Commercial property market and financing in Malaysia: comparative analysis between Islamic and conventional financing

Commercial property financing (CPF) offered by Islamic and conventional banks have been an issue of deliberation in the recent years due to interest rates fluctuations mostly during the economic crisis. Islam forbids relying on interest rates in all aspects of life including commercial property fina...

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Main Author:	Siti Latipah, Harun
Format:	Thesis
Language:	eng eng eng
Published:	2020
Subjects:	HJ Public Finance
Online Access:	https://etd.uum.edu.my/9479/1/s900166_01.pdf https://etd.uum.edu.my/9479/2/s900166_02.pdf https://etd.uum.edu.my/9479/3/s900166_references.docx
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id	my-uum-etd.9479
record_format	uketd_dc
spelling	my-uum-etd.94792022-12-28T02:58:24Z Commercial property market and financing in Malaysia: comparative analysis between Islamic and conventional financing 2020 Siti Latipah, Harun Mohd Yusof, Rosylin Abd Wahab, Norazlina Islamic Business School Islamic Business School HJ Public Finance Commercial property financing (CPF) offered by Islamic and conventional banks have been an issue of deliberation in the recent years due to interest rates fluctuations mostly during the economic crisis. Islam forbids relying on interest rates in all aspects of life including commercial property financing. Therefore, this study aims to identify the macroeconomic factors and financial factors that influence the financing of commercial property offered by Islamic banks (CPFi) and conventional banks (CPFc) in Malaysia during 2010: Q1-2018: Q2. Using ARDL, ARDL-ECM, VDC, and IRF models, the short and long run relationship between macroeconomic factors and financial factors to commercial property financing in Malaysia was analyzed. Data were collected from BNM's monthly statistics bulletin, National Property Information Center, Department of Statistics Malaysia, and International Monetary Fund. The findings show that in the long run, the conventional financing affected by changes in macroeconomic factors (IPI, REER and OPR). Unlike conventional financing, Islamic financing is deem stable because not affected by OPR changes. Surprisingly, both Islamic and conventional financing affected by interest rates (ALR) movement. This study proposed rental rates as alternative to the interest based financing as it is determined based on the real value of the property and the physical properties of the property. The proposed rental rate is not only free of the interest rate elements but fair in price as it is based on the real value of the property. Empirical evidence shows rental rates are not affected by macroeconomic factors. Therefore, this study proposes policy makers to consider rental rates as a mechanism in determining CPF and eliminating interest-based financing 2020 Thesis https://etd.uum.edu.my/9479/ https://etd.uum.edu.my/9479/1/s900166_01.pdf text eng 2022-11-21 public https://etd.uum.edu.my/9479/2/s900166_02.pdf text eng public https://etd.uum.edu.my/9479/3/s900166_references.docx text eng public other doctoral Universiti Utara Malaysia
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng eng
advisor	Mohd Yusof, Rosylin Abd Wahab, Norazlina
topic	HJ Public Finance
spellingShingle	HJ Public Finance Siti Latipah, Harun Commercial property market and financing in Malaysia: comparative analysis between Islamic and conventional financing
description	Commercial property financing (CPF) offered by Islamic and conventional banks have been an issue of deliberation in the recent years due to interest rates fluctuations mostly during the economic crisis. Islam forbids relying on interest rates in all aspects of life including commercial property financing. Therefore, this study aims to identify the macroeconomic factors and financial factors that influence the financing of commercial property offered by Islamic banks (CPFi) and conventional banks (CPFc) in Malaysia during 2010: Q1-2018: Q2. Using ARDL, ARDL-ECM, VDC, and IRF models, the short and long run relationship between macroeconomic factors and financial factors to commercial property financing in Malaysia was analyzed. Data were collected from BNM's monthly statistics bulletin, National Property Information Center, Department of Statistics Malaysia, and International Monetary Fund. The findings show that in the long run, the conventional financing affected by changes in macroeconomic factors (IPI, REER and OPR). Unlike conventional financing, Islamic financing is deem stable because not affected by OPR changes. Surprisingly, both Islamic and conventional financing affected by interest rates (ALR) movement. This study proposed rental rates as alternative to the interest based financing as it is determined based on the real value of the property and the physical properties of the property. The proposed rental rate is not only free of the interest rate elements but fair in price as it is based on the real value of the property. Empirical evidence shows rental rates are not affected by macroeconomic factors. Therefore, this study proposes policy makers to consider rental rates as a mechanism in determining CPF and eliminating interest-based financing
format	Thesis
qualification_name	other
qualification_level	Doctorate
author	Siti Latipah, Harun
author_facet	Siti Latipah, Harun
author_sort	Siti Latipah, Harun
title	Commercial property market and financing in Malaysia: comparative analysis between Islamic and conventional financing
title_short	Commercial property market and financing in Malaysia: comparative analysis between Islamic and conventional financing
title_full	Commercial property market and financing in Malaysia: comparative analysis between Islamic and conventional financing
title_fullStr	Commercial property market and financing in Malaysia: comparative analysis between Islamic and conventional financing
title_full_unstemmed	Commercial property market and financing in Malaysia: comparative analysis between Islamic and conventional financing
title_sort	commercial property market and financing in malaysia: comparative analysis between islamic and conventional financing
granting_institution	Universiti Utara Malaysia
granting_department	Islamic Business School
publishDate	2020
url	https://etd.uum.edu.my/9479/1/s900166_01.pdf https://etd.uum.edu.my/9479/2/s900166_02.pdf https://etd.uum.edu.my/9479/3/s900166_references.docx
_version_	1776103730186289152

Commercial property market and financing in Malaysia: comparative analysis between Islamic and conventional financing

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