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International Journal of Management Studies (IJMS) Vol. 19, No. 1 June 2012

The Future of Monetary Reform and the Real Economy: A Problem of Trade Versus Interest
Masudul Alam Choudhury
College of Economics and Political Sciences
Sultan Qaboos University, Muscat Sultanate of Oman
 
Sofyan Syafri Harahap
Director of Postgraduate Program in Islamic Economics and Finance
Trisakti University, Indonesia
 
Abstract Ɩ Full Text
The prologue is our starting premise.
 
The Qur’an (2: 275) declares, “As for those who devour interest, they behave as the one whom Satan has confounded with his touch. Seized in this state they say: ‘Trade is but a kind of interest’, even though Allah has made trade lawful, and interest unlawful”.
 
Keynes (1930, p. 368) picked up such wisdom of the inverse relationship between trade and interest and wrote, “The strenuous purposeful moneymakers may carry all of us along with them into the lap of economic abundance. But it will be those peoples, who can keep alive, and cultivate into a fuller perfection, the art of life itself and do not sell themselves for the means of life, who will be able to enjoy the abundance when it comes.”
 
Such are the messages of moral highness and wisdom picked up in this paper. The fundamental point here is to establish the fact that the only way of phasing out interest rate from Islamic activities is to understand and implement the formalism of the inverse relationship that permanently exists between trade in the good things of life and the rate of interest as the impediment to the free flow of resources into such tradable activities.
 
The central bank and commercial banks and fi nancial intermediaries as practitioners must understand this organic relational concept of intellection in relation to money and the real economy. The monetary system and the real economy with the financial instruments between would thus be shown to formalize the intellection paradigm – which indeed is a truly scientific revolution. The result is replacement of the fractional reserve requirement monetary system by the 100 per cent reserve requirement monetary system backed by the gold standard. Likewise, the organic relationships of such a monetary arrangement including its monetary policy and transmission mechanism would structurally change the nature of markets and its institutional relations and individual preferences. The result at the end will be a phased down interest rate regime into a trade-related one by the rise of the tradable relationships that are generated.
The foundational methodology that enters this kind of organically relational worldview with the episteme of unity of knowledge (the divine law in Islam) provides the functional ontology of the socially and morally constructed money, production and real economy circular causation. It models the legitimacy of trade as the resource mobilization instrument, while rejecting interest as the permanent impediment of resource mobilization.
 
Keywords: Monetary economics, Islamic economics and fi nance, Islamic political economy and world-system, social economics, ethics and economics.
 

 
The Effects of Interest Rates Volatility on Stock Market Returns in Malaysia and Singapore
Karen Tan, Mohamed Hisham Yahya & Amin Nordin Bany Ariffin
Faculty of Economics and Management
Universiti Putra Malaysia
 
Abstract Ɩ Full Text
This research examines the eff ects of interest rates volatility on stock market returns in Malaysia and Singapore. The data used are market returns on the FBM Kuala Lumpur Composite Index (FBM KLCI) and 3-months deposit yields in Malaysia over the period of September 1999 to December 2010. For the Singaporean market, the monthly data of market returns on the Straits Times Index (STI) and 3-months deposit yields in Singapore during the same period are used. Two separate GARCH (1,1) models are applied for Malaysia and Singapore. Results suggest that interest rate volatility in each country has a strong positive relationship with its respective stock market volatility. The results also show that the volatility of interest rates has a negative relationship with the stock market return but the relationship is insignificant.
 
Keywords: Interest rates, stock market, GARCH, Malaysia, Singapore, FBM KLCI, STI.
 

 
Social Capital and Educational Attainment Among Rural Community in Malaysia
Roslan Abdul Hakim
Othman Yeop Abdullah Graduate School of Business
Universiti Utara Malaysia
 
Russayani Ismail Nor Azam Abdul Razak
School of Economics, Finance and Banking
UUM College of Business
 
Abstract Ɩ Full Text
The determinants of educational attainment among children have become one of the main research agenda among scholars, educationists and economists alike. In most studies, the focus is on the relationship between educational attainment and factors such as the quality of teachers, schools, educational technologies, curriculum design, the fi nancial and human capital aspect of the families and the ability of children themselves. Recently, the focus has been expanded to explore the relationship between social capital and educational attainment. As an addition to the existing literature, this paper attempts to investigate the impact of social capital on educational attainment using a regression analysis based on a sample of 2500 households, gathered from a rural community in Terengganu, Malaysia. Six domains of social capital are used to arrive at the index of social capital. The argument advanced in this paper is that social capital, which could be viewed as the outcome of networking, cooperation and trust at the household level, is expected to have a positive impact on a child’s educational attainment. Towards this end, we regress children’s education attainment on social capital along with other relevant independent variables, i.e. family, children, school and neighbourhood characteristics. Interestingly, the result of our study reveals that the level of social capital that a family has, is found to be signifi cant and has the expected positive sign. This finding implies that social capital at the household level appear to be a critical factor in determining a child’s educational attainment. Thus, our finding lends support to the idea that social capital is a good predictor of children’s is educational attainment.
 
Keywords: Social capital, educational attainment, rural community.
 

 
Malaysia Household Wealth Distribution: Current Evidence and Future Prospects
Muhammed Abdul Khalid
Institute of Malaysian and International Studies
Universiti Kebangsaan Malaysia
 
Abstract Ɩ Full Text
The paper studies the distribution and inequality of wealth among the household per capita in Malaysia, using the 2007 Malaysia’s Household Income Survey (HIS) data. Consistent with findings from other countries, the distribution of wealth is more skewed than that of income. The distribution of wealth shows that the top 10% of Malaysian households per capita control 35% of the country’s wealth, while the bott om 40% own 8%. The decomposition of wealth shows that the Gini coefficient for savings is 0.98, while the figure for investment assets and real estate assets are 0.90 and 0.52 respectively. It is expected that wealth inequality will widen in the future due to several factors such as liberalization of the higher education policy and pro-rich tax treatment.
 
Keywords: Inequality, Malaysia, wealth.
 

 
Malaysia Household Wealth Distribution: Current Evidence and Future Prospects
Muhammed Abdul Khalid
Institute of Malaysian and International Studies
Universiti Kebangsaan Malaysia
 
Abstract Ɩ Full Text
The paper studies the distribution and inequality of wealth among the household per capita in Malaysia, using the 2007 Malaysia’s Household Income Survey (HIS) data. Consistent with findings from other countries, the distribution of wealth is more skewed than that of income. The distribution of wealth shows that the top 10% of Malaysian households per capita control 35% of the country’s wealth, while the bott om 40% own 8%. The decomposition of wealth shows that the Gini coefficient for savings is 0.98, while the figure for investment assets and real estate assets are 0.90 and 0.52 respectively. It is expected that wealth inequality will widen in the future due to several factors such as liberalization of the higher education policy and pro-rich tax treatment.
 
Keywords: Inequality, Malaysia, wealth.
 

 
Productivity Improvement in the Utilization of Domestic and Imported Inputs in Resource and Non-Resource-Based Industries: 1983–2005
Noorasiah Sulaiman
Faculty of Economics and Management
Universiti Kebangsaan Malaysia
 
Zakariah Abdul Rashid & Khalid Abdul Hamid
Malaysian Institute of Economic Research
 
Abstract Ɩ Full Text
The focus of the study is to examine the improvement in productivity on the utilization of intermediate input in resources and non resources-based industries of the Malaysian manufacturing sector. Since improvement in productivity can determine how well an input performed, our main interest rests on whether there exists any discrepancy between the performance of domestic and imported intermediate input. To undertake such an analysis, we employed various publications of the Malaysian Input-Output Tables. The input-output coefficients of domestic and imported inputs were then simulated by using the commodity technology model. It was anticipated that three main findings could be obtained from this study. Firstly, non resourcesbased industries have shown that both inputs have a higher improvement in productivity compared to resources-based industries. Secondly, this study revealed that resource-based industries have improved productivity relatively in the imported input used compared to domestic input. Thirdly, the number of industries that were efficient in utilizing imported input was higher, both, in resource and non resource-based industries. Results from this study show that imported intermediate input are still important in the production of manufactured products, even though many incentives have been given in order to increase the effi ciency of the domestic input used.
 
Keywords: Productivity improvements, input utilization, resource and non resource-based industries.
 

 
Effects of Susceptibilty to Interpersonal Influence on Clothing Benefits Sought
Syadiyah Abdul Shukor
Faculty of Economics and Muamalat
Universiti Sains Islam Malaysia
 
Abstract Ɩ Full Text
Susceptibility to interpersonal infl uence is the tendency of an individual to be influenced by other people in their decision-making. Prior research suggests that susceptibility to interpersonal influence aff ects various numbers of consumer behaviours. This paper aims to investigate the effects of susceptibility to interpersonal influence on clothing benefits sought, which are: uniqueness, conformity, self-congruity, social status and modesty. Data for the present study was collected through web-based and drop off questionnaires. 222 completed questionnaires were received and analysed using the Structural Equation Modelling (SEM). Results of this study show that susceptibility to interpersonal influence is positively related to uniqueness, conformity, self-congruity and social status. Limitations and directions for future research are discussed towards the end of this paper.
 
Keywords: Susceptibility to interpersonal influence, clothing, clothing benefits sought.
 

 
Predicting Work-Family and Familywork Conflict from Work and Family Domain: A Longitudinal Study
Zaiton Hassan & Hana Hamidi
Faculty of Cognitive Sciences and Human Development
Universiti Malaysia Sarawak
 
Abstract Ɩ Full Text
Although work-family conflict studies are available in Malaysia, most rely on cross-sectional design and focus on women. This study uses the longitudinal design on a heterogeneous sample which is aimed to enhance the understanding of the antecedents of work-family conflict (WFC) and familywork conflict (FWC) from work and family demands and resources. The respondents were 296 employees in diverse industries from six public and private organizations in Kuching, Sarawak. Two surveys were conducted over a three-month interval. Structural Equation Modeling via AMOS 7.0 was used to analyse the data. The study found that the respondents reported higher WFC than FWC. Demands from work predicted WFC positively while resources from work predicted WFC negatively. None of the demands and resources from work and family predicted FWC. The findings implied the importance of organizations in influencing the work-family balance of the employees.
 
Keywords: Work-family conflict (WFC), family-work conflict (FWC), demands, resources.
 

 
Genuine Savings for Malaysia: What Does it Tell?
Jamal Othman, Roby Falatehan & Yaghoob Jafari
Faculty of Economics and Management
Universiti Kebangsaan Malaysia
 
Abstract Ɩ Full Text
Resource and environmental economists have argued that the conventional GDP is not an adequate indicator to reflect if an economy is growing sustainably, as it does not consider the changes in national capital and pollution impacts. The World Bank Genuine Savings indicator, though in the weak sustainability form, provides an alternative measure. This paper calculates the Genuine Savings for Malaysia from 1990–2008. While the results show that the Genuine Savings for Malaysia has been positive, its ratio to GDP declines markedly following the economic crisis of 1997/98. Comparisons with selected countries, especially South Korea and Indonesia are also made. Policy implications are deliberated at the end of the paper.
 
Keywords: Malaysian genuine savings, sustainability path, macroeconomic sustainability measure.
 

 
Hubungan antara Kerja Berpasukan dengan Kepuasan Kerja Ketua Panitia Sekolah Menengah
Arsaythamby Veloo & Kiew Hwee Bin
Pusat Pengajian Pendidikan dan Bahasa Moden
UUM College of Arts and Sciences
 
Abstrak Ɩ Full Text
Kajian ini bertujuan untuk mengenal pasti perbezaan kepuasan kerja ketua panitia dalam kerja berpasukan berdasarkan jantina, umur dan pengalaman kerja. Di samping itu kajian ini juga bertujuan mengenal pasti penyumbang utama dan hubungan antara lima faktor kerja berpasukan iaitu tindakan pemimpin, struktur perwatakan pasukan, struktur perwatakan individu dan hubungan interpersonal dengan kepuasan kerja ketua panitia. Subjek kajian ini terdiri daripada kesemua 141 ketua panitia daripada sembilan buah sekolah menengah kebangsaan harian di daerah Kuala Krai, Kelantan. Alat ukur kerja berpasukan telah diubah suai daripada kajian Karakus dan Töremen (2008) manakala alat ukur kepuasan kerja telah diubah suai daripada Model Teori Dua Faktor Herzberg (1966) dalam Tay (2007). Kerja berpasukan diukur daripada empat dimensi iaitu tindakan pemimpin (8 item), struktur perwatakan pasukan (7 item), struktur perwatakan individu (8 item) dan hubungan interpersonal (8 item) manakala kepuasan kerja diukur menggunakan 20 item. Dapatan kajian ini dianalisis dengan menggunakan program Statistical Package for Social Science (SPSS) versi 16.0. Kajian ini menggunakan ujian-t, ANOVA satu hala, Kolerasi Pearson dan regrasi berganda untuk menguji hipotesis kajian. Dapatan kajian ini menunjukkan bahawa wujud perbezaan yang signifikan antara jantina dan umur dengan kepuasan kerja tetapi tiada perbezaan yang signifikan dengan pengalaman kerja. Keputusan kajian ini menunjukkan terdapat hubungan antara tindakan pemimpin, struktur perwatakan pasukan, struktur perwatakan individu dan hubungan interpersonal. Kajian ini juga menunjukkan tindakan pemimpin, struktur perwatakan pasukan dan hubungan interpersonal menjadi peramal kepada kepuasan kerja. Hasil kajian mencadangkan pihak sekolah, Jabatan Pendidikan Daerah serta Jabatan Pendidikan Negeri yang terlibat dengan program latihan dan pembangunan harus menitikberatkan aspek peningkatan pengetahuan dan kemahiran kerja berpasukan khususnya kepada ketua-ketua panitia dalam aspek kemanusiaan, perancangan dan penyelarasan tugas.
 
Kata kunci: Kepuasan kerja, kerja berpasukan, jantina, umur, pengalaman kerja.
 

 
Pelaburan Langsung Asing dan Perkembangan Pelancongan: Kointegrasi dan Ujian Penyebab Granger di Sepuluh Destinasi Utama Pelancongan
Norlida Hanim Mohd Salleh
Institut Kajian Ekosistem Marine
Universiti Kebangsaan Malaysia
 
Redzuan Othman & Tamat Sarmidi
Institut Kajian Asia Barat
Universiti Kebangsaan Malaysia
 
Abstrak Ɩ Full Text
Kebanyakan Negara Sedang Membangun menghadapi masalah kekurangan dana dalam membangunkan negara mereka khususnya dalam sektor yang memerlukan perbelanjaan yang besar seperti pembangunan industri pelancongan (ARR). Salah satu sumber dana yang penting adalah daripada Pelaburan Langsung Asing (PLA). Oleh itu kajian ini bertujuan untuk mengenal pasti kewujudan hubungan antara PLA dan ARR di destinasi pelancongan utama dunia, iaitu negara Perancis, Sepanyol, Amerika Syarikat, China, Itali, United Kingdom, Jerman, Turki, Mexico dan Malaysia bagi tempoh masa tiga puluh tahun iaitu daripada tahun 1978 hingga 2008. Untuk mencapai tujuan kajian ini, kaedah kointegrasi dan Ujian Penyebab Granger dalam kerangka pendekatan ARDL digunakan. Pemilihan kaedah ini disebabkan oleh keistimewaan kaedah itu sendiri di mana ia membenarkan data siri masa yang pendek digunakan di samping boleh diaplikasikan pada siri masa yang berbeza kepegunannya, iaitu I(0) dan I(I). Hasil kajian mendapati wujud hubungan jangka panjang atau kointegrasi antara PLA dan ARR di kesemua negara dikaji. Dalam jangka pendek ujian sebab-penyebab mendapati ARR adalah signifi kan mempengaruhi PLA bagi negara Perancis, Mexico, United Kingdom dan Malaysia. Sementara di Perancis, Mexico dan United Kingdom sahaja didapati PLA adalah signifi kan mempengaruhi ARR dalam jangka pendek. Bagi negara lain iaitu Jerman, Itali, Sepanyol, Turki, Amerika Syarikat dan China didapati kedua-dua pemboleh ubah PLA dan ARR tidak mempunyai sebarang hubungan dalam jangka pendek. Hasil kerja ini dapat dijadikan panduan kepada pembuat dasar dalam merangsang pembangunan pelancongan.
 
Kata kunci: Pelaburan langsung asing, perkembangan pelancongan, kointegrasi, ujian penyebab Granger.

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