Determinants of Islamic banking financing in Indonesia: An empirical analysis of internal and macroeconomic factors

Dini Rahmayanti*  -  Universitas Islam Negeri Salatiga, Indonesia
Mail Hilian Batin  -  Universitas Islam Negeri Raden Fatah Palembang, Indonesia
Suryati Suryati  -  Universitas Islam Negeri Raden Mas Said Surakarta, Indonesia
Diyah Ariyani  -  Universitas Islam Negeri Salatiga, Indonesia
Khusnul Ifada  -  Universiti Islam Sulthan Sharif Ali, Brunei Darussalam

(*) Corresponding Author
DOI: 10.21580/jiemb.2023.5.1.15220

Supp. File(s): Research Instrument

This article examines the internal and macroeconomic determinants affecting Islamic banking financing in Indonesia, focusing on Sharia Commercial Banks, Sharia Business Units, and Sharia People’s Financing Banks. Using a quantitative methodology with monthly panel data spanning from 2019 to 2022, the study employs Vector Autoregression (VAR) and Vector Error Correction Model (VECM) techniques. The analysis incorporates variables such as Total Assets, Third Party Funds (TPF), Net Operating Margin (NOM), Financing to Deposit Ratio (FDR), Non-Performing Financing (NPF), Return on Assets (ROA), Equivalent Rates of mudharabah and musyarakah, BI Rate, and Inflation. Findings reveal that in the long run, TPF, NOM, ROA, and the Equivalent Rate of Musyarakah positively influence Islamic banking financing, whereas NPF and inflation exert a significant negative impact. In the short run, TPF, NOM, ROA, and the Equivalent Rate of Mudharabah are significant influencers of financing. These results highlight the critical role of effective fund management and a stable economic climate in fostering the expansion of Islamic banking financing. The study offers valuable insights for policymakers and banking institutions aiming to improve financial inclusion and economic stability through enhanced Islamic banking practices.

Supplement Files

Keywords: Islamic banking; financing; macroeconomic factors; VAR model; VECM analysis

  1. Adzimatinur, F., Hartoyo, S., & Wiliasih, R. (2015). Faktor-Faktor yang Memengaruhi Besaran Pembiayaan Perbankan Syariah di Indonesia. Al-Muzara’ah: Journal of Islamic Economics and Finance, 3(2), 106–121. https://doi.org/https://doi.org/10.29244/jam.3.2.106-121
  2. Aji, S., & Mawardi, I. (2019). Tingkat Bagi Hasil Deposito Melalui Variabel Intervening Dana Pihak Ketiga Terhadap Pembiayaan Mudharabah Bank Syariah. Jurnal Ekonomi Syariah Teori Dan Terapan, 6(5), 957–967. https://doi.org/https://doi.org/10.20473/vol6iss20195pp957-967
  3. Andraeny, D. (2011). Analisis Pengaruh Dana Pihak Ketiga, Tingkat Bagi Hasil dan Non Performing Fiannce Terhadap Volume Pembiayaan Berbasis Bagi Hasil Pada Bank Syariah. Simposium Nasional Akuntansi( SNA) XIV, 1–25.
  4. Antonio, M. S. (2001). Bank Syariah dan Praktek. Jakarta: Gema Insani.
  5. Arbi, H., Ahmadsyah, I., & Zainul, Z. R. (2019). Pengaruh Non Performing Financing (NPF), Financing to Deposit Ratio (FDR) dan Tingkat Suku Bunga Deposito Bank Konvensional terhadap Pembiayaan Mudharabah pada Bank Umum Syari’ah di Aceh. JIHBIZ: Global Journal of Islamic Banking and Finance., 1(1), 1–15. https://doi.org/10.22373/jihbiz.v1i1.4598
  6. Azizah, S. N., Apriliani, W., Santoso, S. B., & Hapsari, I. (2021). Analysis of the Effect of TPF, CAR, NPL, and Inflation and BI Rate on Loan Distribution (Empirical Study on Commercial Banks Listed on the Indonesia Stock Exchange for the Period 2017-2019). IJATB: Internasional Journal of Accounting, Tax, and Bussines, 2(2), 26–34.
  7. Banu, I. M. (2013). The Impact of Credit on Economic Growth in the Global Crisis Context. Procedia Economics and Finance, 6(February 2007), 25–30. https://doi.org/10.1016/s2212-5671(13)00109-3
  8. Basuki, A. T., & Yuliadi, I. (2014). Electronic Data Processing (SPSS 15 dan EVIEWS 7). Yogyakarta: Penerbit Danisa Media.
  9. Enders, W. (2014). Applied Econometric Time Series (4th ed.). New York: John Wiley & Sons.
  10. Endri, Marlina, A., & Hurriyaturrohman. (2020). Impact of internal and external factors on the net interest margin of banks in Indonesia. Banks and Bank Systems, 15(4), 99–107. https://doi.org/http://dx.doi.org/10.21511/bbs.15(4).2020.09
  11. Fakhri, U. N., & Darmawan, A. (2021). Comparison of Islamic and Conventional Banking Financial Performance during the Covid-19 Period. International Journal of Islamic Economics and Finance (IJIEF), 4(SI), 19–40. https://doi.org/10.18196/ijief.v4i0.10080
  12. Farianti, R., Pramuka, B. A., & Purwati, A. S. (2020). Pengaruh NPF, NOM dan FDR Terhadap Pembiayaan Murabahah dengan TPF Sebagai Variabel Moderating. MALIA: Journal of Islamic Banking and Finance, 3(1), 17–32. https://doi.org/10.21043/malia.v3i1.5665
  13. Giri, N. P., Rediatni, P., Sri, A. A. G., Luh Sri, P. J., Made, I. M., & Amerta, S. (2019). Effect of third party funds and BI rate on credit distribution of BNI. International Journal of Social Sciences and Humanities, 3(3), 147–156. https://doi.org/https://doi.org/10.29332/ijssh.v3n3.371
  14. Hermuningsih, S., Sari, P. P., & Rahmawati, A. D. (2020). The Influence of Third-Party Funds, Non-Performing Loans (NPL) on Credit Distribution With Profitability As Intervening Variable in Commercial Banks. International Journal of Economics, Business and Accounting Research (IJEBAR), 4(02), 40–50. https://doi.org/10.29040/ijebar.v4i02.988
  15. Huljak, I., Martin, R., Moccero, D., & Pancaro, C. (2022). Do non-performing loans matter for bank lending and the business cycle in euro area countries? Journal of Applied Economics, 25(1), 1050–1080. https://doi.org/10.1080/15140326.2022.2094668
  16. Husaeni, U. A. (2016). The Variables that Affect Murābaḥa Financing in Islamic Commercial Banks. International Journal of Nusantara Islam, 4(2), 1–16. https://doi.org/https://doi.org/10.15575/ijni.v4i2.1446
  17. Ivakhnenkov, S., Hlushchenko, S., & Sverenko, K. (2021). Macroeconomic factors that influence the bank loans rate in international and Ukrainian practice. Economics of Development, 19(4), 35–47. https://doi.org/10.21511/ed.19(4).2020.04
  18. Jayawarsa, A. K., Wulandari, I. G. A. A., Saputra, K. A. K., & Saputri, N. M. M. D. (2021). Public financial deposits in state owned banks: from an inflation perspective and bank indonesia interest rates. International Journal of Business, Economics and Law, 24(1), 105–112.
  19. Jessica, T., & Chalid, D. A. (2021). Determinants of Bank Loans in Indonesia. Proceedings of the Asia-Pacific Research in Social Sciences and Humanities Universitas Indonesia Conference (APRISH 2019), 558(Aprish 2019), 505–512. https://doi.org/10.2991/assehr.k.210531.064
  20. Khotmi, H., Wahyullah, M., & Fachrozi. (2021). Determinan Pembiayaan yang Diberikan (Studi pada Bank Umum Syariah di Indonesia Periode 2018-2020). Journal Ilmiah Rinjani: Media Informasi Ilmiah Universitas Gunung Rinjani, 9(2), 1–10. https://doi.org/10.53952/jir.v9i2.337
  21. Klein, N. (2013). Non-Performing Loans in CESEE: Determinants and Impact on Macroeconomic Performance. IMF Working Papers, 13(72), 1. https://doi.org/10.5089/9781484318522.001
  22. Kuncoro, M. (2011). Metode Kuantitatif: Teori dan Aplikasinya untuk Bisnis dan Ekonomi (4th ed.). Yogyakarta: UPP STIM YKPN.
  23. Kurniawanti, A. (2014). Analisis Faktor-Faktor Yang Mempengaruhi Volume Pembiayaan Berbasis Bagi Hasil Pada Bank Umum Syariah Di Indonesia. Universitas Muhammadiyah Surakarta.
  24. Mughits, M., & Wulandari, R. (2016). Kontribusi Pembiayaan Bank Syariah untuk Sektor Pertanian di Indonesia. Al-Muzara’ah, 4(1), 61–75. https://doi.org/https://doi.org/10.29244/jam.4.1.61-75
  25. Nadya, A., Tanjung, M., & Sugianto, S. (2020). Analisis Faktor Eksternal dan Internal terhadap Pembiayaan pada Bank Umum Syariah yang Terdaftar di OJK. JIEFeS: Journal of Islamic Economics and Finance Studies, 1(2), 153. https://doi.org/10.47700/jiefes.v1i2.2095
  26. Nur’aeni, & Setiawan. (2020). Third Party Funds and Non-Performing Financing for Mudharabah Financing in Indonesia’s Sharia Banking. International Journal of Business, Economics, and Social Development, 1(4), 178–184. https://doi.org/10.46336/ijbesd.v1i4.96
  27. Odah, M. H., Sadig, A., Bager, M., & Mohammed, B. K. (2017). Tobit Regression Analysis Applied on Iraqi Bank Loans. American Journal of Mathematics and Statistics, 7(4), 179–182. https://doi.org/10.5923/j.ajms.20170704.06
  28. Pontines, V., & Siregar, R. (2012). How Should We Bank with Foreigners? - An Empirical Assessment of Lending Behavior of International Banks to Six East Asian Economies. In ADBI Working Paper No. 386. https://doi.org/10.2139/ssrn.2159088
  29. Pradesyah, R., & Triandhini, Y. (2021). The Effect of Third Party Funds (TPF), Non Performing Financing (NPF), and Indonesian Sharia Bank Certificates (SBIS) on Sharia Banking Financing Distribution In Indonesia. International Journal of Business, Economics, and Social Development, 2(2), 72–77. https://doi.org/10.46336/ijbesd.v2i2.132
  30. Rahmananingtyas, N. A. (2022). The Effect of Interest Rates and Inflation on Loan Growth and Non Performing Loan (Literature Review of Financial Management). Dinasti International Journal of Education Management and Social Science, 4(1), 128–137. https://doi.org/https://doi.org/10.31933/dijemss.v4i1.1522
  31. Saputri, S., & Wibowo, M. G. (2018). Determinan Pembiayaan UMKM di Indonesia Tahun 2011-2015: Pendekatan Generalized Method of Moment (GMM). Al-Amwal: Jurnal Ekonomi Dan Perbankan Syari Ah, 10(1), 1–47. https://doi.org/http://dx.doi.org/10.24235/amwal.v10i1.2809
  32. Silalahi, T., Wibowo, W. A., & Nurliana, L. (2012). Impact of Global Financial Shock to International Bank Lending in Indonesia. Buletin Ekonomi Moneter Dan Perbankan, 15(2), 77–114. https://doi.org/10.21098/bemp.v15i2.63
  33. Siringoringo, M. J., & Sijabat, J. (2023). Car, LDR and Third Party Funds on the Amount of Credit Disbursed by Rural Banks in North Sumatera, Indonesia. Dinasti International Journal of Economics, Finance & Accounting, 4(1), 1–16. https://doi.org/https://doi.org/10.38035/dijefa.v4i1.1686
  34. Syarif, A. (2016). The Growth of Islamic Banking and SMEs Financing in Indonesia. HUMAN FALAH, : Volume 3.
  35. Tanjung, O. M., Sadalia, I., & Irawati, N. (2022). The Effect of Macroeconomics on Non-Performing Loans with Credit Growth as an Intervening Variable at PT. Bank SUMUT. International Journal of Research and Review, 9(7), 535–549. https://doi.org/10.52403/ijrr.20220758
  36. Wangsawidjaja. (2012). Bank Syariah Financing. Jakarta: Gramedia Pustaka Utama.
  37. Yasnur, M., & Kurniasih, A. (2017). Factors Affecting Bank Lending Growth: Cases In Indonesia. International Journal of Scientific and Research Publications, 7(11), 69–76.

Open Access Copyright (c) 2023 Dini Rahmayanti, Mail Hilian Batin, Suryati Suryati, Diyah Ariyani, Khusnul Ifada
Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Journal of Islamic Economics Management and Business (JIEMB)
Department of Master of Sharia Economics, Faculty of Islamic Economics and Business, Universitas Islam Negeri Walisongo Semarang, Indonesia

Jl Prof. Dr. Hamka Kampus III Ngaliyan Semarang 50185
Phone: +62 852-2007-5758
Website: https://febi.walisongo.ac.id/
Email: jiemb@walisongo.ac.id 

ISSN: 2721-0197 (Print)
ISSN: 2721-0324 (Online)
DOI : 10.21580/jiemb

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License 

apps