Building an early warning towards the resilience of Islamic Banking in Indonesia

An early warning system (EWS) is widely used as surveillance mechanism for preserving financial system stability. This paper addresses the issue of namely which macroeconomic indicators that are capable of signaling adverse shocks towards the resilience of Islamic banking in Indonesia. This resea...

Full description

Bibliographic Details
Main Authors:	Kusuma, Dimas Bagus, Duasa, Jarita
Format:	Article
Language:	English
Published:	Faculty Of Shariah and Law Syarif Syarif Hidayatullah State University Jakarta 2017
Subjects:	HG1501 Banking HG3368 Islamic Banking and Finance
Online Access:	http://irep.iium.edu.my/62229/ http://irep.iium.edu.my/62229/ http://irep.iium.edu.my/62229/1/195044-EN-building-an-early-warning-towards-the-re.pdf

id	iium-62229
recordtype	eprints
spelling	iium-622292018-02-27T01:41:07Z http://irep.iium.edu.my/62229/ Building an early warning towards the resilience of Islamic Banking in Indonesia Kusuma, Dimas Bagus Duasa, Jarita HG1501 Banking HG3368 Islamic Banking and Finance An early warning system (EWS) is widely used as surveillance mechanism for preserving financial system stability. This paper addresses the issue of namely which macroeconomic indicators that are capable of signaling adverse shocks towards the resilience of Islamic banking in Indonesia. This research uses an extraction signal approach as EWS mechanism. The results suggest that there are several indicators that (1) IBRI, which is composed from standardized deposit and financing, is able to figure out the resilience of Islamic banking. The resilience of Islamic banking was considered stable since the index was moving below the normal line during the global financial crises, and (2) Some selected macro financial indicators, M2/reserve (M2res), credit growth (CG), real effective exchange rate (REER), and inflation rate (INF) empirically show low noise to signal ratio. It means that these four variables are capable of signaling vulnerabilities due to adverse external shocks. The paper recommends that the resilience of Islamic banking needs to be supported by the resilience in the real sector. Sistem deteksi dini banyak digunakan sebagai mekanisme surveillans guna menjaga stabilitas sistem keuangan. Tulisan ini membahas isu terkait dengan manakah indikator makroekonomi yang mampu mengeluarkan sinyal karena tekanan eksternal kaitannya terhadap ketahanan perbankan syariah. Tulisan ini menggunakan pendekatan ekstraksi sinyal sebagai mekanisme sistem deteksi dini. Hasil penelitian ini menyarankan bahwa beberapa indikator, yaitu pertama, IBRI yang terdiri dari simpanan dan pembiayaan yang sudah distandarisasi, mampu menggambarkan tingkat ketahanan perbankan Syariah yang bervariasi. Pada tahun 2004, tingkat ketahanan perbankan Syariah menurun, namun secara bertahap membaik dan stable hingga tahun 2016. Tingkat ketahanan perbankan Syariah menunjukkan arah yang stabil karena IBRI bergerak dibawah garis hijau selama krisis global. Kedua, beberapa indikator makro terpilih, yaitu M2/reserve (M2res), pertumbuhan kredit (CG), real effective exchange rate (REER), dan tingkat inflasi (INF), secara empiris menunjukkan ratio signal to noise yang rendah. Ini berarti indikator terpilih tersebut mampu menjadi indikator utama dalam mengeluarkan sinyal kerentanan karena adanya tekanan eksternal. Akhirnya, tulisan ini memberikan rekomendasi bahwa ketahanan perbankan Syariah perlu didukung oleh ketahanan di sektor riil mengingat basis usahanya adalah pengembangan sektor riil. Faculty Of Shariah and Law Syarif Syarif Hidayatullah State University Jakarta 2017-01 Article PeerReviewed application/pdf en http://irep.iium.edu.my/62229/1/195044-EN-building-an-early-warning-towards-the-re.pdf Kusuma, Dimas Bagus and Duasa, Jarita (2017) Building an early warning towards the resilience of Islamic Banking in Indonesia. Al-Iqtishad: Journal of Islamic Economics, 9 (1). pp. 13-32. ISSN 2087-135X E-ISSN 2407-8654 http://journal.uinjkt.ac.id/index.php/iqtishad/article/view/3881/3215
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HG1501 Banking HG3368 Islamic Banking and Finance
spellingShingle	HG1501 Banking HG3368 Islamic Banking and Finance Kusuma, Dimas Bagus Duasa, Jarita Building an early warning towards the resilience of Islamic Banking in Indonesia
description	An early warning system (EWS) is widely used as surveillance mechanism for preserving financial system stability. This paper addresses the issue of namely which macroeconomic indicators that are capable of signaling adverse shocks towards the resilience of Islamic banking in Indonesia. This research uses an extraction signal approach as EWS mechanism. The results suggest that there are several indicators that (1) IBRI, which is composed from standardized deposit and financing, is able to figure out the resilience of Islamic banking. The resilience of Islamic banking was considered stable since the index was moving below the normal line during the global financial crises, and (2) Some selected macro financial indicators, M2/reserve (M2res), credit growth (CG), real effective exchange rate (REER), and inflation rate (INF) empirically show low noise to signal ratio. It means that these four variables are capable of signaling vulnerabilities due to adverse external shocks. The paper recommends that the resilience of Islamic banking needs to be supported by the resilience in the real sector. Sistem deteksi dini banyak digunakan sebagai mekanisme surveillans guna menjaga stabilitas sistem keuangan. Tulisan ini membahas isu terkait dengan manakah indikator makroekonomi yang mampu mengeluarkan sinyal karena tekanan eksternal kaitannya terhadap ketahanan perbankan syariah. Tulisan ini menggunakan pendekatan ekstraksi sinyal sebagai mekanisme sistem deteksi dini. Hasil penelitian ini menyarankan bahwa beberapa indikator, yaitu pertama, IBRI yang terdiri dari simpanan dan pembiayaan yang sudah distandarisasi, mampu menggambarkan tingkat ketahanan perbankan Syariah yang bervariasi. Pada tahun 2004, tingkat ketahanan perbankan Syariah menurun, namun secara bertahap membaik dan stable hingga tahun 2016. Tingkat ketahanan perbankan Syariah menunjukkan arah yang stabil karena IBRI bergerak dibawah garis hijau selama krisis global. Kedua, beberapa indikator makro terpilih, yaitu M2/reserve (M2res), pertumbuhan kredit (CG), real effective exchange rate (REER), dan tingkat inflasi (INF), secara empiris menunjukkan ratio signal to noise yang rendah. Ini berarti indikator terpilih tersebut mampu menjadi indikator utama dalam mengeluarkan sinyal kerentanan karena adanya tekanan eksternal. Akhirnya, tulisan ini memberikan rekomendasi bahwa ketahanan perbankan Syariah perlu didukung oleh ketahanan di sektor riil mengingat basis usahanya adalah pengembangan sektor riil.
format	Article
author	Kusuma, Dimas Bagus Duasa, Jarita
author_facet	Kusuma, Dimas Bagus Duasa, Jarita
author_sort	Kusuma, Dimas Bagus
title	Building an early warning towards the resilience of Islamic Banking in Indonesia
title_short	Building an early warning towards the resilience of Islamic Banking in Indonesia
title_full	Building an early warning towards the resilience of Islamic Banking in Indonesia
title_fullStr	Building an early warning towards the resilience of Islamic Banking in Indonesia
title_full_unstemmed	Building an early warning towards the resilience of Islamic Banking in Indonesia
title_sort	building an early warning towards the resilience of islamic banking in indonesia
publisher	Faculty Of Shariah and Law Syarif Syarif Hidayatullah State University Jakarta
publishDate	2017
url	http://irep.iium.edu.my/62229/ http://irep.iium.edu.my/62229/ http://irep.iium.edu.my/62229/1/195044-EN-building-an-early-warning-towards-the-re.pdf
first_indexed	2023-09-18T21:28:13Z
last_indexed	2023-09-18T21:28:13Z
_version_	1777412335272460288

Building an early warning towards the resilience of Islamic Banking in Indonesia

Similar Items