Islamic Bank Financing Research Articles

The Effect of Exchange Rate of The Rupiah, Money Supply, Inflation, and BI Rate on Sharia Bank Financing During the Covid-19 Pandemic

The Covid-19 pandemic is an event of the spread of the 2019 Coronavirus disease. The pandemic has had a significant impact on the development of the world economy, especially the Islamic Banking Industry. The research used is quantitative research with an associative approach using multiple linear regression. The population used by Islamic banks and the samples used in this study are saturated and non-probability samples. This study aims to analyze the factors that influence the financing of Islamic commercial banks. Based on the results of the regression test, it proves that the rupiah exchange rate and inflation have no effect on sharia commercial bank financing, while the BI rate and money supply have an effect on sharia commercial bank financing.

Non-Performing Micro, Small and Medium Enterprises Financing: Studies on Islamic Banking in Indonesia

Micro, Small and Medium Enterprises (MSMEs) have a very large role in the Indonesian economy, but they have the problem of not having access to capital from either banks or non-bank financial institutions. As a form of commitment to support government programs, conventional and Sharia banking extends credit to MSMEs. The amount of financing channelled by Sharia banking to the MSME sector has continued to increase, but the increase in MSME financing has had an impact on non-performing financing for MSME financing, which is above 5%. This study aims to determine the effect of financing margin, the financing-to-deposit ratio (FDR) and the inflation rate on non-performing financing (NPF) for MSME financing in Islamic banking in Indonesia. Multiple regression analysis is used in this study, and took a sample of 36 data was obtained from the financial services authority's Sharia banking statistical reports. This study found that the financing margin and the financing-to-deposit ratio (FDR) positively affect non-performing MSME financing. In contrast, the inflation rate does not affect non-performing MSME financing.

Monetary policy and Islamic banks: a critical literature review

Purpose This study aims to review to what extent Islamic banks carry conventional monetary policy impulses. Hence, the authors focus to review on the presence or absence of an Islamic financing channel. Design/methodology/approach A systematic approach to the literature review was adopted. The search criterion is confined to empirical studies that examined the transmission of interest-based monetary policy through Islamic banks’ financing, particularly empirical studies that check the existence of an Islamic bank financing channel of conventional monetary policy. By adopting a systematic approach, over 40 empirical papers published in Scopus and Google Scholar were selected for review and analysis to suggest prospects for future analysis in this field. Findings The existence of Islamic banks may raise concerns for local central banks, particularly in terms of implementing monetary policies that rely on interest rates. Indeed, the specific nature of the business model of Islamic banks based on the sharing of losses and profits as an alternative to interest rate–based remuneration suggests a priori the non-transmission of monetary policy through these free-interest banks. Despite this, the actual asset structure of Islamic banks may facilitate the transmission of monetary impulses to the economy. Currently, there are limited and inconclusive empirical studies on how Islamic bank financing contributes to the transmission of monetary policy. Additional research is required to fully comprehend the response of Islamic banks to fluctuations in monetary policy interest rates, as well as the factors that impact their reactions. Originality/value This literature review is incredibly important as it thoroughly examines a critical issue from both academic and practical perspectives. Analyzing how monetary policy actions can be transmitted through Islamic bank financing is an important task that can provide insights for future research. A straightforward response to this inquiry could assist central banks in formulating effective monetary policy.

KEPASTIAN HUKUM TERHADAP PERJANJIAN AKAD QARD WAL IJARAH ATAS DANA TALANGAN HAJI PADA BANK SYARIAH


 
 
 
 Al-qard wal ijarah is a financing product available at Islamic Banks with the aim of making it easier for people to perform the pilgrimage. Hajj bailout funds are basically in order to make it easier for people to perform the pilgrimage. Whereas Law Number 21 of 2008 concerning Sharia Banking, Article 1 paragraph (1) in this Law states that; Sharia Banking is everything that concerns Sharia Banks and Sharia Business Units, including institutions, business activities and procedures and processes in carrying out their business activities. In practice, there are problems when there is a default in the agreement. This research is to examine the arrangements for the implementation of the Qard Wal Ijarah Akad Agreement on Hajj Bailout Funds at Islamic Banks and examine the provisions of the Qard Wal Ijarah Akad Agreement on Hajj Bailout Funds at Islamic Banks in order to achieve legal certainty. This study uses an analytical knife, namely using the theory of legal certainty and the theory of agreements.
 The method used in this study is normative juridical research, namely library law research or secondary data with sources of primary, secondary and tertiary legal materials. The research approach used is the statute approach, conceptual approach, analytical approach, case approach and legal material collection techniques by identifying and inventorying positive legal materials, literature books, journals and other sources of legal materials. For legal material analysis techniques, legal interpretation (interpretation) is systematic interpretation and legal construction methods by analogy, legal refinement construction (rechtsverfijning) and argumentum a contrario. The results of the researcher's analysis conclude that the arrangement in implementing the consequences of the agreement in the Qard Wal Ijarah contract for the financing of hajj bailout funds at Islamic banks raises problems when there is a default in the agreement. Defaults committed by parties causing losses to Islamic Banks. The absence of collateral in the ijarah contract agreement raises concerns about fraud in the Hajj bailout fund financing at Islamic banks. The provisions of the Qard Wal Ijarah Contract Agreement for Hajj Bailout Funds at Islamic Banks in order to achieve legal certainty is that there is a guarantee in financing that has several functions, namely increasing the level of trust of the owner of the funds to the user of the funds. In addition, the guarantee function can be a means of paying debts in the event of default by cashing in or selling the collateral. In this case, collateral in Islamic bank financing is a support or reinforcement for banks to provide financing for third parties. The researcher's suggestion is that for the government it is necessary to make specific regulations in terms of making an Ijarah agreement deed by including a guarantee clause as a deterrent and a solution in the event of a default. For financing distributors, putting more emphasis on implementing the customer's character, capacity (customer's ability in future business prospects), collateral (collateral) so as not to harm.
 
 
 

The Effect of Applying Sustainability (Maqasid Shariah) and Competition on Islamic Bank Financing

In the last decade, the Islamic Bank (IB) has been contributing to global financial development. There are inconclusive results about the function of IB to meet Islamic Finance ethics, particularly sustainability from the IB perspective (called Maqasid Shariah-MS). This paper aims to contribute to the basic research question: does sustainability matter in improving competition in IB financing? This study developed an advanced empirical model from previous theoretical studies that separated IB behavior using MS or less MS. To distinguish this effect, this study employed causal inference with Instrumental Variable (IV) analysis. The IV-Probit was applied to conduct a simulated treatment effect analysis accordingly. The dataset was obtained and combined from two global IB sustainability indicators and comprehensive financial statements of IB across 35 banks in 12 countries. The results confirm that applying IB in different MS with similar increasing level of competition produce different growth of financing. The IB with MS has larger financing than less MS. These results confirm that sustainability matters for improving competition and financing growth.

SOSIALISASI LITERASI DAN IMPLEMENTASI PRODUK PERBANKAN SYARIAH DI NAGARI BATANG ARAH TAPAN, KEC. BASA AMPEK BALAI TAPAN

Community service activities at Posko 35 Batang Arah Tapan aim to provide Islamic banking literacy related to regulations, systems and products from Islamic banking. The methods used in carrying out this activity are lectures, implementing and discussion sessions. Community service activities apply three sessions, namely session one exposure on service activities, session two exposure on entrepreneurship and session three exposure to material on Islamic banking financing. Community service activities at Posko 35 Batang Arah Tapan were carried out in Nagari Batang Arah Tapan, Basa Ampek District, Balai Tapan. The results of this community service activity are literacy socialization and implementation activities that have an impact on increasing sharia financial and banking education. The author and the KKN team at Posko 35 Batang Arah Tapan fully understand and understand the regulations, systems and various savings products, financing and services available in Islamic banking. These findings show the importance of more intensive socialization in order to increase banking literacy and implementation in a complex society.

Factors Affecting the Risk Non-Performing Sharia Commercial Bank Financing

This study aims to examine and analyze the influence of internal and external factors on the risk of problem financing in Islamic commercial banks in Indonesia. This research uses a quantitative type. Data comes from the Financial Services Authority (OJK) and Bank Indonesia for the 2015-2022. The data were first tested using the classical assumption test, which included the normality test, multicollinearity test, and autocorrelation test and then analyzed using multiple linear regression analysis. The Robust Least Squares method is used in multiple linear regression analysis to overcome the problem of heteroscedasticity. The results show that the internal factors that are taken into account are the efficiency ratio (BOPO), capital adequacy ratio (CAR) and financing-to-savings ratio (FDR). At the same time, the external factor that is taken into account is the inflation rate. Based on the results of testing the hypothesis using the z test, it is concluded that only CAR and FDR significantly contribute to problem financing. In contrast, efficiency and inflation do not significantly affect problem financing in Islamic Commercial Banks in Indonesia.

Do corporate governance implementation and bank characteristics improve the performance of Indonesian Islamic banking? Before-COVID-19 pandemic analysis

Islamic banking has existed in Indonesia since 1992. The performance of Islamic banking is interesting for further analysis. This study aims to analyze the impact of good corporate governance (GCG) implementation and bank characteristics on the performance of Islamic banking in Indonesia before the COVID-19 pandemic. Profitability is a measure of banking performance and is proxied by return on assets (ROA) and return on equity (ROE). The research sample consists of Islamic commercial banks that published financial and annual reports between 2011 and 2019. The data collection method used is documentation. Multiple regression analysis was used for data analysis. The results indicate that the implementation of GCG has no significant impact on performance (probability values of 0.425 and 0.420 on ROA and ROE with coefficients of 0.016 and 0.019). The P-value of the non-performing loans (NPF) variable is < 0.001 on ROA and ROE, which means that NPF has a significant negative impact on ROA and ROE. Third-party funds only have a significant impact on ROE with a p-value of 0.046. Meanwhile, the size of a bank has not been shown to have a significant impact on the performance of Islamic banking in Indonesia. Efforts to maintain NPF are critical for banks to achieve good performance (profitability). NPF demonstrates the risk of nonpayment of Islamic bank financing. AcknowledgmentWe gratefully acknowledge the research funding provided by LPPM Universitas Negeri Semarang (contract number: 19.8.3/UN37/PPK.3.1/2022).

Sosialisasi Literasi Pembiayaan Perbankan Syariah di Jenangan Kabupaten Ponorogo

The implementation of the service aims to provide Islamic banking literacy related to regulations, systems and products from Islamic banking. The implementation of this activity uses the lecture method, implements and discussion sessions. The implementation of community service applies three sessions, namely session one, exposure to community service activities, session two exposure to entrepreneurship and session three exposure to material on Islamic banking financing. Community service was carried out at Jenanagan, Ponorogo Regency in collaboration with BMT Surya Abadi Jangan. The result of this community service activity is that literacy socialization activities have an impact on increasing sharia financial and banking education. The service participants fully understand and understand regulations, systems and various savings products, financing and services in Islamic banking. These findings show the importance of more intensive socialization in order to increase banking literacy in a complex society.

Investment, Islamic Human Development Index and Banking Financing on Economic Growth and Their Impact on Labor Absorption

The purpose of the study was to analyze the effect of investment, the Islamic Human Development Index and banking financing on the economic growth of the districts/cities of North Sumatra province and to analyze the effect of economic growth in mediating the effect of investment, the Islamic Human Development Index and banking financing for employment in the districts/cities of North Sumatra province. The use of the path analysis method with economic growth as the intervening variable results that in total the indirect effect of investment, banking financing and the Islamic Human Development Index through the intervening variable of economic growth on the Open Unemployment Rate is significant, which means that Economic Growth is able to mediate the effect of Investment, Banking Financing and Islamic Human Development Index on the Open Unemployment Rate in Regencies/Cities of North Sumatra Province during 2015-2019. The amount of direct influence between all variables used, namely, Economic Growth to the Open Unemployment Rate is 90 percent, where the magnitude of the direct influence between all the variables used, namely; Investment, Banking Financing and Islamic Human Development Index on Economic Growth is 95.96 percent. Economic growth as an intervening variable is able to mediate the effect of Investment, Banking Financing and the Islamic Human Development Index (IHDI) on the Open Unemployment Rate and Wage Workers, Banking and Islamic Human Development Index on Workers' Wages, Banking and Islamic Human Development Index on Workers' Wages. The influence of economic growth on the open unemployment rate is positive and significant and the influence of economic growth on workers' wages is negative and significant. The direct influence of economic growth on workers' wages is 89.87 percent.

Bank stability, Covid-19, and Islamic bank financing in Indonesia

The financial performance of Islamic banks is strongly influenced by the bank's ability to disburse their funds. The purpose of this study is to analyze the influence of Islamic bank fundamentals in influencing financing. Islamic bank fundamentals consist of stability, size, profitability, equity, efficiency, and financing risk. This study uses quarterly data to examine 13 Islamic commercial banks from 2014 to 2020. The method used is static panel data regression with unbalanced panel data of 334 observations. The results show that the Z-score, assets, ROA, and NPF have a positive effect on the financing of Islamic commercial banks. Meanwhile, the CAR and income cost ratio has a negative effect on the financing of Islamic commercial banks. Furthermore, the economic slowdown because of Covid-19 has reduced Islamic commercial bank financing. These findings indicate that profit, bank size, and stability are the main Islamic bank fundamentals that significantly influence the amount of Islamic bank financing.

Shariah Murabahah Financing in Islamic Banks

Murabahah is the practice of purchasing and selling items while adding a margin for the bank to benefit from. The majority of Indonesian Islamic Banking's overall financing, or about 60%, is currently provided by financing under Murabahah contracts. The research method used in this article is literature analysis which originates from the scientific articles studied. The results of the study show that the application of sharia murabaha financing to Islamic banks is in accordance with the Sharia Banking Act and the DSN-MUI Fatwa, where financing is based on Islamic principles, namely not containing elements of usury, maisir, garar, haram, unjust, and there is contract supervision by the DPS.

Pengaruh Pembiayaan Perbankan Syariah Berdasarkan Sektor Ekonomi Terhadap Lingkungan Hidup di Indonesia dengan Inflasi Sebagai Moderasi

This study aims to examine the effect of Islamic banking financing on the Environmental Quality Index with the inflation moderating variable. The Moderation Panel Data Regression Analysis was used in this study with samples from 33 provinces in Indonesia in 2010-2019 using non-probability sampling. The fixed effect model was chosen as the best model, using the inflation moderating variable shows that the mining and quarrying sector; the transportation, warehousing and communication sectors have a negative relationship, meaning that inflation can be a moderating variable. As for the manufacturing sector; electricity, gas, air sector; development sector; the trade, restaurant and hotel sectors have a negative and insignificant relationship and the agriculture, fishery and forestry sectors have a positive and insignificant relationship, inflation is also not moderate because high or low inflation doesn’t give effect on high financing that sectors, the focus of Islamic banking is on the real sector that drives energy consumption. Therefore, this research can serve as input for the Islamic Financial Institutions in prioritizing several environmentally friendly sectors to support Indonesia's green taxonomy, namely the service sector, the construction sector, the electricity, air and gas sector, the mining sector which have a positive but insignificant relationship because the market share of Islamic banking is still small compared to conventional banking.

The Influence Of Msmes, Inflation, And Sharia Bank Finance On Economic Growth

Economic growth is important to study considering that each region will always try to increase its economic target. This study aims to analyze regional economic growth in West Java with the predictor variables of the number of MSMEs, inflation, and Islamic bank financing. Using secondary data for the 2016–2021 period obtained from the Central Bureau of Statistics, the Services and Finance Authority, and the Office of Cooperatives and UMKM of West Java Province, Using seven cities in West Java as a sample in the study and multiple linear regression as an analytical tool The findings revealed that, for the 2016–2021 period, the number of MSMEs, inflation, and Islamic bank financing had a significant positive effect on West Java regional economic growth. Furthermore, simultaneously, the three independent variables significantly affect the regional economic growth of West Java. West Java's regional economic growth variable of 95.28% is influenced by the independent variables of the number of MSMEs, inflation, and Islamic bank financing, while 4.72% is influenced by other variables. In order to increase economic growth, the government's role is very important in empowering MSMEs, maintaining inflation rate stability, and increasing the portion of sharia financing by Islamic banks.

Juridical Review of Imposition of Deeds for Granting of Collective Rights in Sharia Banking in Indonesia

This study aims to describe and then find out how the granting of Mortgage Deeds institution Sharia Banking Finance made by Land Deed Officials regulated in the Regulation of the Head of the National Land Agency Number 8 of 2012 concerning Amendments to the Regulation of the Minister of Agrarian Affairs/Head of the National Land Agency Number 3 of 1997 concerning Provisions for Implementation of Government Regulation Number 24 of 1997 concerning Registration Land As well as affiliated provisions. By using the Normative Juridical research method with the conclusions: 1. The granting of Mortgage Guarantees for financing contracts in Islamic banking is guided by the Mortgage Law which proves the occurrence of a mixture of two principles in the implementation of mortgage guarantees in Indonesia; 2. Formulation of the Mortgage Deed Institution Islamic Banking Finance uses the same formulation as Conventional Banking Financial Institutions, so it needs to be designed separately for the Formulation of the Deed of Imposing Sharia Mortgage on several Sharia terminologies.

Financing of the Agricultural Business by Sharia Bank to Increase the Exchange Rate of Farmers in West Java Province

This study aims to analyze the relationship between Islamic bank financing in agricultural businesses and farmer exchange rates in West Java Province between 2017 and 2021. The dependent variable of this study is farmer exchange rates, while the independent variable is total amount financing. , non-emerging financing (NPF), and the BI rate. This study uses a quantitative approach using secondary data from Islamic banks and other reliable sources. The data used covers five years, i.e., 2017-2021. The analytical method used is statistical regression which measures the effect of independent variables on farmers’ exchange rates. The research results should lead to a better understanding of the impact of Islamic bank financing on agricultural businesses on farmers’ exchange rates in West Java province during the study period. In addition, this study aimed to determine the effect of the funding level, non-current finance (NPF), and BI rate variables on farmers’ rates. The results of this study are expected to help Islamic banks and local governments formulate more effective policies to increase farming financing and farmer exchange rates in West Java Province. In addition, this research can also contribute to the development of literature on agribusiness financing and the role of Islamic banks in the agricultural sector.

Equity-based financing and risk in Islamic banks: A cross-country analysis

Equity-based financing and risk in Islamic banks: A cross-country analysis

Are sharia bank financings in Indonesia procyclical?

Purpose – The study aims to determine whether Islamic banks' debt financing and equity financing are procyclical or counter-cyclical.Methodology – The data used in this study cover eight Islamic commercial banks and span from 2008 to 2020, thereby including 72 observations. The analysis employs the dynamic panel data model estimated using the GMM method (Generalized Method of Moments).Findings –The debt-based financing, under murabahah, salam, istishna, and ijarah contracts, did not display clear procyclical or counter-cyclical behavior. In contrast, equity financing based on mudharabah and musyarakah contracts demonstrated procyclical characteristics concerning economic fluctuation.Implications – Policymakers need to pay more attention to Islamic banks with a greater proportion of equity financing for both micro and macroprudential policy purposes since procyclicality is likely to be associated with higher risks. Similarly, Islamic banks with greater proportion of equity financing need to watch carefully the behavior of their equity financing concerning its effect on risks for the purpose of their risk management and prudential policy. Originality – This research paper fills in the absence of studies that examine which category of Islamic bank financing – debt-based or equity-based financing - is more procyclical.

Nexus between financial inclusion and Islamic financing distribution: Evidence from Indonesian MSMEs

Purpose – The purpose of this study is to investigate the relationship between financial inclusion and the distribution of Islamic banking financing to Indonesia's MSME industry.Methodology – This study utilizes the Vector Error Correction Model (VECM) approach covering the period between 2015 to 2020.Findings – The study's findings suggest that the use of all-inclusive financial variables, as represented by the number of ATMs, branch offices, and Third-Party Fund (TPF), has a significant effect on the distribution of financing in the short-term but not in the long term. Furthermore, macroeconomic as well as internal control variables, such as inflation and Non-Performing Financing, have been shown to have a significant influence. The impulse-response function analysis shows that the financing distribution responds positively to financial inclusion variables such as ATMs and branch offices. TPF, inflation, ROA, and exchange rate variables were found to have negative responses in the case of a shock.Implications – The findings of this study are expected to be used as a basis to develop government policies, particularly in supporting the post-COVID-19 national economic recovery through a comprehensive financial program that can broaden access to financing from Islamic banks for the general public, particularly MSME actors who have been severely impacted by the COVID-19 pandemic.Originality – This investigation utilizes three distinct indicators to assess the relationship between Islamic financing distribution in Islamic banking and financial inclusion for MSMEs. These include measures of financial inclusion, financial performance metrics of Islamic banking institutions, and macroeconomic variables.

Activity Diversification, Performance, And Profitability In Islamic Banking

Diversification of financing in Islamic banking is a strategy to improve performance. However, can the diversification of financing carried out by Islamic banks increase profitability? And is financing diversification able to reduce financing risks? The study wanted to prove these two theories by using data from the Islamic Banking Report for the 2016-2021 Period using the HHI indicator to diversify financing. Three categories of financing diversification are contract-based, financing-based, and economic sector-based. Profitability in the study was measured using the ROA ratio and the risk of bad debts with the NPF ratio. The result of this study is that the diversification of contract-based financing affects ROA in a negative direction and has a positive effect on NPF. On the other hand, financing diversification based on the use of financing does not affect increasing profitability and has a positive impact on the risk of bad debts. Meanwhile, sector-based financing diversification has a significant effect on increasing profitability and has a significant negative impact on reducing the risk of bad debts in Islamic banks.