Performance of Asset and Commodity-Based Securities in Malaysia’s Islamic Inter-Bank Money Market

Abstract

The aim of this paper is to study is to review the performance of Asset based (Mudharabah) and commodity based (Murabaha) Islamic securities on a yearly basis in the Islamic Inter-Bank Money Market (IIMM) in Malaysia. The money market is a key appendage of the banking system and banking system is considered as very important for the development of any economy. Banks depend on the money market to manage their liquidity. While liquidity management is not the only use of money markets for banks, it is by far the most important. Recent statistics shows that the Malaysian Islamic banking sector continues to outperform the conventional banking sector with average annual asset growth rate of 18.6% during 2008-2012, in comparison to the conventional banking growth of 9.3% during the same period. The paper will also highlight the kinds of risk for Asset and commodity based Islamic securities in IIMM which are likely to be face by participant of the market.