Does the Volatility of Macroeconomic Variables Depress The Profitability of Islamic Banking?
Islamic banking in Indonesia has been growing rapidly since 2010. The  profitability of Islamic bank depends on Islamic bank characteristics and macroeconomic condition. As a country with an open economy, macroeconomic conditions are very volatile. Through the theory of exchange rate pass through,...
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| Format: | Article |
| Language: | English |
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Universitas Negeri Semarang
2020-03-01
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| Series: | JEJAK: Jurnal Ekonomi dan Kebijakan |
| Subjects: | |
| Online Access: | https://journal.unnes.ac.id/nju/index.php/jejak/article/view/19460 |
| _version_ | 1819093449832398848 |
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| author | Agus Widarjono |
| author_facet | Agus Widarjono |
| author_sort | Agus Widarjono |
| collection | DOAJ |
| description | Islamic banking in Indonesia has been growing rapidly since 2010. The  profitability of Islamic bank depends on Islamic bank characteristics and macroeconomic condition. As a country with an open economy, macroeconomic conditions are very volatile. Through the theory of exchange rate pass through, the exchange rate fluctuation affects domestic prices so that it affects the profits of Islamic bank.  This study analyzes the impact of the instability of the macroeconomic variables, namely the exchange rate and inflation on the profitability of Islamic bank. The instability of inflation and exchange rate are measured using the GARCH (Generalized Autoregressive Conditional Heteroskedasticity). This study applies ARDL (Autoregressive Distributed Lag Model). The data used is monthly data starting from January 2011 to June 2018. The results of the study show that the exchange rate and inflation instability depress the profitability of Islamic banki. More interestingly, instability of inflation has a greater negative impact than the instability of exchange rate on Islamic bank profit. The most Islamic bank characteristics influencing Islamic banking profit was bad financing as known as a non performing financing (NPF). |
| first_indexed | 2024-12-21T23:11:42Z |
| format | Article |
| id | doaj.art-aafd7df0799447e58c3f9de2dac522f2 |
| institution | Directory Open Access Journal |
| issn | 2460-5123 |
| language | English |
| last_indexed | 2024-12-21T23:11:42Z |
| publishDate | 2020-03-01 |
| publisher | Universitas Negeri Semarang |
| record_format | Article |
| series | JEJAK: Jurnal Ekonomi dan Kebijakan |
| spelling | doaj.art-aafd7df0799447e58c3f9de2dac522f22022-12-21T18:47:00ZengUniversitas Negeri SemarangJEJAK: Jurnal Ekonomi dan Kebijakan2460-51232020-03-01131304210.15294/jejak.v13i1.194609568Does the Volatility of Macroeconomic Variables Depress The Profitability of Islamic Banking?Agus Widarjono0Department of economics, Universitas Islam Indonesia YogyakartaIslamic banking in Indonesia has been growing rapidly since 2010. The  profitability of Islamic bank depends on Islamic bank characteristics and macroeconomic condition. As a country with an open economy, macroeconomic conditions are very volatile. Through the theory of exchange rate pass through, the exchange rate fluctuation affects domestic prices so that it affects the profits of Islamic bank.  This study analyzes the impact of the instability of the macroeconomic variables, namely the exchange rate and inflation on the profitability of Islamic bank. The instability of inflation and exchange rate are measured using the GARCH (Generalized Autoregressive Conditional Heteroskedasticity). This study applies ARDL (Autoregressive Distributed Lag Model). The data used is monthly data starting from January 2011 to June 2018. The results of the study show that the exchange rate and inflation instability depress the profitability of Islamic banki. More interestingly, instability of inflation has a greater negative impact than the instability of exchange rate on Islamic bank profit. The most Islamic bank characteristics influencing Islamic banking profit was bad financing as known as a non performing financing (NPF).https://journal.unnes.ac.id/nju/index.php/jejak/article/view/19460macroeconomic variables, instability, islamic banking and profitability |
| spellingShingle | Agus Widarjono Does the Volatility of Macroeconomic Variables Depress The Profitability of Islamic Banking? JEJAK: Jurnal Ekonomi dan Kebijakan macroeconomic variables, instability, islamic banking and profitability |
| title | Does the Volatility of Macroeconomic Variables Depress The Profitability of Islamic Banking? |
| title_full | Does the Volatility of Macroeconomic Variables Depress The Profitability of Islamic Banking? |
| title_fullStr | Does the Volatility of Macroeconomic Variables Depress The Profitability of Islamic Banking? |
| title_full_unstemmed | Does the Volatility of Macroeconomic Variables Depress The Profitability of Islamic Banking? |
| title_short | Does the Volatility of Macroeconomic Variables Depress The Profitability of Islamic Banking? |
| title_sort | does the volatility of macroeconomic variables depress the profitability of islamic banking |
| topic | macroeconomic variables, instability, islamic banking and profitability |
| url | https://journal.unnes.ac.id/nju/index.php/jejak/article/view/19460 |
| work_keys_str_mv | AT aguswidarjono doesthevolatilityofmacroeconomicvariablesdepresstheprofitabilityofislamicbanking |