Interaction Model of Macroeconomic and Microeconomic Variables on Growth Volatility of Various Types of Financing in Islamic Banks

DOI

10.2991/978-94-6463-176-0_18How to use a DOI?

Keywords

equity-based financing; debt-based financing; leasing-based financing; macroeconomic; microeconomic

Abstract

Islamic banks in Indonesia have three types of financing, namely: equity-based financing, debt-based financing, and leasing-based financing. This study aims to find an effective formula for encouraging the growth of the three types of financing. This study uses a quantitative approach with data analysis methods Error Correction Model (ECM) and Co-integration. Secondary data was selected as a sample from the fourth quarter of 2014 to the first quarter of 2022. Overall growth of Islamic bank financing is influenced by macroeconomic and microeconomic variables. In terms of macroeconomic variables, growth in equity-based financing is more influenced by economic growth than the interest rate and inflation. Meanwhile, the growth of debt-based financing and leasing-based financing is more influenced by interest rates than economic growth. In terms of microeconomic variables, the growth of third-party funds always affects the three types of financing, while non-performing financing and equivalent rate only affect the growth of equity-based financing. Macroeconomic variables such as economic growth and interest rate can be used as indicators in controlling the growth of the three types of Islamic bank financing, while microeconomic variables such as the growth of third-party funds are the determinants in encouraging the growth of the three types of financing, in addition to non-performing financing and the equivalent rate. It is recommended that Islamic banks focus more on raising third-party funds to encourage the growth of their financing, because the market share of Islamic banks is still small, which allows for the large potential for raising funds that have not been explored.

Copyright

© 2023 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Irawati Junaeni
AU  - Dian Kurniawatib
AU  - Ridarmeli
AU  - Muhammad Iqbal
PY  - 2023
DA  - 2023/06/19
TI  - Interaction Model of Macroeconomic and Microeconomic Variables on Growth Volatility of Various Types of Financing in Islamic Banks
BT  - Proceedings of the 4th International Conference on Islamic Economics, Business, Philanthropy, and PhD Colloqium (ICIEBP 2022)
PB  - Atlantis Press
SP  - 266
EP  - 287
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-176-0_18
DO  - 10.2991/978-94-6463-176-0_18
ID  - Junaeni2023
ER  -