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Long Run Cointegration between the Kuala Lumpur Interbank Offer Rate and the Islamic Overnight Interbank Market Rate

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This paper analyzes the short-term and long-term relationship between the Kuala Lumpur interbank offer rate and the Islamic interbank offer rate. In 1994, an Islamic interbank money market system was introduced in Malaysia to meet the liquidity needs for Islamic financial institutions. The empirical results indicate that there is a long-run cointegration relationship between the two markets and that both markets operate independently in the short term.

Abstract

Ⅰ. Introduction

Ⅱ. Data and Methodology

Ⅲ. Empirical Findings and Discussion

Ⅳ. Summary and Conclusions

References

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