ISLAMIC ENDOGENOUS MONEY: EVIDENCE FROM THE ISLAMIC BANKING SYSTEM IN INDONESIA AND MALAYSIA
This paper proposes a theoretical model of endogenous Islamic money and empirically analyses the endogeneity of Islamic money supply under fiat and fractional reserve systems. The causal relations between Islamic money and macro and financial variables are assessed using the autoregressive distribut...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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Bank Indonesia
2021-08-01
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| Series: | Journal of Islamic Monetary Economics and Finance |
| Subjects: | |
| Online Access: | https://jimf-bi.org/index.php/JIMF/article/view/1351 |
| _version_ | 1797870625108262912 |
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| author | Khoirul Umam Abdul Ghafar Ismail Achmad Tohirin Jaka Sriyana |
| author_facet | Khoirul Umam Abdul Ghafar Ismail Achmad Tohirin Jaka Sriyana |
| author_sort | Khoirul Umam |
| collection | DOAJ |
| description | This paper proposes a theoretical model of endogenous Islamic money and empirically analyses the endogeneity of Islamic money supply under fiat and fractional reserve systems. The causal relations between Islamic money and macro and financial variables are assessed using the autoregressive distributed lag (ARDL) model and error-correction modelling (ECM). The results suggest that the greater the maturity and the larger the asset share in the Islamic financial system, the better the endogeneity of money. They also reveal that the profit and loss sharing system can connect the economy to money, minimise the exogenous potential of the fractional reserve requirement system, and eliminate the exogenous feature of the fiat money system. Accordingly, the study argues that an Islamic endogenous money system can be developed in fiat and fractional reserve banking systems. |
| first_indexed | 2024-04-10T00:31:30Z |
| format | Article |
| id | doaj.art-e278897183ce49d78b39be0b3e93b1c8 |
| institution | Directory Open Access Journal |
| issn | 2460-6146 2460-6618 |
| language | English |
| last_indexed | 2024-04-10T00:31:30Z |
| publishDate | 2021-08-01 |
| publisher | Bank Indonesia |
| record_format | Article |
| series | Journal of Islamic Monetary Economics and Finance |
| spelling | doaj.art-e278897183ce49d78b39be0b3e93b1c82023-03-15T04:23:51ZengBank IndonesiaJournal of Islamic Monetary Economics and Finance2460-61462460-66182021-08-017354556010.21098/jimf.v7i3.13511351ISLAMIC ENDOGENOUS MONEY: EVIDENCE FROM THE ISLAMIC BANKING SYSTEM IN INDONESIA AND MALAYSIAKhoirul Umam0Abdul Ghafar Ismail1Achmad Tohirin2Jaka Sriyana3Universitas Darussalam Gontor, IndonesiaUniversiti Sains Islam Malaysia, MalaysiaUniversitas Islam Indonesia, IndonesiaUniversitas Islam Indonesia, IndonesiaThis paper proposes a theoretical model of endogenous Islamic money and empirically analyses the endogeneity of Islamic money supply under fiat and fractional reserve systems. The causal relations between Islamic money and macro and financial variables are assessed using the autoregressive distributed lag (ARDL) model and error-correction modelling (ECM). The results suggest that the greater the maturity and the larger the asset share in the Islamic financial system, the better the endogeneity of money. They also reveal that the profit and loss sharing system can connect the economy to money, minimise the exogenous potential of the fractional reserve requirement system, and eliminate the exogenous feature of the fiat money system. Accordingly, the study argues that an Islamic endogenous money system can be developed in fiat and fractional reserve banking systems.https://jimf-bi.org/index.php/JIMF/article/view/1351endogenous islamic money, islamic m2, indonesian islamic banks, malaysian islamic banks. |
| spellingShingle | Khoirul Umam Abdul Ghafar Ismail Achmad Tohirin Jaka Sriyana ISLAMIC ENDOGENOUS MONEY: EVIDENCE FROM THE ISLAMIC BANKING SYSTEM IN INDONESIA AND MALAYSIA Journal of Islamic Monetary Economics and Finance endogenous islamic money, islamic m2, indonesian islamic banks, malaysian islamic banks. |
| title | ISLAMIC ENDOGENOUS MONEY: EVIDENCE FROM THE ISLAMIC BANKING SYSTEM IN INDONESIA AND MALAYSIA |
| title_full | ISLAMIC ENDOGENOUS MONEY: EVIDENCE FROM THE ISLAMIC BANKING SYSTEM IN INDONESIA AND MALAYSIA |
| title_fullStr | ISLAMIC ENDOGENOUS MONEY: EVIDENCE FROM THE ISLAMIC BANKING SYSTEM IN INDONESIA AND MALAYSIA |
| title_full_unstemmed | ISLAMIC ENDOGENOUS MONEY: EVIDENCE FROM THE ISLAMIC BANKING SYSTEM IN INDONESIA AND MALAYSIA |
| title_short | ISLAMIC ENDOGENOUS MONEY: EVIDENCE FROM THE ISLAMIC BANKING SYSTEM IN INDONESIA AND MALAYSIA |
| title_sort | islamic endogenous money evidence from the islamic banking system in indonesia and malaysia |
| topic | endogenous islamic money, islamic m2, indonesian islamic banks, malaysian islamic banks. |
| url | https://jimf-bi.org/index.php/JIMF/article/view/1351 |
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