FIRST VOLUME OF AJISS (2)


Finance And Other Services Sectors In Peninsular Malaysia, Sabah and Sarawak :

Testing for Stochastic Convergence

Muzafar Shah Habibullah1*, M. T. Hirnissa2, and A.H. Baharom3
1,2Faculty of Economics and Management, Universiti Putra Malaysia, 43400 UPM Serdang, Selangor, Malaysia.
3Taylors Business School, Taylors University, 47500 Subang Jaya, Selangor, Malaysia.
*Corresponding author: muzafar@econ.upm.edu.my
Abstract - In the last four decades, the financial services sector has becoming more important for the Malaysian economy. Despite gaining importance for enhancing economic growth, the contribution of the finance sector to the total services real Gross Domestic Product (GDP) has been ranked second in Peninsular Malaysia, third in Sabah and fourth in Sarawak. The purpose of the present paper is to determine whether the contribution of the financial services sector in the three regions in Malaysia, namely Peninsular Malaysia, Sabah and Sarawak show any distinct pattern. In the jargon of economic development literature, we seek to determine whether there is “convergence” or similarity in the patterns of the performance of the financial services sector among the three regions. Generally, our results suggest divergence of the finance sector and other sub-sector of the services among the three regions.
Keywords : Financial services sector; Economic growth; Convergence; Malaysia

Bank Loans and Stock Prices:
An Empirical Evidence

Bakri Abdul Karim1*, Lim Siew Lih2, and Zulkefly Abdul Karim3
1,2Faculty of Economics and Business, Universiti Malaysia Sarawak (UNIMAS),
94300 Kota Samarahan, Sarawak, Malaysia, Tel: +6 082 584396.
3School of Economics, Faculty of Economics and Management,
Universiti Kebangsaan Malaysia, 43600 Bangi, Selangor, Malaysia.
*Corresponding author: akbakri@feb.unimas.my
Abstract - This study re-examines the interaction between bank loans and stock prices in Malaysia. We use Granger non-causality test proposed by Toda and Yamamoto (1995) in both bivariate and multivariate frameworks and both monthly and quarterly data in examining the relationship between the two variables. Unlike previous studies, we find that there is strong evidence of no causality running between stock prices and bank loans in all models and samples. This finding revealed that stock prices and bank loans are independent. The predictability of stock prices cannot be enhanced considerably through utilizing information on the bank loans.
Keywords : Bank lending; Stock prices; Non-Granger causality; Efficient market


The Substitution Dilemma In Islamic Finance:
Contemporary Muslim Legal Thought on the use of Paper Money

Olorogun Lukman Ayinde
IIUM Institute of Islamic Banking and Finance (IIiBF)
International Islamic University Malaysia (IIUM)
E-mail: yinluk2000@yahoo.com
Abstract - Gold and silver became the most widely accepted and circulated form of money in the medieval world. Even though paper money was introduced, state banks continued to store their equivalent in gold. In 1971 the US government abolished the Bretton Woods system and exchanged with the floating or fiat economy system which soon became the standard currency system worldwide. Many economies felt compelled to adopt the new US currency system because of the strength of the all-dominating American dollar and criticism was sparse. Disappointingly, no Muslim government produced legal rulings (fatwas) which rejected the legality of the fiat system and demanded the return to gold and silver backed currency. The single fatwa issued in Saudi Arabia in 1985 concluded that paper currency had completely replaced gold and silver and that all previous Islamic legal rulings issued on gold and silver were now applicable to paper currency. This paper study critically and evaluates the consequences of the Muslim intellectuals and Fiqh Academies’ approval of substitution of gold and silver by banknotes on the Muslims and their nations.
Keywords : Substitution; Dilemma; Islamic finance; Contemporary Muslim; Legal thought; Paper money

Negotiating Aceh Self-Determination in Inonesia’s Unitary System :
A Study on Peace Agreement Helsinki Memorandum of Understanding 2005

M.Y. Aiyub Kadir
Lecturer of International Law,SyiahKualaUniversity,Aceh,Indonesia
Postgraduate student at theUniversityofHull, theUnited Kingdom.
Current address:34 Sidmouth street, Kingston Upon Hull, HU5 2LB.
E-mail: muyakadir@yahoo.com
Abstract – Aceh, the northern-most province of Indonesia came through long suffering of armed conflicts for self-determination  under the Dutch (1873-1942) and Japanese colonisation (1942-1945). It continued until Aceh joined Indonesia’s unitary system in 1945, in which it was formally initiated by Tgk. Daud Beureueh between  1953-1963, and further to be declared by Tgk. Hasan Tiro on  4th  December 1976 under the banner of the Free Aceh Movement (GAM). This struggle was ended by peace agreement, the Helsinki Memorandum of Understanding (MoU) on 15th August 2005 with the Aceh self-government notion consensus. In this regard, Aceh has more spaces and opportunities to re-determine its political, economic, social and cultural status under the Indonesian system. According to the international law, the notion of self-government is considered as internal self-determination under the International Human Rights Law regime. This would refer to two covenants: the United Nations International Covenant on Civil and Political Rights and on Economic, Social and Cultural Rights 1966. However, in practice, despite this ongoing implementation has achieved some progress in short term local political development, yet there are still many challenges for long-term economic, social and cultural advancement objectives, in particular regarding human rights related issues. This paper endeavours to analyse the issue through the overview of historical background of Aceh self-determination from an international law perspective. Hopefully, this paper contributes to a conceptual understanding of the MoU Helsinki in terms of Aceh self-determination movement as well as some challenges ahead.
Keywords: Self-determination; Self-government; Peace agreement; Free Aceh Movement; Government of Indonesia.

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