This paper attempts to identify the relationship between the real exchange rate and trade balance in Malaysia from year 1955 to 2006. This study uses Unit Root Tests, Cointegration techniques, Engle-Granger test, Vector Error Correction Model (VECM), and impulse response analyses. The main findings of this paper are: (i) long run relationship exists between trade balance and exchange rate. Other important variables that determine trade balance such as domestic income shows a long run positive relationship between trade balances, and foreign income shows a long run negative relationship (ii) the real exchange rate is an important variable to the trade balance, and devaluation will improve trade balance in the long run, thus consistent with Marshall-Lerner condition (iii) the results indicate no J-curve effect in Malaysia case.

Purpose Malaysia is recognised as an emerging country with a large Muslim population, making the Malaysian Takaful industry the largest Takaful market in the Southeast Asia region and, notably, one of the fastest growing markets globally. Malaysia is also the first country globally to implement a risk-based capital framework for Takaful. Therefore, the purpose of this paper is to identify the factors that influence the efficiency level (cost efficiency and technical efficiency) of the Takaful industry and to examine the effects of Takaful insurance firms’ specific factors and corporate governance factors that influence the efficiency of Takaful insurance in Malaysia. Design/methodology/approach In this paper, the efficiency level of the Malaysian Takaful industry was examined between 2011 and 2015. The sample consisted of 11 family Takaful and 8 general Takaful operators. Two-stage Data Envelopment Analysis (DEA) was used by first, conducting non-parametric frontier data envelopment analysis to obtain a DEA score for each operator. This was followed by panel regression with the DEA scores as the dependent variable and the insurance firms’ specific factors and corporate governance factors as the independent variables. Findings The results of DEA indicate that Takaful operators in general have allocative inefficiency but family Takaful is more cost efficient than general Takaful. Results of panel data analysis reveal that corporate governance factors do influence the cost efficiency but find no evidence on the firm-specific factors towards the cost efficiency and technical efficiency on Takaful operators. Board size and the proportion of non-executive directors impose a negative and significant relationship with cost efficiency, while proportion of Muslim directors in the board is not significant. Research limitations/implications This paper focused solely on Malaysia which uses strict regulations governing the Takaful insurance market. Due diligence was also performed to minimise any limitation in the paper. It is proposed that future studies should examine this issue in greater detail by incorporating more data from other Muslim countries. Practical implications The findings of this paper have significant implications for policymakers to understand the efficiency condition in the Takaful market. Takaful operators should maintain a small board size with a higher proportion of executive directors, given they could improve the level of effective decision-making to enhance the cost efficiency. As corporate governance factors are significant, Takaful operators in Malaysia should also undertake transparent disclosure practice and reporting such as providing adequate and relevant information related to Shariah compliance and principles to provide a robust foundation as the Takaful market leader regarding Takaful regulations globally. Social implications The consumer is able to make a better decision when choosing Takaful insurance company to protect their interests. Originality/value No similar paper has been undertaken to the best of the researcher’s knowledge using similar research design and scope to investigate the efficiency of Takaful insurance as in this paper. Takaful insurance is a rapidly growing industry in Malaysia, setting a prime example to other countries globally. Malaysia was selected for this study, as it is the only nation that has implemented the most extreme regulation in the Takaful insurance market.

Foreign direct investment (FDI) has been an important source of economic growth for Malaysia, bringing in capital investment, technology and management knowledge needed for economic growth. Thus, this paper aims to study the relationship between FDI and economic growth in Malaysia for the period 1970-2005 using time series data. Ordinary least square (OLS) regressions and the empirical analysis are conducted by using annual data on FDI and economy growth in Malaysia over the 1970-2005 periods. The paper used annual data from IMF International Financial Statistics tables, published by International Monetary Fund to find out the relationship between FDI and economic growth in Malaysia case. Results show that LGDP, LGNI and the LFDI series in Malaysia are I(1) series. There is sufficient evidence to show that there are significant relationship between economic growth and foreign direct investment inflows (FDI) in Malaysia. FDI has direct positive impact on RGDP, which FDI rate increase by 1% will lead to the growth rate increase by 0.046072%. Furthermore, FDI also has direct positive impact on RGNI because when FDI rate increase by 1 %, this will lead the growth increase by 0.044877%.

This study seeks to examine the effectiveness of interest rates transmission mechanism from money market rate into retail banking rate in several Asian countries. In particular, we intend to investigate the differences in the degree of pass-through from monetary policy rate into deposit and lending rates across countries and between the pre-and post-crisis of 1997. The study is carried out by running the Seemingly Unrelated Regression (SUR) equations. The results suggest that the transmission rate from money market rate into deposit and lending rates is slow and sluggish across economies. There is no much difference between the pass-through rate into deposit and lending rates but the pass-through into deposit rate is slightly higher than that in lending rate. Most of the countries have slower adjustment rates after the crisis 1997, indicating low effectiveness of monetary policy, imperfect financial market and lower degree of financial integration if these economies. However, there is an exception for Malaysia.

This research aims to study the relationship of export with four determinants, namely import, inflation, foreign direct investment (FDI), and exchange rate. Sample years are 1975 to 2013. Ordinary least square (OLS) is used. Results revealed that import has positive relationship with export. This implied that Malaysia import may be an "assembly point exporter". Electric and electrical (E&E), which is Malaysia major export component has high possibly where inputs are imported, then assembly and exported. Foreign exchange rate (domestic currency in term of foreign) has positive relationship with export, thus validating Marshall Learner hypothesis. Inflation has negative relationship as higher aggregate price increase cost of production and decreasing price competitiveness of export. Foreign direct investment has an inverted-U curve relationship, which give further insight into conflicting evidence of linear relationship between export and FDI. Facilities provided to promote export may attract inflow of foreign investment. However, if FDI is targeted to produce for domestic market, it may not contribute to export growth.