| Summary: | Financing in Islamic banking consists of mudaraba, musharaka, murabaha,
istishna', ijara and qardh which each such financing has concepts and basic
principles of different contracts (Antonio, 2000). According to Islamic banking
statistics issued by Bank Indonesia, the movement of the number of financing
transactions in Islamic banking generally show a positive development, both of the
financing with the principle of profit sharing and the buying and selling or leasing
one. However, financing the contract istishna' did not have increased as well as
financing with other types of contracts, with an average growth of the smallest in the
amount of 0.03% per year. This study was conducted to estimate the variables that
affect the financing istishna' on Islamic banking in Indonesia. The data that used were
obtained from Islamic Banking Statistics report, published by Bank Indonesia in the
period December 2003 to March 2011. The available data were analyzed by using
econometric models with OLS method. The first conclusion, margin ratio proved to
be significantly positive effect on the number of istishna' financing deals, refers to the
theory of the law of supply that the price of a product has a positive effect on the
supply of that product. Second, non-performing financing negatively affect the
nominal amount of istishna' financing deals. Third, the rate of inflation significantly
has negative effect on the nominal amount of istishna' financing deals. It is clear that
if there was an increase of the inflation rate in Indonesia will be followed by a
decrease in istishna' financing deals
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