The Effect of Monetary Instrument of Islamic Banking Financing Channel Towards The Economic Growth in Indonesia
Monetary policy is closely related to activities to achieve economic growth, which eventually gives welfare to the community. This study aims to analyze the description of the transmission flow of financing channels, the effect of monetary policy instruments, and their effectiveness to achieve econo...
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| Format: | Article |
| Language: | English |
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Universitas Muhammadiyah Yogyakarta
2022-04-01
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| Series: | Jurnal Ekonomi & Studi Pembangunan |
| Subjects: | |
| Online Access: | https://journal.umy.ac.id/index.php/esp/article/view/13198 |
| _version_ | 1828785347044048896 |
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| author | Sobar M. Johari Wing Keung Wong Ida Fitri Anjasari Nguyen Tran Thai Ha Trinh Thi Huyen Thuong |
| author_facet | Sobar M. Johari Wing Keung Wong Ida Fitri Anjasari Nguyen Tran Thai Ha Trinh Thi Huyen Thuong |
| author_sort | Sobar M. Johari |
| collection | DOAJ |
| description | Monetary policy is closely related to activities to achieve economic growth, which eventually gives welfare to the community. This study aims to analyze the description of the transmission flow of financing channels, the effect of monetary policy instruments, and their effectiveness to achieve economic growth. The variables used are Islamic Banking Finance (FIN), return of Sharia Bank Indonesia Certificate (SBIS), return of PUAS, and Industrial Production Index (IPI). This study used Vector Error Correction Model (VECM) to determine short- and long-term relationships using the time series data. First, the result of the study showed that the transmission flow could not be identified clearly, because the flow stopped in FIN, and it could not affect IPI, according to the Granger Causality test. Second, the result of VECM estimation showed that all variables only affected long term period and did not affect the short-term period. Third, monetary policy transmission of Islamic banking financing channel was not effective enough, which was proven with the result of IRF simulation, which showed that the effect of shock on financing channel variable (FIN) towards IPI was subsided and stable in the 10th period later. Meanwhile, the result of the FEVD simulation showed that the financing channel variable (FIN) only gave a contribution of as much as 0.14 percent towards IPI. The contribution and policy implications are also discussed in this study. |
| first_indexed | 2024-12-11T23:49:30Z |
| format | Article |
| id | doaj.art-b6264c749313411ba59065268bd108b1 |
| institution | Directory Open Access Journal |
| issn | 1411-9900 2541-5506 |
| language | English |
| last_indexed | 2024-12-11T23:49:30Z |
| publishDate | 2022-04-01 |
| publisher | Universitas Muhammadiyah Yogyakarta |
| record_format | Article |
| series | Jurnal Ekonomi & Studi Pembangunan |
| spelling | doaj.art-b6264c749313411ba59065268bd108b12022-12-22T00:45:32ZengUniversitas Muhammadiyah YogyakartaJurnal Ekonomi & Studi Pembangunan1411-99002541-55062022-04-0123112413910.18196/jesp.v23i1.131985792The Effect of Monetary Instrument of Islamic Banking Financing Channel Towards The Economic Growth in IndonesiaSobar M. Johari0Wing Keung Wong1Ida Fitri Anjasari2Nguyen Tran Thai Ha3Trinh Thi Huyen Thuong4Department of Islamic Economics, Faculty of Islamic Studies, Universitas Muhammadiyah Yogyakarta, Special Region of Yogyakarta, Indonesia Department of Business Administration, College of Management, Asia University, Taiwan, Province of ChinaDepartment of Finance, College of Management, Asia UniversityDepartment of Islamic Economics, Faculty of Islamic Studies, Universitas Muhammadiyah Yogyakarta, Special Region of YogyakartaDepartment of Business Administration, College of Management, Asia University, Taiwan, Province of China Faculty of Finance and Accounting, Saigon University, Ho Chi Minh City, Viet NamFaculty of Finance and Accounting, Saigon University, Ho Chi Minh CityMonetary policy is closely related to activities to achieve economic growth, which eventually gives welfare to the community. This study aims to analyze the description of the transmission flow of financing channels, the effect of monetary policy instruments, and their effectiveness to achieve economic growth. The variables used are Islamic Banking Finance (FIN), return of Sharia Bank Indonesia Certificate (SBIS), return of PUAS, and Industrial Production Index (IPI). This study used Vector Error Correction Model (VECM) to determine short- and long-term relationships using the time series data. First, the result of the study showed that the transmission flow could not be identified clearly, because the flow stopped in FIN, and it could not affect IPI, according to the Granger Causality test. Second, the result of VECM estimation showed that all variables only affected long term period and did not affect the short-term period. Third, monetary policy transmission of Islamic banking financing channel was not effective enough, which was proven with the result of IRF simulation, which showed that the effect of shock on financing channel variable (FIN) towards IPI was subsided and stable in the 10th period later. Meanwhile, the result of the FEVD simulation showed that the financing channel variable (FIN) only gave a contribution of as much as 0.14 percent towards IPI. The contribution and policy implications are also discussed in this study.https://journal.umy.ac.id/index.php/esp/article/view/13198islamic monetary instrumentsislamic banking financing channeleconomic growthvector error correction model (vecm) |
| spellingShingle | Sobar M. Johari Wing Keung Wong Ida Fitri Anjasari Nguyen Tran Thai Ha Trinh Thi Huyen Thuong The Effect of Monetary Instrument of Islamic Banking Financing Channel Towards The Economic Growth in Indonesia Jurnal Ekonomi & Studi Pembangunan islamic monetary instruments islamic banking financing channel economic growth vector error correction model (vecm) |
| title | The Effect of Monetary Instrument of Islamic Banking Financing Channel Towards The Economic Growth in Indonesia |
| title_full | The Effect of Monetary Instrument of Islamic Banking Financing Channel Towards The Economic Growth in Indonesia |
| title_fullStr | The Effect of Monetary Instrument of Islamic Banking Financing Channel Towards The Economic Growth in Indonesia |
| title_full_unstemmed | The Effect of Monetary Instrument of Islamic Banking Financing Channel Towards The Economic Growth in Indonesia |
| title_short | The Effect of Monetary Instrument of Islamic Banking Financing Channel Towards The Economic Growth in Indonesia |
| title_sort | effect of monetary instrument of islamic banking financing channel towards the economic growth in indonesia |
| topic | islamic monetary instruments islamic banking financing channel economic growth vector error correction model (vecm) |
| url | https://journal.umy.ac.id/index.php/esp/article/view/13198 |
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