The Role of PLS Financing on Economic Growth: Indonesian Case (original) (raw)
Related papers
Islamic Banking Financing and Economic Growth: An Empirical Study from Indonesia
2020
This research studies the relationship between Islamic bank financing and Indonesia's economic growth from 2017:1 to 2019:12. The analytical approach used is the Autoregressive Distributed Lag (ARDL) model, which can show the dynamics of short and long terms relationships. Also using the Granger causality test to study the relationship of causality between research variables. ARDL estimation results show the independent variable: Total Financing (TF), Mudharabah (PLS), and Murabahah (PMH) are proven to have long-term co-integration or in the long term move together in influencing Indonesia's economic growth (GDP). These three variables also have a dynamic short-term relationship with an adjustment speed of 52.47 percent per month. Furthermore, the Granger causality test results indicate that a supply-following relationship, economic growth affect the financing of Islamic banks in Indonesia. The vital record from this research is Islamic Banking intermediation empiricall...
Shirkah: Journal of Economics and Business, 2021
The contribution of Islamic banking towards economic growth remains debatable amongst academicians and practitioners. This study investigates the relationship between Islamic banks’ financing and economic growth in Indonesia which is the largest Muslim population country. This study adopts Autoregressive-Distributed Lag (ARDL) and utilizes time-series quarterly data from 2011Q1 to 2019Q3. The study uses four predictors: financing to deposit ratio; inflation; gross capital fixed formation; and trade openness. The results from the auto-regressive distributed lag model indicate that, in the long-run, Islamic banks' financing has a significant impact on the Indonesian economy. However, in the short-run, financing does not make a substantial contribution to Indonesian economic growth. The study’s key implication is that financing by Islamic banks still makes a limited contribution to economic growth in Indonesia. This study enhances the literature review, specifically on evaluating t...
Can Islamic Finance Drives Economic Growth ? : Empirical Evidence from Indonesia
At-tijaroh: Jurnal Ilmu Manajemen dan Bisnis Islam, 2021
The purpose of this paper is to analyze the contribution of Islamic finance to Indonesian economic growth in view Global Islamic Finance Report which places Indonesia as number 1 globally in terms of Islamic Finance Country Index for the year 2019. Using quarterly dataset (2013:1-2018:4), this paper study employs ARDL framework and bounds testing approach to co-integration to investigate the influence of Islamic finance on Indonesian economic growth. The results show that in the long run Islamic finance is positive and significantly correlated with economic growth of Indonesia. The result obtained from Error correction model reveal a positive and significant long run causal effect of Islamic finance on Indonesian's economic growth. However, Indonesian Islamic capital market is found not to have a significant long run causal effect on the country's economic growth. Bearing in mind this important contribution need sustainable efforts to expand the industry and its legal...
Signifikan: Jurnal Ilmu Ekonomi, 2021
This study aims to analyze the effect of Islamic bank financing, government spending, and investment on economic growth in Indonesia from 2003 to 2019. A quantitative descriptive methodusing the Vector Error Correction Model (VECM) analysis was applied. The results showed that in the short term, the variables of Islamic bank financing, government spending, and investment did not have a significant effect on economic growth. This shows that these variables require enough time to affect the economic growth. However in the long term, the results showed that Islamic bank financing and investment respectively have a significant, negative effect on economic growth, while government spending has a positive and significant effect on economic growth in Indonesia.JEL Classification: F22, F24, I32, J01, O15How to Cite:Nofrianto, Muliana, Y., & Cahyadi, A. (2021). The Impact of Islamic Bank Financing, Government Spending, and Investment on Economic Growth in Indonesia. Signifikan: Jurnal Ilmu E...
Islamic Finance-Growth Nexus: Evidence from Indonesia
Shirkah: Journal of Economics and Business
Previous work on the financial industry, which covers the entire financial services sector and is related to economic growth, has remained limited. This present study empirically analyzed the growth of Indonesia’s three main sectors of the Islamic Financial Industry (Islamic Capital Market, Islamic Banking, and Islamic non-bank Financial Industry) towards economic growth between 2014Q1 and 2021Q3. The quarterly data was processed through the ARDL Bound-test for cointegration and Error Correction Model (ECM). The research revealed three of the four research variables (sharia stock, Sukuk, and sharia insurance) that significantly affect GDP, while Islamic banking shows no significant effect on GDP. As a result, Indonesian Islamic banks must optimize funds for the productive sector. Future policies should consider maximizing the role of the Islamic financial industry to accelerate economic growth.
Does Islamic bank financing lead to economic growth: An empirical analysis for Malaysia
2016
The purpose of this paper is to empirically examine the impact of the Islamic Bank Financing on Malaysia’s economic growth. Using Malaysia as a case in point, this paper employs Advance time-series ARDL bound testing technique, Vector error correction model (VECM) and variance decompositions (VDCs) to explore short-and long-run relationship and causal relationships between the development of Islamic banks and the economic growth using Islamic bank financing to the private sectors, gross domestic product as a proxy of economic growth, Gross fixed capital formation and the consumer price index variables. The paper documents significant role played by the economic growth to the development of Islamic Banks in Malaysia, supporting the growth-Islamic finance led hypothesis or the demand following view. The policy implication of this paper is to improve the efficiency of Malaysian Islamic banks as financial intermediaries that facilitate the capital accumulation and the economic growth; m...
Islamic bank contribution to Indonesian economic growth
International Journal of Islamic and Middle Eastern Finance and Management
Purpose This paper aims to examine the short run and long run of Indonesia Islamic bank (IIB) contribution to economic growth over the periods 2009: Q1 – 2019: Q4. IIB is considered which supported by the largest Muslim population in the world. Deposits, financing and offices are proxy to highlight the relationship between Islamic banks and Indonesia's economic growth. Design/methodology/approach Through cointegration analysis, autoregressive distributed lag (ARDL), vector error correction model (VECM), variance decompositions (VDCs) and impulse response functions (IRFs), this study investigates the Islamic bank and economic growth nexus. Findings A significant relationship in the short-run and long-run between IIB deposits and offices and economic growth. There is evidence of a bidirectional relationship between the Islamic bank and economic growth. Social implications In spite of their market share less than a conventional bank. The result proved than IB a prosperous sector an...
2015
Indonesia has been rapidly showing signs of advanced economic development. The country’s central bank is of the view that with the unbanked accounting for more than half of the population, the potential for growth in the world’s biggest Muslim population is immense. This article makes an attempt to test the possible directions of causality between financial development and economic growth, with Indonesia as a case study. It also discusses the results in the context of the development of Islamic finance in Indonesia. The study is conducted by applying the Autoregressive Distributed Lag model (ARDL) analysis (also known as the Bounds testing procedure) proposed by Pesaran et al. (2001). This article is believed to be one of the first to extend the finance-growth nexus discussion to include the development of Islamic finance. The study finds a unique cointegrating relationship among GDP per capita, gross fixed capital formation, annual population growth rate, and domestic credit to pri...
2017
The paper attempts to study the relationship between Islamic financing and interest rate, stock price and real economic production as the macroeconomic variables for Islamic Banking system in Malaysia using the ARDL. Using this technique and methodology, we try to measure the long run relationships among these variables. Despite the abundant literature on bank lending, interest rate, GDP and stock price in many developing countries, there is relatively less empirical work on this subject in Malaysia. Most of the theories or earlier studies available are focusing more on conventional banking and very limited for Islamic financing perspective. The results show there is a significant causal relationship of interest rate with Islamic financing, medium result with stock price and very low result with real production. This shows that Islamic financing in Malaysia is robust enough to thrive during the good/bad economic condition with regard to the stock price or real industrial productivit...