<p><em>The research aimed to analyze the stability of Islamic banking industry and its determinants in Indonesia. The same analysis was also done to the conventional banking industry as Indonesia practices dual banking systems. Using monthly data on Indonesian Banking Statistics for 2008-2013, this research implemented the Banking Stability Index (BSI) model for predicting the bank's stability. The analysis began with measuring BSI then using VECM to examine the effect of variables on BSI. </em><em>The result showed that the BSI of both banking system was exhibiting the moderate level of stability though Islamic banking is </em><em>more stable and safe way of financing</em><em> than conventional banking. The shocks of inflation, exchange rate, efficiency, income diversity, liquidity, and Industrial Production Index responded positively by Islamic Bank' stability, while interest rate and market share responded negatively. In another hand, conventional bank' stability responded positively the shock of the exchange rate, income diversity, interest rate, liquidity, and market share, while other variables responded negatively. The results of shocking variables strongly indicated that the conventional banking is more vulnerable than Islamic banking. Islamic banking looked tend to the shock resistance and less volatile. This conclusion, however, might be still questioned as the BSI was not designed specifically for Islamic banking. </em><em>Therefore, constructing an Islamic BSI (under Islamic banking characters) was important to measure the banking stability more appropriate and to develop a proper early warning system for Islamic banking industry.</em></p>

Purpose ― This study aims to assess the home financing credit risk performed by Islamic banks in Indonesia. Methods ― A panel dynamic analysis is adopted to measure the bad loan performance before and during the Covid-19 pandemic. The observation period started from January 2016 to September 2020 with 1,881 observation periods of monthly panel data from the province level. Findings ― The study finds a difference in bad loan performance before and during the Covid-19 pandemic. Before this pandemic, inflation has a positive and significant influence on non-performing financing in real estate, rental business, and company service. However, during the Covid-19 pandemic, a substantial and positive effect of inflation is found on the bad loan for personal flat and apartment ownership. On the other hand, a significant and negative impact of inflation is found on the bad home loan for personal business shop ownership. Implication ― This analysis could trigger the government to provide financial assistance for those affected by the Covid-19 crisis. In addition to that, an Islamic bank is also expected to give financing allowances for them by providing an option of debt restructuration and rescheduling. Originality ― This paper analyses the Islamic bank’s credit risk performance for home financing before and during the Covid-19 pandemic. This issue has not been presented in the literature to the best of our knowledge.

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Dalam tiga dasawarsa terakhir kinerja perekonomian Indonesia menunjukkanprestasi yang cukup mengagumkan, sehingga termasuk dalam High Performing Asia Economies (HPAEs). Namun demikian, masih terdapat beberapa masalah yang cukup pelik, seperti tingginya tingkat pengangguran, distribusi pendapatan yang semakin timpang, angka kemiskinan yang cukup besar, serta hutang luar negeri yang sampai pada "lampu merah". Dalam kancah internasional daya saing Indonesia menduduki posisi yang rendah, dan bahkan pada tahun 1996 cenderung turun. Kebijakan pemerintah untuk meningkatkan daya saing ekonomi selama ini sering kurang sistematis dan strategis, serta tidak konsisten. Masih rumitnya permasalahan ekonomi dalam negeri di satu sisi, dan tuntutan perdagangan bebas di sisi lain, telah menempatkan Indonesia pada posisi yang dilematis. Konflik antara kepentingan pemerataan dengan pertumbuhan, kepentingan domestik dan internasional merupakan contoh dilema yang tak mudah dipecahkan. Dibutuhkan suatu tekad yang kuat serta usaha yang konsisten dengan disertai kebijakan strategis untuk dapat survive di masadepan.