Islamic Monetary Policy and Its Impact on Real Sector

Octaviani, Isnaeni; Arif, Muhammad

doi:10.23969/trikonomika.v17i2.1144

Cited by 4 publications

(5 citation statements)

References 7 publications

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“…Herianingrum and Syapriatama (2016), using IRF and VDA, proved that Islamic banks play a role in transmitting monetary policy and positively influence economic growth. This was corroborated by Octaviani and Arif (2018), who found a positive impact of Islamic bank financing on economic growth. Zulkhibri and Sukmana (2017) employed the panel multiple regression technique to investigate whether macroeconomic monetary policy factors and financing rates influence Islamic banks.…”

Section: Previous Studiesmentioning

confidence: 55%

“…Sukmana and Ascarya (2010) examined the role of Islamic stock markets in transmitting monetary policy. Ascarya (2012Ascarya ( , 2014, Herianingrum and Syapriatama (2016), Setiawan and Karsinah (2016), Widodo (2017) and Fikri (2018) investigated the transmission process through both conventional and Islamic banking, while Zulkhibri and Sukmana (2017) and Octaviani and Arif (2018) examined the transmission process through Islamic banks, specifically passing through their financing. This paper aims to fill the gap by focusing solely on the role of Islamic banks in Indonesia in the monetary transmission process.…”

Section: Introductionmentioning

confidence: 99%

“…Zulkhibri and Sukmana (2017) employed panel regression analysis, while this paper uses time-series econometrics, i.e Autoregressive Distributed Lag (ARDL), with additional analysis using Granger Causality. Octaviani and Arif (2018) also employed time-series econometrics on Indonesian Islamic bank samples. However, Islamic bank financing is the only balance sheet item analyzed by them This paper will analyze the role of Islamic bank deposits and financing in the monetary transmission process of the bank lending (financing) channel.…”

Section: Introductionmentioning

confidence: 99%

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Islamic Bank and Monetary Policy: The Case of Indonesia

Ponziani

Mariyanti

2020

ijief

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Islamic banks in Indonesia exist side by side with their conventional counterparts within a dual banking system. The central bank aims to achieve price stability in the economy using both conventional and Islamic monetary instruments within this dual monetary system. This creates a unique environment for Islamic banks. This research aims to examine the role of Islamic banks in the monetary policy transmission mechanism using Granger Causality and Autoregressive Distributed Lag (ARDL). The balance sheet components of deposit and financing are hypothesized to function in the monetary transmission process within the bank financing channel. Granger causality reveals that the Islamic interbank overnight rate Granger causes Islamic deposits and financing, and that these in turn Granger cause the industrial production index. This index Granger causes inflation, Islamic deposits, and the Islamic interbank overnight rate. Islamic deposits and inflation then Granger cause the Islamic interbank overnight rate. The ARDL results show cointegrating relationships in the output and inflation model. Long-term convergence could be achieved to correct deviations in output and inflation by way of Islamic banks' deposits and financing. However, there is only a short-term influence of Islamic bank deposits on output. In the short-run, these deposits do not contribute to inflation. Islamic bank financing does not have a short-term relationship with output and inflation; therefore, there is declining effectiveness of Islamic banks' financing contribution to the economy.

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Section: Previous Studiesmentioning

confidence: 55%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Islamic Bank and Monetary Policy: The Case of Indonesia

Ponziani

Mariyanti

2020

ijief

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“…In addition, the researchers also conducted various deepening of the relationship between monetary policy and its instruments in influencing growth, both in conventional monetary policy on economic growth (Bhattacharya et al, 2009;Igharo et al, 2020;Khabo & Harmse, 2005;Mishchenko et al, 2018;Precious & Palesa, 2014;Twinoburyo & Odhiambo, 2018;Younsi & Nafla, 2019), Islamic monetary policy on economic growth (Bayuni & Srisusilawati, 2018;Octaviani & Al Arif, 2018;Wahid et al, 2020), as well as monetary policy in the dual banking system and its transmission mechanism for growth (Muhammad et al, 2017;Wisandani et al, 2017;Ascarya, 2012;Ascarya, 2014;Ayuniyyah et al, 2013;Muhammad et al, 2017;Rusydiana, 2009).…”

Section: Figure 1 World Economic Growthmentioning

confidence: 99%

Dynamic Model of The Impact of Macro Indicators and Islamic Monetary Policy Instruments on The Dual Banking System

Maisuroh

Adam

2022

iijse

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Indonesia is the largest Muslim country with a unique monetary system that in its development tries to juxtapose two monetary systems that have different philosophies and still need to be deepened on the extent of their impact and effectiveness on the economy. The study explores the impact of macro indicators and monetary policy instruments on economic output in Indonesia. Using the time series analysis method with the Vector Error Correction Model (VECM) approach, the model shows the results that the Macro Capital Market or Stock Market indicators have a positive impact on the economy both in the short and long term. At the same time, inflation responds positively to short-term behavior but becomes economic constraints in long-term action. Meanwhile, in the Monetary policy instruments’ scope, the M1 variable consistently has positive implications both in the short and long term. In contrast, the M2 and SBIS variables give negative responses in the short time but become a driving force for the economy in the long term. Meanwhile, there is no positive correlation between Sharia, Monetary Operations with Economic Output. The research suggests focusing on innovating sharia monetary policy instruments by continuing to carry out monetary policy reforms in order to stimulate better economic conditions.

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“…Ascarya (2012Ascarya ( , 2014, Herianingrum and Syapriatama (2016), Setiawan and Karsinah (2016), Widodo (2017) and Fikri (2018) investigated the transmission process through both conventional and Islamic banking. Zulkhibri and Sukmana (2017) and Octaviani and Arif (2018) examined the transmission process through Islamic banking, specifically by passing through Islamic banks financing. Zulkhibri and Sukmana (2017) employed panel regression analysis.…”

Section: Introductionmentioning

confidence: 99%

Responses of Islamic banking variables to monetary policy shocks in Indonesia

Hafidh

2021

IES

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PurposeThis paper investigates the structural model of vector autoregression (SVAR) of the interdependent relationship of inflation, monetary policy and Islamic banking variables (RDEP, RFIN, DEP, FIN) in Indonesia. By using monthly data for the period 2001M01-2019M12, the impulse response function (IRF), forecasting error decomposition variation (FEDV) is used to track the impact of Sharīʿah variables on inflation (prices).Design/methodology/approachThis research uses quantitative approach with SVAR model to reveal the problem.FindingsThe empirical results of SVAR, the IRF show that policy shocks have a negative impact on all variables in Islamic banking except the equivalent deposit interest rate (RDEP). The impact of both conventional (7DRR) and Sharīʿah (SBIS) policies has a similar pattern. While the transmission of Sharīʿah monetary variables as a policy operational target in influencing inflation is positive. In addition, the FEDV clearly revealed that the variation in the Sharīʿah financial sector was relatively large in monetary policy shocks and their role in influencing prices.Originality/valueThe empirical results of SVAR, the IRF show that policy shocks have a negative impact on all variables in Islamic banking except the equivalent deposit interest rate ‘RDEP’. The impact of both conventional “7DRR” and Sharīʿah “SBIS” policies has a similar pattern. While the transmission of Sharīʿah monetary variables as a policy operational target in influencing inflation is positive. In addition, the FEDV clearly revealed that the variation in the Sharīʿah financial sector was relatively large in monetary policy shocks and their role in influencing prices.

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Islamic Monetary Policy and Its Impact on Real Sector

Cited by 4 publications

References 7 publications

Islamic Bank and Monetary Policy: The Case of Indonesia

Islamic Bank and Monetary Policy: The Case of Indonesia

Dynamic Model of The Impact of Macro Indicators and Islamic Monetary Policy Instruments on The Dual Banking System

Responses of Islamic banking variables to monetary policy shocks in Indonesia

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