A Structural VAR analysis of Islamic financing in Malaysia

Abstract

The main determination of this paper is to catch out the relations of Islamic financing and key macroeconomic and financial variables. In this paper we use the structural vector auto regression approach to check the behaviour of the Islamic financing that how much operative in Malaysia. This paper determines that the Islamic financing positively effects in Malaysia and due to the Islamic financing price level was shocks and financing chances increases. The Islamic banks are protected from the interest rate this is the very big for everything. In the dual banking system Islamic banking practices are not affected by the monitory policy. In Islamic banking industry, the various macroeconomic variables on Islamic financing is vital.

Keywords: Malaysia, Structural VAR, Impulse response functions, Islamic financing