The effect of macroeconomic factors and macroprudential policy elements on macroprudential policy indicators and banks’ stability: empirical evidence from Islamic banking system / Sutina Junos

The 2008-2009 Global Financial Crisis (GFC) had redirected the focus on the relationship between Islamic banking and financial stability particularly, the resilience of the Islamic banking industry during a crisis. Effective macroprudential policy are necessary and desirable in Islamic banking to mi...

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Main Author:	Junos, Sutina
Format:	Thesis
Language:	English
Published:	2022
Subjects:	Macroeconomics Money
Online Access:	https://ir.uitm.edu.my/id/eprint/74322/2/74322.pdf
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id	my-uitm-ir.74322
record_format	uketd_dc
spelling	my-uitm-ir.743222023-03-28T13:29:31Z The effect of macroeconomic factors and macroprudential policy elements on macroprudential policy indicators and banks’ stability: empirical evidence from Islamic banking system / Sutina Junos 2022 Junos, Sutina Macroeconomics Money The 2008-2009 Global Financial Crisis (GFC) had redirected the focus on the relationship between Islamic banking and financial stability particularly, the resilience of the Islamic banking industry during a crisis. Effective macroprudential policy are necessary and desirable in Islamic banking to mitigate systemic risks. The objectives of applying this policy on Islamic banking activities are to pursue and maintain financial stability by ensuring the safety and stability of banks, thereby preventing the systemic effects of emerging problems. There are three key elements of an effective macroprudential policy framework namely a system of early warning indicators that signal increased vulnerabilities to financial stability, a set of policy instruments that can help contain risks, address the increased vulnerabilities at an early stage, as well as help build buffers and an effective institutional framework. Therefore, this study is conducted to extend the investigation on how macroprudential policies may affect the Islamic banking system. The objectives of this study are to analyze the trend of main macroprudential policy indicators in Islamic banks, to investigate the influence of macroeconomic factors and macroprudential policy elements on the main macroprudential policy indicators in Islamic banks in order to strengthen the links between the different financial components of the financial system and the macroeconomic environment and finally to study the impact of macroprudential policy indicators on Islamic banks’stability. This study employed the two- stage least square estimator and Hausman Taylor estimator to establish the second research objective and panel data analysis for the third research objective. The annual data was collected from Islamic banks in twenty (20) selected countries during the post crisis period from 2008 to 2017. The empirical result proved that, GDP growth rate, the balance of payment, money supply, domestic credit growth, unemployment rate, loan-to-value ratio, debt to-income ratio, reserve requirement, mandate and transparency have a significant influence on the macroprudential policy indicators in Islamic banks. Meanwhile, these macroprudential policy indicators have a strong relationship with Islamic banks’ stability. Therefore, the result provides significant contributions to the existing body of knowledge on the macroprudential policy framework. The results of this study can help policy-makers especially those in countries that practice the Islamic banking system in strengthening their macroprudential policy toolkit and clarifying the mandate for financial stability, developing a more formal institutional framework of macroprudential policy and expanding the range of macroprudential instruments 2022 Thesis https://ir.uitm.edu.my/id/eprint/74322/ https://ir.uitm.edu.my/id/eprint/74322/2/74322.pdf text en public phd doctoral Universiti Teknologi MARA (UiTM) Faculty of Business and Management Ma’in, Masturah
institution	Universiti Teknologi MARA
collection	UiTM Institutional Repository
language	English
advisor	Ma’in, Masturah
topic	Macroeconomics Money
spellingShingle	Macroeconomics Money Junos, Sutina The effect of macroeconomic factors and macroprudential policy elements on macroprudential policy indicators and banks’ stability: empirical evidence from Islamic banking system / Sutina Junos
description	The 2008-2009 Global Financial Crisis (GFC) had redirected the focus on the relationship between Islamic banking and financial stability particularly, the resilience of the Islamic banking industry during a crisis. Effective macroprudential policy are necessary and desirable in Islamic banking to mitigate systemic risks. The objectives of applying this policy on Islamic banking activities are to pursue and maintain financial stability by ensuring the safety and stability of banks, thereby preventing the systemic effects of emerging problems. There are three key elements of an effective macroprudential policy framework namely a system of early warning indicators that signal increased vulnerabilities to financial stability, a set of policy instruments that can help contain risks, address the increased vulnerabilities at an early stage, as well as help build buffers and an effective institutional framework. Therefore, this study is conducted to extend the investigation on how macroprudential policies may affect the Islamic banking system. The objectives of this study are to analyze the trend of main macroprudential policy indicators in Islamic banks, to investigate the influence of macroeconomic factors and macroprudential policy elements on the main macroprudential policy indicators in Islamic banks in order to strengthen the links between the different financial components of the financial system and the macroeconomic environment and finally to study the impact of macroprudential policy indicators on Islamic banks’stability. This study employed the two- stage least square estimator and Hausman Taylor estimator to establish the second research objective and panel data analysis for the third research objective. The annual data was collected from Islamic banks in twenty (20) selected countries during the post crisis period from 2008 to 2017. The empirical result proved that, GDP growth rate, the balance of payment, money supply, domestic credit growth, unemployment rate, loan-to-value ratio, debt to-income ratio, reserve requirement, mandate and transparency have a significant influence on the macroprudential policy indicators in Islamic banks. Meanwhile, these macroprudential policy indicators have a strong relationship with Islamic banks’ stability. Therefore, the result provides significant contributions to the existing body of knowledge on the macroprudential policy framework. The results of this study can help policy-makers especially those in countries that practice the Islamic banking system in strengthening their macroprudential policy toolkit and clarifying the mandate for financial stability, developing a more formal institutional framework of macroprudential policy and expanding the range of macroprudential instruments
format	Thesis
qualification_name	Doctor of Philosophy (PhD.)
qualification_level	Doctorate
author	Junos, Sutina
author_facet	Junos, Sutina
author_sort	Junos, Sutina
title	The effect of macroeconomic factors and macroprudential policy elements on macroprudential policy indicators and banks’ stability: empirical evidence from Islamic banking system / Sutina Junos
title_short	The effect of macroeconomic factors and macroprudential policy elements on macroprudential policy indicators and banks’ stability: empirical evidence from Islamic banking system / Sutina Junos
title_full	The effect of macroeconomic factors and macroprudential policy elements on macroprudential policy indicators and banks’ stability: empirical evidence from Islamic banking system / Sutina Junos
title_fullStr	The effect of macroeconomic factors and macroprudential policy elements on macroprudential policy indicators and banks’ stability: empirical evidence from Islamic banking system / Sutina Junos
title_full_unstemmed	The effect of macroeconomic factors and macroprudential policy elements on macroprudential policy indicators and banks’ stability: empirical evidence from Islamic banking system / Sutina Junos
title_sort	effect of macroeconomic factors and macroprudential policy elements on macroprudential policy indicators and banks’ stability: empirical evidence from islamic banking system / sutina junos
granting_institution	Universiti Teknologi MARA (UiTM)
granting_department	Faculty of Business and Management
publishDate	2022
url	https://ir.uitm.edu.my/id/eprint/74322/2/74322.pdf
_version_	1783736018479874048

The effect of macroeconomic factors and macroprudential policy elements on macroprudential policy indicators and banks’ stability: empirical evidence from Islamic banking system / Sutina Junos

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