Islamic Bank Financing Research Articles

THE ROLE OF MACRO-MONETARY POLICY ON ISLAMIC BANKING STABILITY IN THE BUSINESS CYCLE IN INDONESIA: STUDY OF KEYNES'S THEORY AND IBN KHALDUN'S THEORY

According to the theory of Keynes and Ibn Khaldun, the government must be in control of the national economy with active policies to influence the movement of the economy. The macro-monetary policy can reduce output imbalances through macro-monetary instruments to influence credit growth, affecting aggregate demand. This study aims to analyze the role of macro-monetary policy on Islamic banking stability in the business cycle in Indonesia. This study used the Vector Error Correction Model (VECM) simultaneous equation method with the Eviews-12 program. This study used secondary data on Islamic banks from various institutions such as the Financial Services Authority, Bank Indonesia and the Central Bureau of Statistics. The secondary data in this study are Islamic banks from 2008 to 2021. This research resulted in findings that, in the long-term business cycle, Statutory Reserves positively influence Islamic banking financing. Buffer capital or Capital Buffer and Non-Performing Financing negatively influence sharia banking financing. Meanwhile, economic growth or Gross Domestic Product does not affect sharia banking financing. Meanwhile, in the short term, none affects sharia banking financing. The results of the Impulse Response Function (IRF) and Forecast Error Variance Decompositions (FEVD) show that the shock of the Statutory Reserves and Buffer Capital makes the most significant contribution to sharia banking financing in the long-term business cycle. The results of this study can encourage Islamic banks to use macro-monetary instruments in controlling Islamic financing as a proxy for the stability of Islamic banking in Indonesia to control the distribution of financing in a balanced, prudent and quality manner in the business cycle. Then it can anticipate losses and not disrupt the stability of Islamic Banks.

Analysis of Islamic Capital Market-Products and Challenges: A Case Study of Pakistan

Global financial meltdown-2008 brought attention of states and market participants towards asset based Islamic Financial System (IFS). Global financial crises-2008 was not only the debt crises but actually it was the collapse of conventional system that caused surge in Sharia complaint products demand by many folds from every corner of the world. Pakistan where Islamic banking started to came in limelight after 2001 when old Islamic banking procedures were announced NULL and VOID by sharia court and SBP set new road map for next 20 years for Islamic Banking in Pakistan. Islamic Capital market (ICM) also started its growth with rising Islamic bank (IBs) deposits and financing. This paper investigates the ICM products to maximize its growth and challenges. This study is based on review of previous papers and analysis of available data on ICM business from annual reports of PSX, NCCPL, CDC, SECP and PSX brokers. The study found that itis still needed to work for the sustainable growth of ICM in Pakistan as the sector has witnessed very low growth Specially equity market as compared to improvement of IBs during last 8 years.

TYPES OF LINKAGES BETWEEN ISLAMIC BANK FINANCING, INTEREST RATE AND ECONOMIC GROWTH FACTORS: EVIDANCE FROM ACEH PROVINCE WITH GRANGER CAUSALITY TEST

AbstractThe Aceh government's regulation to implement the sharia system in all regional banking institutions certainly has an impact on interest rates and affects economic growth factors. The purpose of this study was to determine the two-way relationship between Islamic bank financing, interest rates and economic growth factors in Aceh Province. The research used bootstrap granger causality test. The findings show that there is no two-way relationship between variables, but the Granger test with economic growth in Aceh Province shows a one-way causality relationship, namely the economic growth of Aceh Province affects Islamic banking financing in Aceh Province. Keywords: Financing, Interest Rates, Economic Growth, Granger Causality

Determinants of Bank Mu'amalat Indonesia's Non-Performing Financing: Internal and External Reviews

Non-Performing Financing (NPF) in the management of Islamic Banks Financing needs to be controlled, although it is difficult to avoid it. This review can be observed from various internal and external variables of Islamic banks. This paper intends to analysis the determinants of Bank Muamalat's NPF, in terms of internal variables, namely Capital Adequacy Ratio (CAR), Operational Income to Operating Costs (BOPO), and Financing To Deposit Ratio (FDR), while external reviews include inflation and the Rupiah Exchange Rate. Writing method with a quantitative approach, the type of associative research. The population is taken from the financial statements of PT. Bank Muamalat Indonesia for the 2013-2021 period as many as 35 data. The sampling technique used is saturated sampling. The analysis uses multiple linear regression through normality test, classic assumption test, t test, F test and coefficient of determination test. Findings showed that CAR had a significant negative effect on NPF, BOPO had a significant positive effect on NPF, FDR had no significant effect on NPF, Inflation had no significant effect on NPF, Rupiah exchange rate had no significant effect on NPF, while CAR, BOPO, FDR, inflation, and The Rupiah exchange rate simultaneously has a significant effect on the NPF of 41%, while the rest is influenced by other indicators. Internally, CAR and BOPO have a significant effect while external reviews have no significant effect. The practical implication of this paper is that Islamic banks need to pay attention to internal conditions so that NPF can be controlled

Factors Contributing to Non-performing Financing: Evidence from Islamic Banks in Malaysia before Pandemic

This study is going to ascertain the contributing factor of non-performing financing in Islamic banks in Malaysia. Purpose – This study aims to investigate the specific bank characteristics as well as macroeconomic variables. Methodology/approach –Twelve local Islamic banks would be the focus for this study starting from period 2009 until 2018 which are before pandemic. The annual report has been used as the primary source for the financial data. While for the macroeconomics data, DataStream database has been used. Panel data approach was used to investigate the data and all the determining factor from both factors were regressed against non-performing financing. Findings – This study found that just two bank-specific characteristics, bank size and capitalization, showed a significant negative link with non-performing financing. While the other variables from macroeconomic factors does not give any important impact on non-performing financing for the Islamic banks in Malaysia.

URGENSI TRANSFORMASI DIGITALISASI PERBANKAN SYARIAH SECARA MASIF DALAM KERANGKA MAQASHID SYARIAH

The growth of the sharia bank business has been predicted to exceed the growth of the national banking sector as disclosed by the Chief Economist of PT Bank Syariah Indonesia Tbk (BSI) Banjaran Surya Indrastomo in the BSI Sharia Outlook 2023. However, the increase in Third Party Funds (DPK) was 11.46% YoY or higher than the national banking DPK projection of 9.6% YoY does not automatically increase the overall interest of sharia banking customers in choosing sharia banking services compared to conventional banking services. We can see this from the data on the number of placements of government funds, both BUMN, BUMD & Public Service Agencies (BLU), including the UIN Sjech M. Djamil Dajmbek Bukittinggi work unit, which are more in conventional banks than Islamic banks. Data on users of Islamic bank services and conventional banks at UIN Sjech M. Djamil Djambek Bukittinggi also have more conventional bank service users than Islamic banks with a ratio of 60% to 40%, based on data from 252 employees of the State Civil Apparatus of UIN Bukittinggi, only 106 service users. Islamic banks that place payroll or salary funds in Islamic banks and the rest use conventional banks. This phenomenon is the basis for the analysis in this study where from interview surveys with some employees of the State Civil Apparatus of UIN Bukittinggi where Islamic bank digital banking is one of the indicators driving interest in using Islamic bank services. Qualified digital banking is a must and must be able to accommodate the interests of Islamic banking services to achieve the goal of benefit within the framework of Maqashid Syariah (Dharuriyyah, Hajiyat and Tahsiniyat). The division of dharuriyyah is categorized into 5 basics, namely 1) Religion, 2) Soul, 3) Heredity, 4) Intellect and 5) Wealth. This research method uses a qualitative research study with a literature review approach. The results of the study show that digital transformation in an inclusive manner is an urgency that cannot be postponed anymore and must be carried out massively by increasing the capacity of Islamic banking capital in the IT sector of Islamic banking.

Disclosure of Islamic Values and Their Impact on Third-Party Funds and Islamic Bank Financing

This study investigates how the disclosure of Islamic values may contribute to third-party funds and financing in Islamic-compliant banks. This study employs a sample of 12 Islamic commercial banks in Indonesia with panel data from 2015 to 2020. Weights, based on expert assessments to determine the level of Islamic values, present as the academic contribution of this research. The finding reports that exposure to Islamic values negatively and significantly impacts financing. Third-party funds provide an indirect positive relationship between the disclosure of Islamic values and financing. These findings further consider the importance of implementing and disclosing Islamic values for investors.

ECONOMIC OUTPUT, MONETARY POLICY TRANSMISSION AND THE ROLE OF ISLAMIC BANKS: EVIDENCE FROM PAKISTAN DUAL BANKING SYSTEM

Using co-integration analysis, this study evaluates the role of Islamic banks in monetary transmission and the economic growth of Pakistani economy. More specifically, it investigates the role of Islamic bank deposits and financing in the transmission of monetary policy impacts to the real economy. The findings suggest that Islamic bank financing and deposits play key roles in Pakistan's monetary transmission process. The bank lending channel has the potential to become a major channel of monetary transmission in Pakistan's economy. The bank lending channel highlights the significance of Islamic financial institutions in disseminating the effects of monetary policy across the economy. Therefore, more efforts should be made to establish a more effective Islamic money market, which might offer Islamic banks with an alternative funding source.

ANALISIS MAQASHID SYARI’AH PADA KEBIJAKAN RESTRUKTURISASI DALAM MENGATASI PEMBIAYAAN BERMASALAH AKIBAT PANDEMI COVID 19 (STUDI KASUS BANK BTN SYARIAH MEDAN)

<p><strong>Abstract<br /> </strong><em>The provision of financing in Islamic banks always carries the risk of payment difficulties that occur in Islamic banks the same as conventional banks, causing financing problems. To overcome this problem, Islamic banking applies the same thing as conventional banks, namely financing restructuring in overcoming problem financing. In this study, the problem that occurred was the COVID-19 pandemic which caused the business and business sectors to experience market problems due to government regulations to keep themselves at home. So the bank, in this case Islamic banking, took action to answer the problem of non-performing financing by restructuring to save banking liquidity and also the finances of customers who had difficulty paying due to the covid 19 pandemic. This study used a qualitative approach using the Publish and Perish software tool to collect journal articles relevant to the purpose of this study. The collected articles were analyzed for content (content analysis) and analyzed with the maqashid shari'ah theory to see the suitability of saving problematic financing for customers and banks during the covid 19 period to achieve benefit for both. The findings in this study are that in improving the performance of banks in carrying out non-performing financing, banks must analyze social problems that occur to find solutions due to the Covid 19 Pandemic which causes economic problems that result in problematic financing</em>.</p><p> </p><p>Keyword : <em>maqashid shari'ah, restructuring, non-performing financing</em></p>

Sharia Banking Contribution To Financial Deeping In Supporting Indonesia Economic Recovery

The background of the research is the issue of research on Indonesia's financial deepening condition during the pandemic to describe the condition of Islamic banking on financial deepening in Indonesia before and during the pandemic, using the variables of total assets, third party funds, and Islamic banking financing. The method used in this research is descriptive quantitative by analyzing secondary data which is processed using Eviews with the VECM method and using quarterly time series data from 2005-2021 with a total sample of 272 from all research variables. The results of data processing using VECM show several findings, namely: Assets have a long-term positive effect on financial deepening, and based on the IRF and FEVD financial deepening tests show a positive response to shock with a contribution of 77%. Meanwhile, TPF and Islamic bank financing have a long-term negative impact on financial deepening and based on the IRF and FEVD financial deepening tests, they showed a negative response to the shock of TPF with a contribution of 9% and showed a positive response to the financing shock with a contribution of 3%. Meanwhile, based on testing using IRF, the movement of financial deepening in response to shocks in these variables shows that it is stable in the future. Keywords : Financial De e p ening , Islamic Banking, VECM Method

Determinants of Poverty Rate in Eastern Indonesia

Poverty is a global issue faced by many countries in the world, including Indonesia. The purpose of this study is to examine the level of poverty in Eastern Indonesia by measuring Islamic banking financing, economic growth, LFPR, education and health and inflation against poverty levels in Eastern Indonesia. The data source used in the form of panel data is obtained from the Central Statistics Agency (BPS) for the 2011-2021 period. Data analysis using regression panel data with Common Effect Model (CEM), Fixed Effect Model (FEM), and Random Effect Model (REM) approach processed with E-Views 10. The results of this study indicate that the estimated model chosen in this study is Random The Effect Model (REM) followed by LM testing shows that the results of the Islamic Banking Financing, TPAK, RLS, UHH, and Inflation variables have no significant effect in a negative direction on the poverty level. negative. This means, for example, that there are independent variables simultaneously, so that the poverty level in Eastern Indonesia is increasingly leading to change. Meanwhile, in the simultaneous test the F-Statistic prob value is 0.000000 < 0.05, which means that the six independent variables simultaneously affect the poverty level in Eastern Indonesia. And the value of Adjusted R-Square is 0.607420 which means 60% of the variables of Islamic Banking Financing, economic growth, TPAK, RLS, UHH, and Inflation in this study are able to explain the variation of economic growth variables. While the remaining 40% is explained by other variables outside the model.
 

Does The Component of Islamic Financial Literacy Affect on MSMEs Decision in Islamic Banking Financing : Creative Economy Investigate

This study aims to determine what factors influence MSMEs in the creative economy sector in deciding to Islamic Banking financing in Indonesia. We investigated the role of Islamic financial awareness, Islamic financial knowledge and Islamic financial skills. We also examine whether the decision to Islamic Banking financing has an impact on business performance. By using a path analysis approach, the results of this study show that Islamic financial awareness and Islamic financial skills has a positive relationship on decision to financing in Islamic banking. Meanwhile, the decision to financing in Islamic banking has a positive effect on the business performance, but insignificant. Other results show that Islamic financial skills have a positive and significant impact on MSME business performance. The results of this study imply that business actors in the creative economy sector must be given an understanding of Islamic financial skill and Islamic financial awareness. On the other hand, Islamic banking must expand financing in the creative economy sector through a more competitive financing scheme so that it can be easily accessed by MSMEs. The expansion of access to Islamic financing for MSMEs is expected to accelerate the inclusion of Islamic finance in Indonesia.

The Influence of ROA, BOPO, CAR, and FDR on Non-Performing Financing in Full-Fledged Islamic Banks

Islamic banks have the main activity of distributing funds in the form of financing. Therefore, banks cannot be separated from financing risks. The financing risk is non-performing financing. Non-Performing Financing is a ratio that shows the large collectability of the bank in collecting back the financing. This study aims to determine the effect of CAR, ROA, FDR, and BOPO on NPF in Islamic Commercial Banks for the 2015-2020 period. This research is quantitative research and uses the panel data regression method. The data used are sourced from the financial statements of each Islamic Commercial Bank. The results showed that simultaneously the variables CAR, ROA, FDR, and BOPO have a significant positive effect on NPF. Partially, the CAR and BOPO variables have no significant effect on the NPF while the ROA variable has a significant negative effect on the NPF and FDR has a significant positive effect on the NPF.

FINANCING RISK IN ISLAMIC BANKING BEFORE AND DURING THE COVID-19 PANDEMIC

This study aims to identify the risk of financing in Islamic Banks. Financing risk assessment is divided into two categories, financing based on contract and financing based on usage. This study uses a comparative analysis method to identify differences in financing risks in the period before and during the Covid-19 pandemic. The results of the study show that there are six differences in financing risks based on the contract period before and during the Covid-19 pandemic. The risk of financing based on use shows that there is no difference in the risk of financing investment for MSMEs before and during the Covid-19 pandemic. Meanwhile, the difference can be seen in the risk of working capital financing for MSMEs, working capital financing for Non-MSMEs, the risk of investment financing for Non-MSMEs and the risk of consumptive financing. These results indicate that Islamic bank financing is responding to the Covid-19 pandemic with changes in financing risk. Banks need to manage financing with the aim of increasing financing not increasing risk.

MACROECONOMIC FACTORS INFLUENCE THE DISTRIBUTION OF MSME FINANCING IN INDONESIAN ISLAMIC BANKS

This study examines macroeconomic factors affecting MSME financing in Indonesian Islamic banks from 2014 to 2021. These factors include inflation, BI rate and exchange rate. The methodology of this study is a quantitative method using the OLS approach. The data used in this study is monthly data from 2014 to 2021. Data was collected from Central Bank and OJK publications. This study found that macroeconomic conditions also affect how MSME financing is channeled in Islamic banks, so inflation and exchange rate partially, but BI Rate does not affect the distribution of MSME financing. This is because Islamic banks do not use an attractive interest rate system but a profit-sharing system. The findings of this study have significant consequences for decision makers, Islamic banks, and market participants. Islamic banks should work more to provide financing for MSMEs. Islamic banks should use innovation and creativity to develop and market new products in MSME financing. Due to its narrow focus on MSME financing in Islamic banks, this research has several limitations including that this research only focuses on macroeconomic factors, many other factors can affect MSME financing such as internal bank factors. Further research can examine the impact of Islamic banking financing on MSME development.

Determinants of non-performing financing in Indonesian Islamic banks: A regional and sectoral analysis

This study examines the determinants of Islamic banks’ non-performing financing from the perspective of regional and sectoral aspects during the periods before and during the pandemic. The study adopts a dynamic panel data analysis, namely the Generalized Method of Moments, and assesses panel data from the Indonesian banking industry in 32 provinces from October 2018 to July 2021 on a monthly basis. The study uses non-performing financing as the dependent variable and regional inflation, total financing, financing to deposit ratio, and Islamic bank size as the dependent variables. The findings indicate that the COVID-19 pandemic generally influenced the performance of non-performing financing in Islamic banks. This was evident in the significant relationship between regional inflation, total financing, financing to deposit ratio, and the non-performing financing value. Moreover, in the sectoral analysis, a different level of impact was observed in each sector. The most severe impact was seen in the construction sector, while other sectors were less affected during the pandemic. The regional analysis shows that all provinces on Java Island, as the epicenter of the pandemic in Indonesia, did not perform better than the provinces outside Java. Concerning policy implications, the Indonesian Financial Services Authority must be more aware of the determinants of Islamic banks’ non-performing financing by considering sectoral and regional aspects. Furthermore, sectoral and regional-based policies should be developed to achieve and maintain the performance of Islamic banks’ non-performing financing. Acknowledgments We are grateful to the Pusat Pengembangan Ekonomi (PPE), Faculty of Business and Economics, Universitas Islam Indonesia No. 259/KajurIE/XII/2021 for support and providing a research grant for the study

Analisis Pembiayaan Murabahah Bank X Cabang Syariah Surabaya

Murabahah financing is the highest financing in Islamic banking in Indonesia, reaching Rp.185,828 M financing of the total sharia banking financing of Rp.393,535 M financing or covering 47.2% with growth that continues to increase steadily from year to year despite the 2019 covid pandemic. 19 hit Indonesia but did not affect the growth of murabahah financing.
 The growth in financing is an indication of good growth in the Islamic banking business because the largest income for Islamic banking comes from financing, but it must also have good risk mitigation to maintain the health of the bank. Risk mitigation is carried out from the beginning before financing is carried out until the financing is paid off by the customer, one of which is by applying the principle of prudence in providing financing and analysis of effective murabahah financing. The financing analysis instrument consists of 5 C financing analysis and the application of murabahah financing analysis is very helpful for analysts and leaders in providing recommendations for financing decisions for prospective customers. 5 C financing analysis instruments (Character, Capacity, Capital, Condition and Collateral.

Competition and banks' financial performance in dual banking: Evidence from efficiency-adjusted market power

Purpose ― This paper examines banking competition's effect on Malaysia's financial performance from 2008–2020. This study investigates the relationship between banks' market competition and financial performance by examining banks' profits and risks. Further, this current study examines whether the association differs for Islamic banks. Methods ― The research studies Malaysia as a sample country and employs a data span from 2008-2020. In order to address omitted variable bias, simultaneity and endogeneity are avoided using a two-step GMM model. Findings ― Our results recommend that more competition inspires the banking sector to invest in risky ventures to offset the losses in revenues. Moreover, banking today is still based on basic banking operations like granting loans (or financing in Islamic banks), collecting deposits, and managing payment systems. Implication ― Since our findings show a negative effect of competition on the bank's financial performance, we suggest that competition lowers banks' profits and results in greater risk. It is suggested that regulators and policymakers develop the financial infrastructure in terms of controlled competition in banking and encourage banks to diversify their operations efficiently. We find no significant difference in the association between conventional and Islamic banking. Originality ― This research is the first to examine the effect of bank competition on the financial performance of a developed dual banking system using the efficiency-adjusted Lerner index.

Pengaruh DPK, NPF, CAR, ROA, dan REO Pada Pembiayaan yang Disalurkan BPRS di Indonesia

This study examines the factors that influence the distribution of financing in islamic rural banks in Indonesia. These factors include Third Party Funds (DPK), Non Performing Financing (NPF), Capital Adequacy Ratio (CAR), Return on Assets (ROA), and Rasio efisiensi Operasional (REO). The population and sample used in this study are all of Islamic rural banks in Indonesia. The data used is secondary data in annual financial reports published by financial servives authority of Indonesia on it is official website for 2015-2020 period. Quantitative is the method used in this research with multiple regression processed through the Eviews version 9 program as the data processing application. The results of the analysis show that partially DPK, ROA, and REO have positive and significant influence to financing, while CAR and NPF partially have no influence to financing.

The Determinants of Islamic Banks’ Non-Performing Financing in the Small-Medium Enterprises (SMEs) Sector

The performance of Islamic banks in financing activities is determined by many factors, including macroeconomic variables and internal factors, such as the financial performance of the bank. The study investigates the determinant of non-performing financing (NPF) of Islamic banks in Indonesia, particularly in Small-Medium Enterprises (SMEs) sector. Adopting the panel data analysis, the data comprise 33 provinces in Indonesia starting from 2016m1 to 2021m07, equal to a 2211 observation period. The study reveals that the size of the bank’s asset and financing to deposit ratio (FDR) of Islamic banks has a significant relationship to NPF value in SMEs sector, and the impact remains unchanged in the period before and during the COVID-19 pandemic. From the regional viewpoint, the size of the bank’s assets also has a significant influence on NPF in the provinces located in Java but not outside of Java. As a policy implication, the study suggests that the size of a bank’s assets must be enhanced with prudent risk management in financing activities in the SME sector. Surely, the policy can be implemented in a top-down approach through government and financial authority; then it also can be applied bottom-up approach through the bank’s business activities. Finally, as the limitation of the research, the study only utilizes limited variables and uses a single-country analysis which can be improved and extended for future study.