Rogers’ (1983; 2003) Diffusion of Innovation. Specifically, the impact of perceived attributes and other variables (understanding, consumer innovativeness and bank personnel’s professionalism) on Islamic banking adoption is examined. Design/methodology/approach A quantitative approach using a sample of 200 working MBA students in a leading public university in Malaysia was used. The instrument used was a self-administered questionnaire survey. Findings The level of understanding of various Islamic banking concepts is below average. A logistic regression reveals that the understanding of Islamic banking concepts and perceived advantage significantly influences the adoption of Islamic banking services. Research limitations/implications The small sample size of 200 individuals may render the findings ungeneralizable. Future studies may use a larger sample from across Malaysia and incorporate other independent variables, such as religiosity and Islamic financial literacy. Practical implications The Malaysian government can provide tax incentives and conduct educational roadshows on Islamic banking. Educating prospective consumers on the advantages of Islamic banking as opposed to conventional banking would provide more objective benefits that would boost the adoption of Islamic banking. Originality/value The results of this paper will be useful for Islamic financial institutions to increase their marketing and promotional efforts to keep pace with stiff competition within the industry.

Assessing the Efficacy of Adjustable Moving Averages Using ASEAN-5 Currencies.

The objective of this research is to examine the trends in the exchange rate markets of the ASEAN-5 countries (Indonesia (IDR), Malaysia (MYR), the Philippines (PHP), Singapore (SGD), and Thailand (THB)) through the application of dynamic moving average trading systems. This research offers evidence of the usefulness of the time-varying volatility technical analysis indicator, Adjustable Moving Average (AMA′) in deciphering trends in these ASEAN-5 exchange rate markets. This time-varying volatility factor, referred to as the Efficacy Ratio in this paper, is embedded in AMA′. The Efficacy Ratio adjusts the AMA′ to the prevailing market conditions by avoiding whipsaws (losses due, in part, to acting on wrong trading signals, which generally occur when there is no general direction in the market) in range trading and by entering early into new trends in trend trading. The efficacy of AMA′ is assessed against other popular moving-average rules. Based on the January 2005 to December 2014 dataset, our findings show that the moving averages and AMA′ are superior to the passive buy-and-hold strategy. Specifically, AMA′ outperforms the other models for the United States Dollar against PHP (USD/PHP) and USD/THB currency pairs. The results show that different length moving averages perform better in different periods for the five currencies. This is consistent with our hypothesis that a dynamic adjustable technical indicator is needed to cater for different periods in different markets.

Islamic religiosity and portfolio allocation: the Malaysian context

Purpose - This study aims to investigate the association between Muslim individuals’ portfolio allocation choice and Islamic religiosity (levels and dimensions), controlling for risk tolerance and sociodemographic factors. Design/methodology/approach - The study uses primary data collected via survey questionnaires from a sample of 751 Muslim working individuals in Kuala Lumpur, Malaysia. Owing to the ordinal nature of the dependent variable, which reflects the levels of proportions of risky assets in portfolios, the data were analyzed using an ordered probit regression model. Findings - The findings reveal that Islamic religiosity levels in general were insignificantly related to portfolio allocation, but that two dimensions of religiosity (virtue and obligation) significantly impact the allocations of risky assets in the portfolio. The higher the level of virtue, the lower the propensity to allocate risky assets into the portfolio. On the contrary, the higher the level of obligation, the higher the propensity to allocate risky assets in the portfolio. Meanwhile, individuals with higher risk tolerance, income and education levels show greater propensity to allocate risky assets in the portfolio. Research limitations/implications - The sample is restricted to Muslims in Kuala Lumpur; hence, the findings are not easily generalized to Muslim investors in general. Findings may differ between Muslims across the world, so future research needs to expand from a country specific to an international analysis. In addition, future studies could include other determinants of portfolio allocation, such as financial literacy. Practical implications - The findings of this study may assist financial planners and policymakers to better understand the drivers of portfolio allocation among their Muslim clients. Originality/value - While other studies have tended to focus on the impact of religiosity on the holdings of specific financial assets, such as Islamic bank accounts or Takaful, the present study explores the effect of Islamic religiosity dimensions on the allocations of risky assets in the portfolio. The study also develops an ordinal measure of portfolio allocation and makes a methodological contribution by using an ordered probit regression analysis.

Is the relationship between macroeconomy and stock market liquidity mutually reinforcing? Evidence from an emerging market

This study investigates whether macroeconomic variables and stock market liquidity have any impact on each other in an emerging market. The Granger causality test and innovative accounting approach (IAA) are used to test the causality among the variables of interest over the period of 2000 M1-2014 M12. Our results suggest that in the short-run, monetary base, interest rate, inflation and foreign equity net inflow have a lagged impact on stock market liquidity. The causality analyses suggest that only industrial production and foreign equity net inflow cause stock market liquidity. The IAA approach suggests that shocks to inflation and foreign equity net inflow increase stock market illiquidity while positive shocks to industrial production decrease stock market illiquidity. Our results suggest weak evidence of feedback from stock market liquidity to macroeconomic variables.

Interindustry dividend policy determinants in the context of an emerging market

Abstract This article examines the determinants of the dividend policies of public listed firms in Malaysia for the period 2005 to 2009. A panel regression estimation model is used to identify the determinants of dividend policy within Malaysian firms. These determinants are then examined across eight different industries – Technology, Industrial, Consumer Noncyclical, Basic Material, Communication, Consumer Cyclical, Diversified and Energy – to investigate possible divergences in the determinants of dividend payouts in the context of an emerging market. Empirical findings show that firm size, leverage position, and profitability are significantly and inversely related to the dividend policy of firms in Malaysia. However, the industry-specific determinants of dividend policy display a number of variances that could plausibly be used as an indication of the selection of stocks in specific industries by potential investors. The results indicate that agency cost is positively related to dividend policy for the Basic Material industry. In addition, size and leverage play an important role in determining dividend payout for firms in the Technology and Consumer Noncyclical industries. For the Industrial sector, the size and profitability significantly affect the dividend policy of firms. However, the results failed to display any significant results for the Energy and Consumer Cyclical industries.