Interbank commodity Murabahah for funding liquidity management in Malaysia

Liquidity instruments for banks’ monetary operations are diverse and available for both conventional and Islamic financial institutions (IFIs). Interbank Commodity Murabahah (ICM) was offered in the Malaysian market from 2009 till 2018 as one of the liquidity management tools for Islamic banks. ICM...

Full description

Saved in:

Bibliographic Details
Main Author:	Mohamad Zabidi, Ahmad
Format:	Thesis
Language:	eng eng
Published:	2021
Subjects:	HJ Public Finance
Online Access:	https://etd.uum.edu.my/9620/1/s903019_01.pdf https://etd.uum.edu.my/9620/2/s903019_02.pdf
Tags:	Add Tag No Tags, Be the first to tag this record!

id	my-uum-etd.9620
record_format	uketd_dc
spelling	my-uum-etd.96202023-11-26T01:33:18Z Interbank commodity Murabahah for funding liquidity management in Malaysia 2021 Mohamad Zabidi, Ahmad Mohd Yusof, Rosylin Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HJ Public Finance Liquidity instruments for banks’ monetary operations are diverse and available for both conventional and Islamic financial institutions (IFIs). Interbank Commodity Murabahah (ICM) was offered in the Malaysian market from 2009 till 2018 as one of the liquidity management tools for Islamic banks. ICM utilisation and demand by Islamic banks are still low due to Shari’ah, operational risks, commodity costs, and timing issues. This research aims to analyse ICM practices and investigate ICM structure and mechanism as an instrument that fulfils IFIs’ liquidity needs and investment opportunities. In doing so, this research reviewed issues from Shari’ah and operational perspectives, such as the time for completion of transactions and the brokerage fees involved in commodity Murabahah transactions. Interviews, survey and autoregressive distributed lag model (ARDL) were used to assess current industry practices. This study found that higher costs brokerage fees charged by commodity suppliers and lengthy completion time caused by manual processes for transactions lead to declining ICM practices. Improper contract sequence was identified as a significant potential to raise Shari’ah non-compliance risks in the Tawarruq processes. The study recommends that Islamic banks adopt automated processes and standardised practices to mitigate Shari’ah and operational risks with more robust and efficient Structured Tawarruq. The findings of this study are expected to serve as a reference to industry players and regulators in improving the current Tawarruq processes of Islamic banks in Malaysia from controversial to more structured Tawarruq. IFIs should endeavour to identify better alternatives by creating more innovative products instead of mirroring conventional banking. 2021 Thesis https://etd.uum.edu.my/9620/ https://etd.uum.edu.my/9620/1/s903019_01.pdf text eng public https://etd.uum.edu.my/9620/2/s903019_02.pdf text eng public other doctoral Universiti Utara Malaysia
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Mohd Yusof, Rosylin
topic	HJ Public Finance
spellingShingle	HJ Public Finance Mohamad Zabidi, Ahmad Interbank commodity Murabahah for funding liquidity management in Malaysia
description	Liquidity instruments for banks’ monetary operations are diverse and available for both conventional and Islamic financial institutions (IFIs). Interbank Commodity Murabahah (ICM) was offered in the Malaysian market from 2009 till 2018 as one of the liquidity management tools for Islamic banks. ICM utilisation and demand by Islamic banks are still low due to Shari’ah, operational risks, commodity costs, and timing issues. This research aims to analyse ICM practices and investigate ICM structure and mechanism as an instrument that fulfils IFIs’ liquidity needs and investment opportunities. In doing so, this research reviewed issues from Shari’ah and operational perspectives, such as the time for completion of transactions and the brokerage fees involved in commodity Murabahah transactions. Interviews, survey and autoregressive distributed lag model (ARDL) were used to assess current industry practices. This study found that higher costs brokerage fees charged by commodity suppliers and lengthy completion time caused by manual processes for transactions lead to declining ICM practices. Improper contract sequence was identified as a significant potential to raise Shari’ah non-compliance risks in the Tawarruq processes. The study recommends that Islamic banks adopt automated processes and standardised practices to mitigate Shari’ah and operational risks with more robust and efficient Structured Tawarruq. The findings of this study are expected to serve as a reference to industry players and regulators in improving the current Tawarruq processes of Islamic banks in Malaysia from controversial to more structured Tawarruq. IFIs should endeavour to identify better alternatives by creating more innovative products instead of mirroring conventional banking.
format	Thesis
qualification_name	other
qualification_level	Doctorate
author	Mohamad Zabidi, Ahmad
author_facet	Mohamad Zabidi, Ahmad
author_sort	Mohamad Zabidi, Ahmad
title	Interbank commodity Murabahah for funding liquidity management in Malaysia
title_short	Interbank commodity Murabahah for funding liquidity management in Malaysia
title_full	Interbank commodity Murabahah for funding liquidity management in Malaysia
title_fullStr	Interbank commodity Murabahah for funding liquidity management in Malaysia
title_full_unstemmed	Interbank commodity Murabahah for funding liquidity management in Malaysia
title_sort	interbank commodity murabahah for funding liquidity management in malaysia
granting_institution	Universiti Utara Malaysia
granting_department	Othman Yeop Abdullah Graduate School of Business
publishDate	2021
url	https://etd.uum.edu.my/9620/1/s903019_01.pdf https://etd.uum.edu.my/9620/2/s903019_02.pdf
_version_	1783729412049469440

Interbank commodity Murabahah for funding liquidity management in Malaysia

Similar Items