Crude Oil Price and Exchange Rates - The Case of Malaysia and Brunei

Hadi, Abdul Razak Abdul; Hussain, Hafezali Iqbal; Zainudin, Zalina; Rehan, Raja

doi:10.5430/ijfr.v10n5p1

Cited by 4 publications

(4 citation statements)

References 17 publications

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“…Technically, an upsurge in inflation and GDP both decline firms' debt [34]. Visibly, Shariah-tagged firms were considered safe and less effective during the last financial crisis, the recent pandemic, and during different inflation and economic regimes (see [13,31]). Moreover, these firms have more diversification options because they have less systematic risk and are thus able to maintain their earnings during financial crises [56].…”

Section: Discussionmentioning

confidence: 99%

“…The selected dependent and independent variables to perform the analysis with their measurements are displayed in Table 2. The former studies (see [16,31]) indicate that the capital structure of Shariah-tagged firms is a dynamic property. Hence, this observed inquiry has chosen the Panel Data Dynamic model that was previously executed by several investigators (see [2,14]) to discover dynamic relations among the explored variables.…”

Section: Methodsmentioning

confidence: 99%

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What explain capital structure determinants choices of Shariah firms?

Rehan,

Sa’ad,

Rosman

et al. 2024

5003

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This study aims to discover key capital structure determinants for the entire Shariah firms operating in dissimilar contexts. Moreover, it also estimates the adjustment speed for these firms to maintain targeted capital structures at all times. For this purpose, 321 Shariah firms that are operational in Saudi Arabia, Pakistan, the UAE, and Indonesia are nominated. The empirical analysis is conducted using 11 years, i.e., 2011-2021, of balanced Panel Data. The debt-to-asset and debt-to-equity ratios are used as variables of interest, whereas the asset tangibility ratio, current ratio, return on equity, size, non-debt-tax shield, inflation, and gross domestic product are used as explanatory variables. The robust estimator, i.e., Generalized Method of Moments (GMM), is executed to perform the analysis. The results show that the most important factors for Shariah-tagged firms are inflation, the gross domestic product, the asset ratio, the return on equity, the non-debt tax shield, and the lagged dependent variables. The important role of asset tangibility, lagged variables, and the presence of adjustment speed postulate that Shariah-tagged firms are following the provided guidelines of Dynamic Trade-Off theory to preserve capital structure. The findings are a new contribution to the limited empirical inquiries of Shariah firms’ capital structure and a fresh addition to Islamic Finance literature. Besides, the outcomes are also helpful for policymakers and assist them in developing an optimal model of capital structure for Shariah-tagged firms that decreases overall capital costs and enhances these firms’ market value.

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Section: Discussionmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

What explain capital structure determinants choices of Shariah firms?

Rehan,

Sa’ad,

Rosman

et al. 2024

5003

View full text Add to dashboard Cite

show abstract

“…There have been studies that define the relationship between crude oil prices and the exchange rate market, but none of which have shown any theoretical framework regarding the linkage of the two variables (Orzesko, 2021; Hadi et al, 2019). Based on the literature, they have said that there is no economic theory that explains or justifies the nexus between commodities and exchange rates, which is somehow questionable at the same time, interesting.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

The Relationship of Crude Oil Prices and the U.S. Dollar Exchange Rate in the Philippines

Pasion

Roxas

Suin

2023

JEFAS

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This paper examines the U.S. dollar exchange rate, gasoline octane 95, diesel, and kerosene prices in one econometric model. These comprehensive literature reviews related to this topic of interest prove evidence of variations in the relationship that exists between the U.S. dollar exchange rate, gasoline octane 95, diesel, and kerosene prices. This study will undertake to find out the effect of the rising crude oil prices in the Philippines on the U.S. dollar exchange rate during these times. Significantly, Through the ARDL bounds testing approach, the research adds to the body of literature by examining the relationship between crude oil prices and the U.S. dollar exchange rate in the Philippines. The study adopted the Autoregressive Distributed Lag (ARDL) model to estimate the causality function, F-Bounds Test to establish long-run causal significance, and Error Correction Term (ECT) to determine how long until the adjustment of short-run errors to re-equilibrate to the long-run equilibrium. The results show that the lag of crude oil prices has a significant relationship with the lag of the U.S. dollar exchange rate in the short run. In regards to the long-run, the crude oil prices were found to be insignificant, but the kerosene and gasoline prices may still have a positive long-term impact, and diesel has a negative long-term impact on the U.S. dollar exchange rate against Philippine Peso.

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“…The author found that there is a long-term cointegration in all the periods, though the short-term impact was found only in 2 quarters from 2016 to 2019. Finally, Hadi et al (2019) analyzed the impact of crude oil prices on the exchange rate of Malaysia and Brunei on the data from 1988 to 2018 by applying Granger causality and a two-step cointegration test. Results indicate a long-term relationship between oil prices in the exchange rate of Brunei and Malaysia.…”

Section: Association Between Oil Prices and Exchange Ratesmentioning

confidence: 99%

The Relationship between Oil Prices and Exchange Rate: A Systematic Literature Review

Siddiqui

Ahmed

Naushad

et al. 2023

IJEEP

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Oil is among the enormously vital and most traded commodities globally, involving many forex transactions in the face of various types of shocks attributable to geopolitics, supply, demand, market crisis, etc. This study uses a systematic literature review approach to explore the Literature from the SCOPUS database considering the relationship between oil prices and exchange rates by analyzing the papers from 1998 to 2022 and includes the final 123 papers. This study emphasizes three objectives; Literature developed so far, standard methodologies and findings, and the research gaps which can be pursued in further studies. Findings show that vast literature is developed around these variables and sub-topics in various dimensions, such as the stock market, gold prices, economic growth, etc. Research around the variables has increased in the recent past, indicating the continued relevancy of the relationship. However, it can be due to increased access to higher education and research. This study also finds the gap in the literature and has implications for the policymakers in monetary and fiscal policy planning, as well as investors across the globe in making portfolio management strategies.

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Crude Oil Price and Exchange Rates - The Case of Malaysia and Brunei

Cited by 4 publications

References 17 publications

What explain capital structure determinants choices of Shariah firms?

What explain capital structure determinants choices of Shariah firms?

The Relationship of Crude Oil Prices and the U.S. Dollar Exchange Rate in the Philippines

The Relationship between Oil Prices and Exchange Rate: A Systematic Literature Review

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