Analysis of factor affecting Islamic commercial bank financing for the agricultural sector in Indonesia

Satrio Arif Wicaksono () and Yeny Fitriyani ()

Asian Journal of Islamic Management (AJIM), 2020, vol. 2, issue 2, 123-137

Abstract: Purpose: This study aims to analyse the factors that influence Islamic commercial bank financing for the agricultural sector in Indonesia from January 2015 to April 2019.Methodology: Variables used in this study are Agricultural Financing, DPK, NPF, Inflation, Exchange Rates, SBIS, and IPI. The method used in this research is the VAR/VECM method with Impulse Response Function (IRF) analysis and Forecast Error Variance Decomposition (FEVD).Findings: The results show that the variables that significantly influence agricultural financing in the long-term are DPK, Exchange Rate, and IPI. Taking a closer detail, IPI variable has a positive effect, while the DPK and Exchange Rate have a negative effect on agricultural financing. Then NPF, inflation, and SBIS have no effect on agricultural financing in the short and long-term. Based on the results of FEVD, the variable that has the greatest contribution to agricultural financing is DPK compared to Exchange Rate and IPI.Practical applications: Islamic bank directors prioritize efforts to increase funding in order to encourage an increase in the portion of financing in the agricultural sector.Originality: This study examines the effect of financial and macroeconomic performance on mudharabah financing in the short and long term in Indonesia.

Keywords: Agricultural financing; Islamic commercial bank; third party fund; exchange rate; industrial production index (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:uii:jrajim:v:2:y:2020:i:2:p:123-137:id:17725

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