Macroeconomic Determinants of Islamic Banking Products in Indonesia

Setyowati, Nur

doi:10.3390/economies7020053

Cited by 17 publications

(16 citation statements)

References 29 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…The VDC approach shows that financial development has a major contribution in explaining industrial production. Setyowati (2019) finds that Islamic bank deposits and financing contribute significantly to boost industrial production in Indonesia.…”

Section: Literature Reviewmentioning

confidence: 99%

The nexus between Islamic banking and industrial production

Bougatef

Nakhli

Mnari

2020

IJIF

View full text Add to dashboard Cite

Purpose The purpose of this paper is to investigate the relationship between Islamic banking and industrial production by decomposing Islamic financing (IF) into profit and loss sharing (PLS) and non-profit and loss sharing (non-PLS) modes of financing. Design/methodology/approach This paper applies the autoregressive distributed lag (ARDL) approach and Toda and Yamamoto causality test on the monthly data set for Malaysia from 2010M1 to 2018M6. Findings The results reveal that IF plays an important role in boosting industrial production in the short run, as well as in the long run. Moreover, this positive effect mainly comes from non-PLS financing. In contrast, no significant relationship was found between PLS financing and industrial development neither in the short run nor in the long run. Practical implications The results have several policy implications. The existence of a time lag between the pooling of funds through PLS contracts and their channeling to industrial activities imply that Malaysian Islamic banks should maintain a long-term relationship with investment account holders. In addition, Islamic banks are called to increase the portion of PLS financing. The positive relationship between the industrial production index and IF (through non-PLS techniques) in the short and the long runs implies that policymakers in Malaysia should multiply their efforts to further expand the Islamic banking industry. Originality/value The originality of this study lies in decomposing Islamic banks’ financing into PLS financing (muḍārabah and mushārakah) and non-PLS financing to assess the contribution of each mode of financing in industrial development.

show abstract

Section: Literature Reviewmentioning

confidence: 99%

The nexus between Islamic banking and industrial production

Bougatef

Nakhli

Mnari

2020

IJIF

View full text Add to dashboard Cite

show abstract

“…From the long-term estimation results, the BI Rate shows insignificant results for NPF (H6 is rejected). This is inversely proportional to the research by Najiatun et al (2020) dan Setyowati (2019), showing that there is a relationship between the BI Rate and NPF. This relationship indicates a positive influence between the two things.…”

Section: Bound Test Cointegrationmentioning

confidence: 71%

The influence of financial performance and macroeconomic on financing risk in Islamic banks

Angraini

Sudarsono

Anindita³

2020

AJIM

View full text Add to dashboard Cite

The aim of this research is to identify the influence of microeconomic and macroeconomic variables toward non-performing financing of Islamic Commercial Banks in Indonesia.Methodology: Microeconomic variables include CAR, FDR, BOPO, ROA, while macroeconomic variables include IPI, BI Rate, Inflation and SBIS for the period of 2015 to 2019. The data analysis method in this study is auto-regressive distributed lag (ARDL) using EViews 10 tool which can analyze the relationship between independent and dependent variables in the long-term and the short-term.Findings: This study shows that CAR has a positive and insignificant effect on NPF. Furthermore, BOPO, ROA, BI Rate have a significant positive effect on NPF, but FDR, inflation and SBIS have a significant negative effect on NPF. In the long-term, CAR, IPI and SBIS have a negative and insignificant effect on NPF, but BI Rate has a positive and insignificant effect. Suggestion in this research is to solve better research, so further research should be carried out by including a longer period of time.Practical implications: Islamic Bank Directors need to pay attention to the movement of BOPO and ROA which tend to consistently have a positive effect on the NPF level.Originality: This study presents the long-term and the short-term relationships of specific Islamic banking variables and macroeconomic variables on NPF in Indonesia.

show abstract

“…On the other hand, the Granger causality test result shows that inflation and Islamic bank financing have unidirectional causality. This means that customers purchasing consumption goods through a Murabaha contract tend to increase the demand and prices of purchasing items, which causes higher inflation (Setyowati, 2019). However, inflation does not Granger cause growth in Islamic bank financing.…”

Section: Discussionmentioning

confidence: 99%

Determinants of Islamic bank financing in the Middle East: Vector Error Correction Model (VECM)

Abusharbeh

2020

Investment Management and Financial Innovations

View full text Add to dashboard Cite

As the world has been struck with a global financial crisis, Middle Eastern countries have been affected as well. Thus, Islamic banks have expanded, and the competitive advantage has become intensive with the increased number of conventional banks in the global banking system. This manuscript is aimed to examine the impact of macroeconomic and bank-specific factors on Islamic bank financing in the Middle Eastern countries. Therefore, the Vector Error Correction Model and the Granger causality test were run from 2009 to 2018 to detect the long- and short-run relationship between the explanatory variables and Islamic bank financing. The results suggest that both inflation and profitability negatively impact Islamic bank financing in the long run. The paper also revealed bidirectional causality between the variables GDP and bank size and Islamic bank financing. It shows that GDP and bank size are highly dominant factors of Islamic bank financing in the short run. Thus, this paper provides evidence that any short-run shock in the variables of GDP, inflation, and bank size will cause a long-term relationship with Islamic bank financing. This article’s novelty is to ensure resilience within the Islamic banking system during and after the financial crisis. It provides evidence that Islamic banks can cushion their financial activities from economic volatility during the crisis. The results found can be used to predict the growth of Islamic bank financing in upcoming years in the Middle East and all emerging countries.

show abstract

Macroeconomic Determinants of Islamic Banking Products in Indonesia

Cited by 17 publications

References 29 publications

The nexus between Islamic banking and industrial production

The nexus between Islamic banking and industrial production

The influence of financial performance and macroeconomic on financing risk in Islamic banks

Determinants of Islamic bank financing in the Middle East: Vector Error Correction Model (VECM)

Contact Info

Product

Resources

About