Geopolitical Risks and Economic Policy Uncertainties Affecting Sharia Liquidity Instruments: Indonesian Sharia Bank Certificates (SBIS)

Fetria Eka Yudiana; Dido Avifa Fajrina

doi:10.18326/aicieb.v5i-.805

Fetria Eka Yudiana Universitas Islam Negeri Salatiga
Dido Avifa Fajrina Universitas Islam Negeri Salatiga

DOI: https://doi.org/10.18326/aicieb.v5i-.805

Abstract

Instability in the financial sector, including Islamic banking, is often associated with global economic uncertainty due to Geopolitical Risk (GPR) and Economic Policy Uncertainty (EPU). With the Bank Indonesia Sharia Certificate (SBIS) as an intervening variable, this study examines the effect of GPR and EPU on the stability of Islamic Commercial Banks in Indonesia. The monthly financial reports of Islamic Commercial Banks registered with the Financial Services Authority (OJK) during the 2019-2023 period are the secondary data sources used for the quantitative method with panel data regression. In this study, Eviews 12 was used, along with the Path Analysis Test. The results of the study indicate that GPR and EPU do not have a significant effect on the stability of Islamic Commercial Banks, either directly or through SBIS. This conclusion suggests that other variables outside of GPR and EPU may also affect the stability of Islamic Commercial Banks. This study used Eviews 12, along with Path Analysis Test. This study found that, both directly and through SBIS, GPR and EPU do not have a significant effect on the stability of Islamic commercial banks. The results indicate that other components outside of GPR and EPU may play a greater role in determining the stability of Islamic banks. As a result, although SBIS is still a monetary tool, further research should be conducted to determine how well it can reduce the effects of economic uncertainty on Islamic banking. This research provides regulators and policymakers with insights to consider other components that contribute to the stability of the Islamic banking sector in Indonesia.

Keywords: Geopolitical Risk, Economic Policy Uncertainty, Bank Indonesia Sharia Certificate, Bank Stability.

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