Financial Stability: Islamic Banks in Indonesia
Abstract
This study aims to analyze the performance of Islamic banking and macroeconomics on the financial stability of Islamic banking in Indonesia. The main factors that cause the financial stability of banking to fluctuate due to internal factors (fundamental factors) are factors originating from within Islamic banking such as NPF, FDR, CAR, while external factors (non-fundamental factors) are caused by economic conditions such as inflation, interest rates and GDP. Researchers use the period from 2017 to 2023, where the year is based on seeing the phenomena before and after the Covid-19 pandemic. This study uses dynamic panel regression with Generalized Method of Moments (GMM) estimation. The results of the GMM estimation analysis produce test results that have a significant effect on the Zscore variable, including the NPF variable, while macroeconomic variables do not have a significant effect on the financial stability of Islamic banking.
Keywords: performance of Islamic banking, macroeconomics, financial stability, GMM
References
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Yuniar, I A and Kusrini, D. (2019). Penerapan Regresi Data Panel Dinamis untuk Pemodelan Ekspor dan Impor di Asean. 1991, 111–119.
Aithal, P. S. (2016). Ideal Banking Concept and Characteristics. International Research Journal of Management, IT and Social Sciences, 3(11), 46–55. https://doi.org/10.21744/irjmis.v3i11.311
Al-Khouri, R., & Arouri, H. (2016). The simultaneous estimation of credit growth, valuation, and stability of the Gulf Cooperation Council banking industry. Economic Systems, 40(3), 499–518. https://doi.org/10.1016/j.ecosys.2015.12.005
Cahyaningrum, Y. W., & Antikasari, T. W. (2017). Pengaruh Earning Per Share, Price To Book Value, Return on Asset, Dan Return on Equity Terhadap Harga Saham Sektor Keuangan. Jurnal Economia, 13(2), 191. https://doi.org/10.21831/economia.v13i2.13961
Daoud, Y., & Kammoun, A. (2020). Financial Stability and Bank Capital: the Case of Islamic Banks. International Journal of Economics and Financial Issues, 10(5), 361–369. https://doi.org/10.32479/ijefi.10147
El Karfi, K., & Mentagui, D. (2020). Monetary policy and financial stability. Journal of Advanced Research in Dynamical and Control Systems, 12(5 Special Issue), 1453–1459. https://doi.org/10.5373/JARDCS/V12SP5/20201905
Fakhrunnas, F. (2019). The Effect of Macroeconomic and Bank-Specific Variables to Risk-Taking of Islamic Bank in Indonesia. International Journal of Islamic Economics and Finance (IJIEF), 1(2), 165–186. https://doi.org/10.18196/ijief.129
Firdaus, A. A., Mafruhah, I., & Tri Rahayu, S. A. (2022). Analysis of the Influence of Banking Performance and Macroeconomic on Banking Stability in Indonesia. International Journal of Economics, Business and Management Research, 06(07), 239–250. https://doi.org/10.51505/ijebmr.2022.6717
Gujarati, D. N. (2021). Essentials of econometrics. SAGE Publications.
Henry Ntarmah, A., Kong, Y., & Kobina Gyan, M. (2019). Banking system stability and economic sustainability: A panel data analysis of the effect of banking system stability on sustainability of some selected developing countries. Quantitative Finance and Economics, 3(4), 709–738. https://doi.org/10.3934/qfe.2019.4.709
IFSB. (2019). Stability Report 2019. In The edge markets. https://www.theedgemarkets.com/article/malaysias-islamic-banking-industry-will-achieve-40-market-share-2020-says-aibim
Jayakumar, M., Pradhan, R. P., Dash, S., Maradana, R. P., & Gaurav, K. (2018). Banking competition, banking stability, and economic growth: Are feedback effects at work? Journal of Economics and Business, 96, 15–41. https://doi.org/10.1016/j.jeconbus.2017.12.004
Karim, N. A., Al-Habshi, S. M. S. J., & Abduh, M. (2016). Macroeconomics Indicators and Bank Stability: a Case of Banking in Indonesia. Buletin Ekonomi Moneter Dan Perbankan, 18(4), 431–448. https://doi.org/10.21098/bemp.v18i4.609
Louzis, D. P., Vouldis, A. T., & Metaxas, V. L. (2012). Macroeconomic and bank-specific determinants of non-performing loans in Greece: A comparative study of mortgage, business and consumer loan portfolios. Journal of Banking and Finance, 36(4), 1012–1027. https://doi.org/10.1016/j.jbankfin.2011.10.012
Priyanto, T., Fahmi, I., & Ismal, R. (2016). Faktor-Faktor Yang Memengaruhi Pembiayaan Berbasis Bagi Hasil (Equity Financing) Pada Bank Syariah X. Jurnal Aplikasi Bisnis Dan Manajemen, 2(3), 281–290. https://doi.org/10.17358/jabm.2.3.281
Raouf, H., & Ahmed, H. (2021). Risk governance and financial stability: A comparative study of conventional and Islamic banks in the GCC. Global Finance Journal, December 2019, 100599. https://doi.org/10.1016/j.gfj.2020.100599
Rizvi, S. A. R., Narayan, P. K., Sakti, A., & Syarifuddin, F. (2020). Role of Islamic banks in Indonesian banking industry: an empirical exploration. Pacific Basin Finance Journal, 62(February), 101117. https://doi.org/10.1016/j.pacfin.2019.02.002
Setiawati, R. I. (2020). Analisis Pengaruh Faktor-Faktor Fundamental Kinerja Bank Dan Makro Ekonomi Terhadap Stabilitas Perbankan Di Indonesia. Jurnal Ilmiah Bisnis Dan Ekonomi Asia, 14(2), 123–132. https://doi.org/10.32812/jibeka.v14i2.194
Widarjono, A. (2020). Stability of Islamic banks in Indonesia: Autoregressive Distributed Lag Approach. Jurnal Keuangan Dan Perbankan, 24(1), 40–52. https://doi.org/10.26905/jkdp.v24i1.3932
Yuniar, I A and Kusrini, D. (2019). Penerapan Regresi Data Panel Dinamis untuk Pemodelan Ekspor dan Impor di Asean. 1991, 111–119.
Published
2024-12-18
How to Cite
Firdaus, A. A., & Yuliani, T. W. (2024). Financial Stability: Islamic Banks in Indonesia. Annual International Conference on Islamic Economics and Business (AICIEB), 4, 171-180. https://doi.org/https://doi.org/10.18326/aicieb.v4i0.695
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