Macroeconomics fluctuations and its impact on musharaka financing

Mubarok, Faizul; Hamid, Abdul; Arif, Mohammad

doi:10.26905/jkdp.v24i2.4061

Cited by 6 publications

(16 citation statements)

References 27 publications

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“…Inflation is one of the government's indicators in making monetary policy. The increase in inflation will be responded to by an increase in interest rates, which means increasing the price of financing in the banking sector (including Islamic banks) (Mubarok et al, 2020). The high inflation will eventually cause a decline in the distribution of financing, including profit-sharing financing.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

“…Many factors can influence banks in channeling their financing, both internal and external factors. There are several ways to identify factors that can affect profit-sharing financing as has been done by previous researchers, including the influence of mudharabah deposits (Kiswanto, 2013;Pramono, 2013;Riyanto, 2016), the influence of non-performing financing (Arnan & Kurniawasih, 2014;Kurniawanti & Zulfikar, 2014;Annisa & Yaya, 2015;Destiana, 2016;Jamilah, 2016;Kalkarina et al, 2016;Riyanto, 2016;Murni et al, 2018;Ispad, 2019;Nastiti & Kasri, 2019), equivalent rate (Kiswanto, 2013;Pramono, 2013;Kurniawanti & Zulfikar, 2014;Riyanto, 2016), efficiency (Jamilah, 2016;Nastiti & Kasri, 2019), economic growth (Ayyubi et al, 2017;Anwar et al, 2020;Hafizh et al, 2020) and inflation (Priyanto et al, 2016;Nastiti & Kasri, 2019;Mubarok et al, 2020).…”

Section: Introductionmentioning

confidence: 99%

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Optimization of Profit-Sharing Financing at Islamic Banking in Indonesia

Riyadi

Iqbāl

Pangastuti

et al. 2021

J. Keuang. dan Perbank.

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The purpose of this study is to identify factors that can encourage an increase in profitsharing financing. These factors are third-party funds in the form of mudharabah deposits, non-performing financing, equivalent rate, operational efficiency ratio, economic growth, and inflation. The research method uses a co-integration and error correction model (ECM) with a sample of the Islamic banking industry in Indonesia from the first quarter of 2015 to the third quarter of 2020. The results show that the factors that encourage profit-sharing financing are the growth of third-party funds in the form of mudharabah deposits, nonperforming low funding, low equivalent rate, operational efficiency, and economic growth. These factors are the key to driving the growth of profit-sharing financing. This research contributes to providing various alternative strategies in encouraging the growth of profitsharing financing, such as increasing retained earnings from profit, providing attractive profit-sharing incentives, transparency of financial reports to attract people to invest in Islamic banks, prevention and supervision of non-performing financing, be careful in determining the ratio by taking into account several internal and external aspects, as well as paying attention to the movements of existing economic growth.

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Section: Hypotheses Developmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Optimization of Profit-Sharing Financing at Islamic Banking in Indonesia

Riyadi

Iqbāl

Pangastuti

et al. 2021

J. Keuang. dan Perbank.

View full text Add to dashboard Cite

show abstract

“…The level of profit sharing has a substantial relationship to the public interest in placing their savings in Islamic banks (Ab Rahman et al, 2021). In addition, profit sharing has been shown to have a positive and significant influence on customers' decisions in choosing to save in Islamic banks (Mubarok, Hamid, & Arif, 2020).…”

Section: Profit-sharing Ratementioning

confidence: 99%

Exploring Determinants of Saving and Financing Aspects in Islamic Banks: An Insight from Indonesia

Musa

Khalidin

Furqani

et al. 2022

5002

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Savings and financing are two significant products of Islamic banking in Indonesia. This study examines the relationship between these two products and key macroeconomic factors. The data was gathered from the Central Bank of Indonesia (BI), the Financial Services Authority (OJK), and the Indonesia Statistics Bureau (BPS). The profit-sharing rate (PSR) and profit and loss sharing (PLS) were examined using a mixture of the addition and balanced average approaches, whereas the relationships among the variables were analyzed using Pearson’s and Spearman’s rank correlation coefficient tests. The findings show a statistically significant correlation between the investigated variables. It was discovered that interest rates, inflation, the consumer price index, the currency rate, and the stock price index all influence savings and financing. There was a negative association between savings and inflation, but there was no relationship between savings and profit-sharing ratios. These findings have policy development implications for Islamic banking in Indonesia in terms of savings and financing options.

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“…According to the authors, low income forces people to access financing. A study by Mubarok et al (2020) showed that an increase in income or purchasing power reduces the Musharaka financing utilization for the case of Islamic banks of Malaysia. Similar results were concluded by Rahayu et al (2016) after interviewing 30 clients of Islamic financial institutions in Indonesia.…”

Section: Demand For Musharakamentioning

confidence: 99%

“…First, studies are silent on the link of their independent variable (whether it increases the demand for or supply of Musharaka). Second, few studies made a correct connection with supply or demand for Musharaka (like Mubarok et al (2020) or Alkhan (2020)). However, they still missed confirmation regarding the convergence of equilibrium.…”

Section: Demand For Musharakamentioning

confidence: 99%

Exploration of the equilibrium level of Musharaka financing in full-fledged Islamic banks

Arshed

Kalim

2021

JIABR

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Purpose This study aims to develop and estimate the Musharaka demand and supply model for full-fledged Islamic banks to explore patterns and stability of Musharaka equilibrium in the market. Design/methodology/approach This quantitative study uses a deductive approach to explore financial statement-level data of 30 Islamic banks of six countries between 2012 and 2017. Findings The results show that the Musharaka market is stable when Musharaka demand is purchase price elastic and supply is sale price inelastic. It indicates that the current banking industry is unable to increase supply when there is an increase in Musharaka returns. In comparison, industry demand for Musharaka is increasing at a higher rate, corresponding to a decrease in Musharaka price. Practical Implications This study is fundamental in estimating the market stable market returns and market quantity of Musharaka financing. If market returns and quantity deviate, market forces will push it to equilibrium. Originality/value The theoretical and empirical studies worked on the application and suitability of Musharaka financing. However, they failed to explain demand and supply forces in determining the level of Musharaka financing in the economy using empirical data. Without an equilibrium model, policymakers would be unable to predict the movement of the Islamic stock market index (the price of Musharaka financing) and the incidence of Musharaka financing. Further, it is not possible to apply expansionary intervention by policymakers if the stability of the market is unknown.

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Macroeconomics fluctuations and its impact on musharaka financing

Cited by 6 publications

References 27 publications

Optimization of Profit-Sharing Financing at Islamic Banking in Indonesia

Optimization of Profit-Sharing Financing at Islamic Banking in Indonesia

Exploring Determinants of Saving and Financing Aspects in Islamic Banks: An Insight from Indonesia

Exploration of the equilibrium level of Musharaka financing in full-fledged Islamic banks

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