Islamic Financial Institutions and Real Estate Cycle
A Review
DOI:
https://doi.org/10.52962/ipjaf.2018.2.3.57Keywords:
Islamic financial institutions, real estate cycle, literature reviewAbstract
The role of Islamic financial intuitions is essential in providing Islamic financing specifically to investors and stakeholders to invest in real estate. Therefore, understanding the link of the real estate cycle to the financial institutions is crucial. This is because the real estate cycle is one of the critical elements that will affect financing decisions and strategies of the banking sectors. Hence, this paper employed meta-analysis which aims (1) to systematically review survey the growing literature on real estate cycle and its links to the financial institutions; (2) to highlight possible cross-country trend analysis financial strategy among investors in dealing in with the real estate cycle. The results of the study suggest that during the peak cycle or period of crisis, most investors are risk-averse and increase the risk to the financing of real estate as well. This real estate cycle that occurs almost every 10 years in conventional real estate sectors also give some consequences to the Islamic financial institutions. This paper suggests to investors to understand the real estate cycle and its impact on Islamic financial institutions.
Downloads
References
Aliyu, S., Hassan, M. K., Yusof, R. M., & Naiimi, N. (2016). Islamic banking sustainability : A review of the literature and directions for future research. Emerging Markets Finance & Trade, (2), 440–470. doi: https://doi.org/10.1080/1540496X.2016.1262761
Bean, C. R. (2003). Asset Prices, Financial Imbalances and Monetary Policy: Are Inflation Targets Enough ? (No. 140). BIS Working Papers. doi: https://doi.org/10.2139/ssrn.761604
Borio, C., & Lowe, P. (2004). Securing sustainable price stability: should credit come back from the wilderness? BIS Working Papers (Vol. 157). doi: https://doi.org/10.2139/ssrn.782324
Davis, E. P., & Zhu, H. (2011). Bank lending and commercial property cycles: Some cross-country evidence. Journal of International Money and Finance, 30(1), 1–21. doi: https://doi.org/10.1016/j.jimonfin.2010.06.005
Eichholtz, P. M. A. (1996). Does International Diversification Work Better for Real Estate than for Stocks and Bonds? Source: Financial Analysts Journal, 52(1), 56–62. Retrieved from http://www.jstor.org/stable/4479897
Gerdrup, K. R. (2003). Three Episodes of Financial Fragility in Norway since the 1890s. BIS Working Paper, (142).
Gorton, G. (1988). Banking panics and business cycles. Oxford Economic Papers, 40(4), 751–781. https://doi.org/10.1093/oxfordjournals.oep.a041885
Hendershott, P. (2000). Property asset bubbles: evidence from the Sydney office market. The Journal of Real Estate Finance and Economics, 81, 67–81. doi: https://doi.org/10.1023/A:1007831922319
Hubbard, R. G., & Mayer, C. J. (2009). The Mortgage Market Meltdown and House Prices The Mortgage Market Meltdown and House prices. The B. E. Journal of Economic Analysis & Policy, 9(3).
Hussein, S. A. (2011) Business and Real Estate Cycles The Kuala Lumpur Office Market. Stockholm.
Kayed, R. N., & Hassan, M. K. (2007). Crisis and Islamic finance. Thunderbird International Business Review, 49(5), 630–631. doi: https://doi.org/10.1002/tie
Keeton, W. R. (1999) ‘Does faster loan growth lead to higher loan losses?’, Economic Review, (Q II), pp. 57–75.
Lee. C. (2011). Real Estate Cycles : They Exist … and Are Predictable. Center for Real Estate Quarterly Journal, 5(2), 5–11.
Mueller, G. R. (2018). Cycle Monitor - Real Estate Market Cycles
Olszewski, K. (2012). The impact of commercial real estate on the financial sector, its tracking by central banks and some recommendations for the macro-financial stability policy of central banks (No. 132).
Parsa, A., & Muwlazadeh, M. (2013). Islamic finance and Shariah-compliant real estate investment. Practical Law Finance. England, Wales. Retrieved from http://usir.salford.ac.uk/18493/
Pavlov, A. D., & Wachter, S. (2009). Subprime Lending and Real Estate Prices (No. 09–36).
Pavlov, A., & Wachter, S. (2004). Robbing the Bank: Non-recourse Lending and Asset Prices. The Journal of Real Estate Finance and Economics, 28(2/3), 147–160. https://doi.org/10.1023/B:REAL.0000011151.02848.1a
Pavlov, A., & Wachter, S. M. (2006a). The inevitability of marketwide underpricing of mortgage default risk. Real Estate Economics, 34(4), 479–496. doi: https://doi.org/10.1111/j.1540-6229.2006.00175.x
Pavlov, A. & Wachter, S. (2006b) Underpriced Lending and Real Estate Markets’.
Pavlov, A., & Wachter, S. M. (2011). Subprime lending and real estate prices. Real Estate Economics, 39(1), 1–17. doi: https://doi.org/10.1016/j.jbankfin.2011.02.001
Rahman, A. A. (2010). Financing structure and insolvency risk exposure of Islamic banks. Financial Markets and Portfolio Management, 24(4), 419–440. doi: https://doi.org/10.1007/s11408-010-0142-x
Sait, S., & Lim, H. (2006). Land, Law and Islam. Property and Human Rights in the Muslim World. (Vol. 1). Zed Books.
Sirtaine, S., & Skamnelos, I. (2007). Credit growth in emerging Europe: a cause for stability concerns? Policy Research Working Paper. Retrieved from http://ideas.repec.org/p/wbk/wbrwps/4281.html
Yusof, R. M., H. Kassim, S., A. Majid, M. S., & Hamid, Z. (2011). Determining the viability of rental price to benchmark Islamic home financing products evidence from Malaysia. Benchmarking: An International Journal, 18(1), 69–85. doi: https://doi.org/10.1108/14635771111109823
Zhu, H. (2003). The importance of property markets for monetary policy and financial stability. BIS Working Paper. doi: https://doi.org/10.2139/ssrn.1188110
Downloads
Published
Issue
Section
License
Site users
Copyright of all articles published in the Indian Pacific Journal of Accounting and Finance (IPJAF) belongs to their respective authors. Site users are permitted to download and print the articles for personal use. Further reproduction and/or distribution is not permitted, except for brief excerpts or quotations intended for inclusion in some other original works. In this case, proper attribution must be made to the author/copyright holder, and the place of publication must be acknowledged. Altering, editing or otherwise modifying the content of information obtained from the Indian Pacific Journal of Accounting and Finance (IPJAF) is a breach of copyright.
Authors
While you retain the copyright of your original material, by publishing in the Indian Pacific Journal of Accounting and Finance (IPJAF) , you will have agreed to the following contractual terms:
- The article is the original work of the stated author(s).
- The work has not been published previously.
- If the Article contains copyright material owned by others, written permission has been obtained from the copyright owner(s) to republish such material in any print or electronic medium and that you have included appropriate acknowledgement of such rights in the Article.
- The author agrees to grant a non-exclusive license to the Indian Pacific Journal of Accounting and Finance (IPJAF) to communicate the work to the public.
- The Indian Pacific Journal of Accounting and Finance (IPJAF) may use the article for publicity purposes.
- The Indian Pacific Journal of Accounting and Finance (IPJAF) may publish the article on third-party sites.
- Any subsequent publication of the article by the authors will carry the acknowledgement: First published in the Indian Pacific Journal of Accounting and Finance (IPJAF) [http://ipjaf.omjpalpha.com]
Disclaimer
The Indian Pacific Journal of Accounting and Finance (IPJAF) has taken all reasonable measures to ensure that material contained in this website is the original work of the author(s). However, the Journal gives no warranty and accepts no responsibility for the accuracy or the completeness of the material; no reliance should be made by any user on the material. The user should check with the authors for confirmation.
Articles published in the Indian Pacific Journal of Accounting and Finance (IPJAF) do not represent the views held by the editors and members of the editorial board. Authors are responsible for all aspects of their articles except the editorial screen design.
