The performance of the banking sector in one period is one of the indicators in encouraging financial stability in a country. Banking stability is reflected by healthy conditions and a well-run intermediation function. The purpose of this study is to see the impact of the Covid-19 pandemic shock in the short and long term which affects capital, efficiency, and management risk on the stability of Islamic banking in Indonesia. Analysis of this study using quantitative methods based on the Vector Error Correction Model (VECM). Empirically, the results of this study show that the CAR, BOPO, and FDR variables are significantly positively correlated to the stability of Islamic banks in the long term. Meanwhile, the NOM and NPF variables in length are negatively correlated with the stability of Islamic banks during the Covid-19 pandemic. In the short term the significant influential variables are NOM and FDR while the other variables have no effect. This shows that the Covid-19 pandemic shows an impact on bank stability in the future. This research proves that during the Covid-19 Pandemic, Islamic banks have succeeded in taking several policies in the form of financing restructuring which have proven effective in maintaining islamic banking stability.

Research explores the impact of COVID-19 on banking has been carried out by previous researchers in the last two years. However, there are no researchers who specifically discuss about banking stability during the COVID-19 pandemic which is related to macroeconomic relaxation during the COVID-19 pandemic. The purpose of this research was to explore the macroeconomic influence on banking stability during COVID-19 in anticipation of a similar shock. This study uses Ordinary Least Square (OLS) method to describe macroeconomic factors as independent variables and control variables on the z-score as the dependent variable. The results of the study showing the GDP variable has a significant negative effect, while the BI Rate and Exchange Rate variables have a significant positive effect on the stability of Islamic banking during the COVID-19 pandemic. As well as inflation and JUB variables show insignificant results. This finding implies that macroeconomics has an influence on bank stability so when the macroeconomic have shock, the government is required to make right strategy, either in the form of comprehensive policies, to maintain bank stability. These findings established the Government has succeeded in adopting several policies that have proven effective in running the economy which have an impact on bank stability during COVID-19 pandemic.