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The Stability of Islamic Banking in Response to Macroeconomic Shocks: An Empirical Study of the Indonesian Islamic Financial Market Achmad, Achmad; Hayet, Hayet
EQUILIBRIUM Vol 14, No 1 (2026): EQUILIBRIUM
Publisher : Prodi Ekonomi Syariah Pascasarjana IAIN Kudus

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21043/equilibrium.v14i1.34409

Abstract

This study aims to examine the influence of macroeconomic variables on the stability of Islamic banking in Indonesia, with Non-Performing Financing (NPF) serving as the primary indicator of banking resilience. A Vector Autoregression (VAR) approach is employed to capture the dynamic interrelationships among variables, including inflation, the exchange rate, the BI Rate, economic growth, and the money supply. Monthly time series data from 2010–2024 were obtained from Bank Indonesia, the Financial Services Authority (OJK), and Statistics Indonesia (BPS). The findings reveal that money supply, exchange rate, and economic growth are the primary macroeconomic determinants of Islamic banking stability in Indonesia. Rapid liquidity expansion and economic growth that are not accompanied by prudent oversight of financing tend to elevate financing risk, while a stable exchange rate plays a critical role in protecting the real sector's repayment capacity. Notably, inflation and the BI Rate do not exert a meaningful short-term influence on NPF, suggesting that Islamic banking operates through a transmission mechanism distinct from its conventional counterpart—one that is less sensitive to interest rate policy. The novelty of this study lies in its use of a comprehensive, long-horizon dataset covering multiple economic cycles, including the 2008 global crisis and the COVID-19 pandemic, which enables a more robust assessment of Islamic banking resilience across varying macroeconomic conditions. The study is limited to macroeconomic variables at the aggregate level and does not account for bank-specific microeconomic factors or regional variations within Indonesia's Islamic banking sector, which may be addressed in future research.
Co-Authors -, Nasiri A. M. Yunus Wahid, A. M. Yunus Abd Mubaraq, S.E.,Sy. M.A Abidin, Siti Chaerani Fatimah Adriana Grahani Firdausy Agus Riwanto, Agus Ai Rosah Aisah Airlangga Surya Nagara al-Hamidy , Abu Dzarrin Alam, Andi Rifdah Auliyah Alfatih, Muhammad Wildan Ali, Misbahul Amaliyah, Amaliyah Amanda Cahyadewi, Felicia Amir Amir Anak Agung Istri Sri Wiadnyani Andi Alim, Andi Anggi Pramunendar, Ricardus Anisah, Lely Nur Ardelia, Aya Sofia As’ad, Muhammad Ridwan Azzahrah, Azzahrah Bakti, Fauziah P. Bonny P.W. Soekarno, Bonny P.W. Bustami Bustami Dany, Ahmad Denta Saputra, Fahrizal Dewa, Grabiella Elok Puri Maharani, Andina Emawati emawati ENDANG SUHENDANG Erlangga, Mikael Figo Bara EVRIANA, FRISCA Fauzi Ahmad Muda Fikri Budiman Fitria, Lailatul Hardiyani, Mitha Hayet, Hayet Hemi Fitriani, Hemi Hendrawan Hendrawan Husodo, Jadmiko Anom Ika Nawang Puspitawati Isharyanto Isharyanto Juliater Simamarta Junaedi, Wahyu Laksamana, Rio Layyinah, Rahmatika Lingga Lingga Lisdayanti, Lisdayanti Listiana, Arnetta M. Yamani Madalina, Maria Maggy T Suhartono Maskun Masyhur, Abdullah Al Memet Agustiar, Memet Metasari Kartika, Metasari Miftahul Ulum Muazzaroh, Faizatul Mubaraq, Abd Muchsin, Putri Rofifah Nabilah Muhammad Aldo Setiawan Muhammad Naufal Munadhir Munadhir Naswar Bohari Naswar, Naswar Nuraripah, Pia Nurdianti Nurdianti Nurhasanah, Via Oktavriana, Diah Ratri Pramarta, Pandhu Prawiro, Suharno Primadi Candra Susanto Rahman, Fadhlu Rejeki, Afifah Tri Resti Resti Richo Kurniawan, Ibnu Risamtyo, Adi Bintang Rivai, Andi Abil Hasan Saiful Aziz Samsul Arifin Sari, Intan Nurmala Simon Taka Nuhamara Soetrisno Hadi Sri Wahyuni Syamsuar Manyullei Tambunan, Darwin Ula, Ade Isfi Ayatul Umar Fakhrizal, Irsyad Ummul Firdaus, Sunny Uni Kurnia Wahyudi Wahyudi Wasrin Syafii Wicaksono, Isa Agung Wisnu, Laksmidari Khansa Bella Yudiwanti Wahyu E. Kusumo