The determinants of deposits in Islamic and conventional banks: an Indonesian study

Eko Fajar Cahyono, Lina Nugraha Rani and M. Fariz Fadillah Mardianto

International Journal of Monetary Economics and Finance, 2022, vol. 15, issue 3, 273-292

Abstract: Deposits are an important source of liquidity for banking operations and become the determinant of a country's savings. Our paper tries to examine the effect of interest rates on the total deposits of Indonesian Conventional and Islamic banks. Using Indonesian banking data sources from January 2018 to January 2020 and generalised method of moments (GMM) regression models, our empirical result shows that interest rates significantly positively affect conventional bank deposits. When the Central bank raises interest rates, commercial banks will increase lending rates and pay higher interest rates to depositors. In addition, the Islamic Banking Rate of Return also has a significant positive effect on deposits. Therefore, the higher interest rates lead to the higher bank's overall average deposits.

Keywords: deposit; conventional bank; Islamic bank; IPI; Industrial Production Index; inflation; interest rate; rate of return; financial empowerment. (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.inderscience.com/link.php?id=126903 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:ijmefi:v:15:y:2022:i:3:p:273-292

Access Statistics for this article

More articles in International Journal of Monetary Economics and Finance from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().