Interaction Model of Macroeconomic and Microeconomic Variables on Growth Volatility of Various Types of Financing in Islamic Banks

Irawati Junaeni (), Dian Kurniawatib (), Ridarmeli () and Muhammad Iqbal ()
Additional contact information
Irawati Junaeni: Perbanas Institute, Management Department, Faculty of Economics and Business
Dian Kurniawatib: Perbanas Institute, Acounting Department, Faculty of Economics and Business
Ridarmeli: Perbanas Institute, Acounting Department, Faculty of Economics and Business
Muhammad Iqbal: Perbanas Institute, Islamic Economics Department, Faculty of Economics and Business

A chapter in 4th International Conference on Islamic Economics, Business, Philanthropy, and PhD Colloquium (ICIEBP) 2022, 2023, pp 266-287 from Springer

Abstract: Abstract Islamic banks in Indonesia have three types of financing, namely: equity-based financing, debt-based financing, and leasing-based financing. This study aims to find an effective formula for encouraging the growth of the three types of financing. This study uses a quantitative approach with data analysis methods Error Correction Model (ECM) and Co-integration. Secondary data was selected as a sample from the fourth quarter of 2014 to the first quarter of 2022. Overall growth of Islamic bank financing is influenced by macroeconomic and microeconomic variables. In terms of macroeconomic variables, growth in equity-based financing is more influenced by economic growth than the interest rate and inflation. Meanwhile, the growth of debt-based financing and leasing-based financing is more influenced by interest rates than economic growth. In terms of microeconomic variables, the growth of third-party funds always affects the three types of financing, while non-performing financing and equivalent rate only affect the growth of equity-based financing. Macroeconomic variables such as economic growth and interest rate can be used as indicators in controlling the growth of the three types of Islamic bank financing, while microeconomic variables such as the growth of third-party funds are the determinants in encouraging the growth of the three types of financing, in addition to non-performing financing and the equivalent rate. It is recommended that Islamic banks focus more on raising third-party funds to encourage the growth of their financing, because the market share of Islamic banks is still small, which allows for the large potential for raising funds that have not been explored.

Keywords: equity-based financing; debt-based financing; leasing-based financing; macroeconomic; microeconomic (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:spr:advbcp:978-94-6463-176-0_18

Ordering information: This item can be ordered from
http://www.springer.com/9789464631760

DOI: 10.2991/978-94-6463-176-0_18

Access Statistics for this chapter

More chapters in Advances in Economics, Business and Management Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().