The Influence of Determining Factors on Islamic Stock Index in Indonesia

Abstract

This paper investigated some determining factors that influence Indonesia Sharia Stock Index (ISSI). Some macroeconomic variables are used as an independent variable such as central bank interest rates, inflation, currency exchange rate, and return rates of Bank Indonesia Sharia Certificates (SBIS). This study conducted the Error Correction Model (ECM) to analyze times series data during October 2013 and September 2017. The findings showed that Indonesia Sharia Stock Index (ISSI) is influenced significantly and negatively by central bank interest rates in long term analysis. Similarly, in short term analysis, the central bank interest rates affect significantly and negatively on ISSI as well as the currency exchange rates. On the other hand, SBIS return rates and inflation are indicated to have a non-significant negative effect on ISSI. This study suggested that investors of ISSI consider Central Bank interest rates, inflation, rupiah exchange rates, and SBIS rates of return to predict the stock price so investors can make the right decisions in their investment policies. This paper also recommended the Indonesian Central Bank to effectively manage their monetary policy and promote ISSI as an alternative investment which is resistant by the negative effect of inflation in short term analysis.

Fundamental Factor Analysis On Banking Stock Price In LQ45

“…Rahardja (2014) says that Inflation is a form of economic disease that affects almost all countries, namely the tendency to increase the prices of goods/services continuously. Several previous studies that analyzed the effect of inflation on stock prices (Alam et al, 2020;Antono et al, 2019;Begawati, 2017;Mulyanto & Riyanti, 2020;Šimáková et al, 2019;Utomo et al, 2019), inflation has a negative and significant effect on stock prices. In contrast to the research conducted (Bertuah & Sakti, 2019;Yusfiarto, 2020;Zuhroh, 2020), it states that inflation has a positive and significant effect on stock prices.…”

“…The exchange rate will have an impact on the real sector. According to Alam et al (2020) an exchange rate is the currency's price against another currency. Exchange rates are JRAK 11.1 considered important in the economy, given the large influence on the current account balance, the comparison of prices or values between currencies is called the exchange rate, a weakening exchange rate means that the rupiah is depreciating, the exchange rate is strengthening, the rupiah is appreciating (Zuhroh, 2020).…”

“…Several previous studies that analyzed the effect of inflation on stock prices (Alam et al, 2020;Begawati, 2017;Mulyanto & Riyanti, 2020) showed that inflation has a negative and significant effect on stock prices. In contrast to the research conducted (Sorcerer & Sakti, 2019;Zuhroh, 2020), it states that inflation has a positive and significant effect on stock prices.…”

“…Stock is one of the securities among many other securities with a high level of risk. The uncertainty of future stock returns reflects a high level of risk, so investors need to analyze fundamental factors before investing (Alam et al, 2020). Investors need to pay attention to stock price fluctuations (Setiyawan & Pardiman, 2014).…”

Folk Belief on Pancur Gading Site in Deli Tua Village, Sumatera Utara Province, Indonesia

“…In the study of folklore as an oral word, people's beliefs were an inseparable part of ritual performance. Religious languages such as Mantra (spells), poetry, prayers are important part of performing rituals (Alam et al, 2020). Although in some rituals, the addition or subtraction was an indisputable part because of the acculturation and syncretism processes.…”