House price index as an alternative pricing benchmark for Islamic home financing: evidence of Malaysia

The pricing benchmark is usually used as a guide to calculate the rate of return of the financing. In the case of Malaysia, it is not known whether residential property values have significant relationship with the general performance of the economy. We propose that the house price index to be a via...

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Main Authors:	Redzuan, Nur Harena, Kassim, Salina
Format:	Article
Language:	English
Published:	Università degli Studi di Torino 2017
Subjects:	HG Finance HG1501 Banking
Online Access:	http://irep.iium.edu.my/56096/ http://irep.iium.edu.my/56096/ http://irep.iium.edu.my/56096/1/2017%20EJIF%20Harena%20Salina.pdf

id	iium-56096
recordtype	eprints
spelling	iium-560962019-02-12T08:33:19Z http://irep.iium.edu.my/56096/ House price index as an alternative pricing benchmark for Islamic home financing: evidence of Malaysia Redzuan, Nur Harena Kassim, Salina HG Finance HG1501 Banking The pricing benchmark is usually used as a guide to calculate the rate of return of the financing. In the case of Malaysia, it is not known whether residential property values have significant relationship with the general performance of the economy. We propose that the house price index to be a viable benchmark of the real values of property to determine the price of Islamic home financing product. This study compares two models; the existing pricing benchmark which relies on interest rate and the alternative pricing benchmark which relies on the house price index. It examines the long-run relationship of the two benchmark rates with selected macroeconomics variables. By comparing the interest-based benchmark with the non-interest benchmark, this study attempts to highlight the sensitivity of the two benchmarks to the real economic conditions. Focusing on quarterly data covering the period from 2001 to 2014, the study finds that the non-interest benchmark, House Price Index have significant long-run relationships with the macroeconomic variables. It shows that this alternative benchmark has the connection to the economic movements that lead to the stability of the non-interest financing instruments. The findings of this study would provide important insights on the viability of the Housing Price Index as the alternatives to benchmark of the Islamic financing home financing product. This study contributes to the empirical evidence for the feasibility of adopting interest-free benchmark to price Islamic home financing product. Università degli Studi di Torino 2017 Article PeerReviewed application/pdf en http://irep.iium.edu.my/56096/1/2017%20EJIF%20Harena%20Salina.pdf Redzuan, Nur Harena and Kassim, Salina (2017) House price index as an alternative pricing benchmark for Islamic home financing: evidence of Malaysia. European Journal of Islamic Finance, 6. pp. 1-7. ISSN 2421-2172 http://www.ojs.unito.it/index.php/EJIF/article/view/1749/1849
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HG Finance HG1501 Banking
spellingShingle	HG Finance HG1501 Banking Redzuan, Nur Harena Kassim, Salina House price index as an alternative pricing benchmark for Islamic home financing: evidence of Malaysia
description	The pricing benchmark is usually used as a guide to calculate the rate of return of the financing. In the case of Malaysia, it is not known whether residential property values have significant relationship with the general performance of the economy. We propose that the house price index to be a viable benchmark of the real values of property to determine the price of Islamic home financing product. This study compares two models; the existing pricing benchmark which relies on interest rate and the alternative pricing benchmark which relies on the house price index. It examines the long-run relationship of the two benchmark rates with selected macroeconomics variables. By comparing the interest-based benchmark with the non-interest benchmark, this study attempts to highlight the sensitivity of the two benchmarks to the real economic conditions. Focusing on quarterly data covering the period from 2001 to 2014, the study finds that the non-interest benchmark, House Price Index have significant long-run relationships with the macroeconomic variables. It shows that this alternative benchmark has the connection to the economic movements that lead to the stability of the non-interest financing instruments. The findings of this study would provide important insights on the viability of the Housing Price Index as the alternatives to benchmark of the Islamic financing home financing product. This study contributes to the empirical evidence for the feasibility of adopting interest-free benchmark to price Islamic home financing product.
format	Article
author	Redzuan, Nur Harena Kassim, Salina
author_facet	Redzuan, Nur Harena Kassim, Salina
author_sort	Redzuan, Nur Harena
title	House price index as an alternative pricing benchmark for Islamic home financing: evidence of Malaysia
title_short	House price index as an alternative pricing benchmark for Islamic home financing: evidence of Malaysia
title_full	House price index as an alternative pricing benchmark for Islamic home financing: evidence of Malaysia
title_fullStr	House price index as an alternative pricing benchmark for Islamic home financing: evidence of Malaysia
title_full_unstemmed	House price index as an alternative pricing benchmark for Islamic home financing: evidence of Malaysia
title_sort	house price index as an alternative pricing benchmark for islamic home financing: evidence of malaysia
publisher	Università degli Studi di Torino
publishDate	2017
url	http://irep.iium.edu.my/56096/ http://irep.iium.edu.my/56096/ http://irep.iium.edu.my/56096/1/2017%20EJIF%20Harena%20Salina.pdf
first_indexed	2023-09-18T21:19:09Z
last_indexed	2023-09-18T21:19:09Z
_version_	1777411764969799680

House price index as an alternative pricing benchmark for Islamic home financing: evidence of Malaysia

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