Determinants of Islamic Banking Vulnerability in Indonesia from 2014 to 2020

Muhammad Iqbal (Faculty of Islamic Economics and Business, State Islamic University (UIN) Raden Intan Lampung)
Sunaryati Sunaryati (Faculty of Islamic Economics and Business, State Islamic University (UIN) Sunan Kalijaga Yogyakarta)
Hadri Kusuma (Faculty Business and Economics, Islamic University of Indonesia)

Muqtasid: Jurnal Ekonomi dan Perbankan Syariah
Vol 12, No 2 (2021): MUQTASID: Jurnal Ekonomi dan Perbankan Syariah

This study aims to analyze the effect of financial performance and macro-economic on Islamic banks' vulnerability in Indonesia from 2014 to 2020. Data were analyzed using the Autoregressive Distributed Lag since their several variables in the economy are dynamic. The results showed that exchange rates and financing are the dominant factors that affect the Islamic banks' vulnerability. Therefore, policymakers tend to identify financial instability and try to avoid the crisis if detected. The Z-score variable in the previous periods (VUL) is another factor that affects Islamic banks' vulnerability