Achmad Fadlil Abidillah
Islamic Economics Departement, Faculty of Economics and Business, Airlangga University, Surabaya, Indonesia

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Macroeconomic’s effect on Islamic and conventional banking profitability: Evidence from Indonesian dual-banking system Achmad Fadlil Abidillah; Roisatun Kasanah; Sulistya Rusgianto
Jurnal Ekonomi & Keuangan Islam Volume 8 No. 1, January 2022
Publisher : Faculty of Economics, Universitas Islam Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.20885/jeki.vol8.iss1.art1

Abstract

Purpose – This paper aims to analyze the effect of macroeconomic and global crisis variables on Islamic and conventional banking profitability, evidence from Indonesian dual-banking system.Methodology – Time-series data from 2008q1–2021q2 were analyzed using an Autoregressive Distributed Lag (ARDL) model. This method can describe both long run and short run equilibrium between banking profitability and macroeconomic variables.Findings – The results point out that in a long run model, sharia banking's profitability is more resistant to macroeconomics shock than conventional's. Then, in a short run model, sharia's ROA and conventional's ROA face different effects of economic growth, exchange rate, and global crisis. Sharia's NPM is more affected by macroeconomic variables than conventional's.Originality – This study used an ARDL model to develop a dynamic relation between macroeconomic variables and dual bankings profitability.