The Relationship of Macro-risk Indicators, Internal Factors, and Risk Profile of Islamic Banking in Indonesia

Santosa, Perdana Wahyu; Setianingrum, Any; Huda, Nurul

doi:10.15408/etk.v19i2.15528

Cited by 4 publications

(7 citation statements)

References 26 publications

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“…The high economic growth proved that the welfare of the people was improving, leading to the actualization of consumption, and debt repayment obligations. These results were in line with Badar and Javid ( 2013 Munifatussaidah (2020); Nugrohowati and Bimo (2019); also Santosa et al (2020), GDP positively and significantly impacted NPF. Meanwhile, the study conducted by (Asmara, 2019;Prastowo & Usman, 2021;Yuniarti et al, 2022) found that GDP was ineffective on NPFs.…”

Section: Resultssupporting

confidence: 82%

What are the Determinants Affecting the Financing Risk in Indonesian Sharia Rural Banks?

Suhel

Bashir²,

Asngari³

et al. 2022

muqtasid

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Rapid and dynamic changes in the financial and economic systems are posing various risks and instabilities to Islamic banking institutions. Therefore, this study aims to investigate the impact of macroeconomic factors and bank abilities on financing risk in Indonesia. In this analysis, the 2005-2019 sharia banking statistics at 92 rural banks were emphasized in the country. A panel data regression was also employed with the fixed effect method during the experimental procedure. The results showed a negative and significant relationship between economic growth, FDR (financing to deposit ratio), and CAR (capital adequacy ratio) toward financing risk. Moreover, a positive and significant relationship was found between the benchmark loan rate on financing risk, although inflation had no significant effect. Economic growth was also a key factor influencing financing risk in the sharia rural banks sector. Based on these results, banking regulators were found to operate according to sharia principles, to selectively optimize and carefully monitor financial distribution and activities with high financing risk.

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Section: Resultssupporting

confidence: 82%

What are the Determinants Affecting the Financing Risk in Indonesian Sharia Rural Banks?

Suhel

Bashir²,

Asngari³

et al. 2022

muqtasid

View full text Add to dashboard Cite

show abstract

“…The effect of the correlation between macroeconomic variables and internal variables (NPF) refers to the theory explained by (Miskin, FS, 2011) regarding the correlation between macroeconomic variables, finance, and banking stability. This influence begins with the emergence of shock changes in macroeconomic variables (inflation, GDP, exchange rates) (Santosa et al, 2020).…”

Section: Non-performing Financingmentioning

confidence: 99%

“…Research by stated that Islamic banks are more efficient due to economic conditions and political stability. Research by (Filip, 2017;Santosa et al, 2020) shows that GDP negatively affects NPF. However, it differs from research by (Kusmayadi et al, 2017), which stated that GDP positively affects NPF.…”

Section: The Effect Of Gdp On Non-performing Financingmentioning

confidence: 99%

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Examining the Effect of Economic Collison

Fadila

Pangestuti

2022

IJFBS

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This study will examine the impact of economic collision on the non-performing financing in sharia bank in Indonesia. The current study adopts VAR/VECM method to examine inter variables correlation by testing an economic factors, including 1) Real GDP Growth, 2) Exchange Rate, 3) Inflation, 4) Interest Rate, and 5) IDX Composite. A total NPF of 14 Islamic Banks and 20 Sharia Business Units were selected as data samples from 2006 to 2020. The findings indicate that inflation positively impacts NPF in the short run and delivers the biggest shock to NPF. The result states that Inflation, Exchange rate, and Interest rate are the dominant factors to shock NPF in Islamic Banks. From the analysis results, the economic variables, i.e., GDP, exchange rates, inflation, interest rates, and the IDX Composite, provide a stable long-term relationship and, in the short term, adjust to each other to achieve a new balance in the long term.

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“…First, it considers previous studies in which banking stability was only discussed at the institutional level. Some, such as that of Santosa et al (2020), explain that Islamic bank stability is affected by macroeconomic conditions. In addition, comparing conventional and Islamic bank stability, Olson & Zoubi (2017), Trad et al (2017), Asutay & Othman (2020), Hassan et al (2019), Safiullah (2021), Bilgin et al, (2021) and Louhichi et al, (2019) conclude that Islamic banks are superior in terms of banking stability during financial turmoil and in tight banking competition.…”

Section: Introductionmentioning

confidence: 99%

The Contribution of Islamic and Conventional Banks to Financial Stability in Indonesia

2023

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This study aims to examine an asymmetric relationship between Islamic and conventional bank contributions to financial stability in Indonesia. Adopting non-linear autoregressive distributed lag (NARDL), the study utilizes time-series data from 2004m1-2021m9, consisting of financial stability as a dependent variable, proxied by non-performing loans (NPLs) and ZSCORE. Islamic and conventional banks as independent variables were measured by total financing and total assets. Furthermore, we used interest rates and inflation as complementary variables. The findings reveal that Islamic and conventional banks affect financial stability in the short and long run. However, conventional banks contribute to financial stability more than Islamic banks. The asymmetric relationship explains that an increase/decrease in the independent variables to the same degree does not have the same impact on the dependent variable. This research implies that the financial authorities need to increase their awareness of the presence of asymmetric relationships when designing monetary policy to achieve and maintain financial stability. Finally, the study also fills the current research gap by measuring the contribution of Islamic and conventional banks to financial stability from an asymmetric relationship viewpoint.JEL Classification: E60, G20, G21How to Cite:Fakhrunnas, F., Nahda, K., Chowdhury, M.A.M. (2023). The Contribution of Islamic and Conventional Banks to Financial Stability in Indonesia. Etikonomi, 22(1), 213–232. https://doi.org/10.15408/etk.v22i2.26656.

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The Relationship of Macro-risk Indicators, Internal Factors, and Risk Profile of Islamic Banking in Indonesia

Cited by 4 publications

References 26 publications

What are the Determinants Affecting the Financing Risk in Indonesian Sharia Rural Banks?

What are the Determinants Affecting the Financing Risk in Indonesian Sharia Rural Banks?

Examining the Effect of Economic Collison

The Contribution of Islamic and Conventional Banks to Financial Stability in Indonesia

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