Enhancing financial stability in Islamic banks: An investigation of determinants during the COVID-19 in Indonesia
DOI:
https://doi.org/10.20414/jed.v6i2.10054Keywords:
islamic banks stability, BI7DRR, OCOI, covid-19Abstract
Purpose — This study investigates the determinants of Islamic banks' stability in Indonesia amidst the Covid-19 pandemic.
Method — Employing a causality-associative quantitative approach, the research utilizes purposive sampling and secondary data collection from monthly financial reports on the official websites of OJK (Financial Services Authority) and BI (Bank Indonesia). Statistical techniques including normality test, multicollinearity test, t-test, f-test, R2 test, and multiple linear regression, aided by SPSS version 22 and Microsoft Excel, are employed for data analysis.
Result — The results reveal that Islamic banks' total assets significantly positively influence their stability in Indonesia. Additionally, variables such as Operational Costs to Operational Income (OCOI) ratio and BI 7-Day Reverse Repo Rate (BI7DRR) exhibit significant negative effects on Islamic banks' stability.
Practical implications — Understanding the influence of total assets, Operational Costs to Operational Income (OCOI) ratio, and the BI 7-Day Reverse Repo Rate (BI7DRR) on Islamic banks' stability in Indonesia during the Covid-19 pandemic can guide policymakers and bank management in implementing measures to strengthen resilience and mitigate risks, such as strategic asset management and cost optimization strategies.
Downloads
References
Abbas, A., & Frihatni, A. A. (2020). The Social Role of Islamic Banks in Indonesia during the Pandemic of COVID-19: Reflection of Market Share. EJIF – European Journal of Islamic Finance, 16.
Anjom, W., & Faruq, A. T. M. O. (2023). Financial Stability Analysis of Islamic Banks in Bangladesh. European Journal of Business and Management Research, 8(3). https://doi.org/10.24018/ejbmr.2023.8.3.1953
Bitar, M., Hassan, M. K., & Walker, T. (2017). Political systems and the financial soundness of Islamic banks. Journal of Financial Stability, 31. https://doi.org/10.1016/j.jfs.2017.06.002
Fatoni, A., & Sidiq, S. (2019). ANALISIS PERBANDINGAN STABILITAS SISTEM PERBANKAN SYARIAH DAN KONVENSIONAL DI INDONESIA. Ekspansi: Jurnal Ekonomi, Keuangan, Perbankan Dan Akuntansi, 11(2). https://doi.org/10.35313/ekspansi.v11i2.1350
Isamail, M. Z., Hosin, H., Ya’acob, F. F., Abu-Hussin, M. F., Abdul Hamid, M. F., Azhar, S. N. A. S., Hehsan, A., Junaidi, J., Aziz, A., Yaakob, S. N. A., & Jailani, M. R. (2023). The Role of Asset-Liability Management on Financial Stability in Malaysia. International Journal of Academic Research in Business and Social Sciences, 13(5). https://doi.org/10.6007/IJARBSS/v13-i5/17257
Joudar, F., Msatfa, Z., Metwalli, O., Mouabid, M., & Dinar, B. (2023). Islamic Financial Stability Factors: An Econometric Evidence. Economies, 11(3). https://doi.org/10.3390/economies11030079
Kanapiyanova, K., Faizulayev, A., Ruzanov, R., Ejdys, J., Kulumbetova, D., & Elbadri, M. (2023). Does social and governmental responsibility matter for financial stability and bank profitability? Evidence from commercial and Islamic banks. Journal of Islamic Accounting and Business Research, 14(3). https://doi.org/10.1108/JIABR-01-2022-0004
Onsongo, S. K., Muathe, S., & Mwangi, L. (2019). Firm Size, Operational Risk and Performance: Evidence from Commercial and Services Companies Listed in Nairobi Securities Exchange. International Journal of Current Aspects, 3(VI). https://doi.org/10.35942/ijcab.v3ivi.93
Raza, F., & Arshed, N. (2023). Macroeconomic determinants of multidimensional risk of Islamic banks across the world. Journal of Management Info, 9(3). https://doi.org/10.31580/jmi.v9i3.2681
Ridho Kismawadi, E., Annisa Shafira Tania, Iskandar, & Bahri, M. I. (2023). INTERCONNECTION OF INFLATION, BI RATE, AND EXCHANGE RATE ON MUDHARABAH AND MURABAHAH FINANCING. Jurnal Ekonomi Dan Bisnis Islam (Journal of Islamic Economics and Business), 9(1). https://doi.org/10.20473/jebis.v9i1.39202
Roncalli, T., & Weisang, G. (2015). Asset Management and Systemic Risk. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2610174
Sanica, I. G., Nurcita, I. K., Mastra, I. M., & Sukarnasih, D. M. (2018). Effectiveness and Forecasting of Interest Rate Reversal BI 7-Day Repo Rate in Indonesia: Lower Bound on Monetary Policy? Mediterranean Journal of Social Sciences, 9(1). https://doi.org/10.2478/mjss-2018-0016
Suartini, S., Sulistiyo, H., & Indrianti, W. (2019). THE EFFECT OF NON PERFORMING FINANCING, FINANCING TO DEPOSIT RATIO AND OPERATING EXPENSE TO OPERATING INCOME RATIO (BOPO) TO PROFITABILITY. AFEBI Economic and Finance Review, 3(02). https://doi.org/10.47312/aefr.v3i02.207
Downloads
Published
Issue
Section
License
Copyright (c) 2024 Ardita Herniati Putri, Zulpawati Zulpawati, Imronjana Syapriatama, Riduan Mas'ud, Muhammad Muhajir Aminy, Mohamed Saleem Ahamed Riyad Rooly
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
