Journal of Islamic Monetary Economics and Finance
JIMF is an international peer-reviewed and scientific journal which is published quarterly by Bank Indonesia Institute. JIMF is a type of scientific journal (e-journal) in Islamic economics, monetary, and finance. By involving a large research communiy in an innovative public peer-review process, JIMF aims to provide fast access to high quality papers and continual platform for sharing studies of academicians, researchers, and practitioners; disseminate knowledge and research in various fields of Islamic economics, Monetary and Finance; encourage and foster research in the area of Islamic Economics, Monetary, and Finance; and bridge the gap between theory and practice in the area Islamic Economics, Monetary and Finance.
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<![CDATA[HOUSE PRICE CHANGES AND ISLAMIC BANK STABILITY: EVIDENCE FROM MALAYSIA ]]>
<![CDATA[Shiau Hui Kok]]>;
<![CDATA[Normaz Wana Ismail]]>
<![CDATA[ Journal of Islamic Monetary Economics and Finance Vol 5 No 1 (2019) ]]>
Publisher : <![CDATA[Bank Indonesia ]]>
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DOI: 10.21098/jimf.v5i1.1044
<![CDATA[In this paper, we examine the relationship between house price and Islamic bank stability in Malaysia. In particular, in relating to Islamic bank stability to Malaysian house price changes, we evaluate the nature of the relationship from the perspective of nonlinearities. The Autoregressive Distributed Lag (ARDL) model is applied to a sample that consists of 9 Islamic banks in Malaysia for the period of 2000-2016. Our results indicate that there is an inverted U-shaped relationship between house price and Islamic bank stability in the long run. Meanwhile, the relationship is insignificant in the short-run. To put it differently, initially, the higher house prices, the more stable the bank. Then, the impact of house prices on bank stability becomes negative when house prices surpass the threshold point. As far as the bank-specific characteristics are concerned, the cost to income ratio is found to significantly and negatively related to the bank stability. Such a result has policy implications in which it is crucial for achieving balance in the housing market, and efficiently managing the cost is equally important to ensure Islamic bank soundness.]]>
<![CDATA[THE CREDIT SUPPLY CHANNEL OF MONETARY POLICY TRANSMISSION MECHANISM: AN EMPIRICAL INVESTIGATION OF ISLAMIC BANKS IN PAKISTAN VERSUS MALAYSIA ]]>
<![CDATA[Syed Muhammad Abdul Rehman Shah]]>;
<![CDATA[Abdul Rashid]]>
<![CDATA[ Journal of Islamic Monetary Economics and Finance Vol 5 No 1 (2019) ]]>
Publisher : <![CDATA[Bank Indonesia ]]>
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DOI: 10.21098/jimf.v5i1.1046
<![CDATA[The transmission mechanism of monetary policy is explained through the relationships between a change in money supply and the level of real income. Monetary policy transmits to the real sector through several different channels. Such channels include the interest rate channel, the exchange rate channel, the asset-pricing channel, the credit supply channel, and the bank balance sheet channel. This paper empirically investigates the credit supply channel of monetary policy and explores the differential impact of monetary policy on credit supply of Islamic banks in Pakistan versus Malaysia. The robust two-step System-Generalize Method of Moments (GMM) estimator is applied on an unbalanced panel dataset over the period 2005-2016. While estimating the effects of three alternative measures of monetary policy on banks’ credit supply, several bank- specific variables are included in the specification as control variables. We provide strong evidence on the existence of credit supply channel in the baseline models for both countries and differential impact of monetary policy through Islamic banks in Pakistan versus Malaysia in the extended models. Our findings suggest that there is a vital need to consider the nature of Islamic banks while devising the instruments of an effective monetary policy in countries with dual banking system like Pakistan, Malaysia, Indonesia, Bahrain, Saudi Arabia, Qatar and others.]]>
<![CDATA[ISLAMIC BANKING AND ECONOMIC GROWTH: APPLYING THE CONVENTIONAL HYPOTHESIS ]]>
<![CDATA[Ahmad Jawad]]>;
<![CDATA[Klein Christian]]>
<![CDATA[ Journal of Islamic Monetary Economics and Finance Vol 5 No 1 (2019) ]]>
Publisher : <![CDATA[Bank Indonesia ]]>
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DOI: 10.21098/jimf.v5i1.1047
<![CDATA[Growth in Islamic banking has gained lot of interest and attention during last few years. The debate currently shifts from theoretical to empirical framework. The growth in empirical work has given rise to a new concept, which can be called as “Islamic banking development” (IBD). It will be interesting to test nexus between IBD and growth, since literature suggests a positive result for conventional finance and growth. Our study uses a panel of 24 countries for a period of 11 years using annual data (2004-2014) to test conventional hypothesis of supply leading or demand following between IBD and growth. In addition, we also investigate direction of causality in a panel setting between the two. Apart from the topic, this paper differs from existing limited literature, on the basis of dataset used and the estimation procedure to assess the nexus. Our results suggest that IBD affect growth positively. Comprehensive tests suggest the presence of a long run relationship between IBD and growth. Moreover, the direction of causality seems to follow supply leading hypothesis: IBD affects economic growth, and that evidence on a reverse causality was not found. This is true, even when we control for CFD.]]>
<![CDATA[THE ROLE OF HALAL CERTIFICATION ON PURCHASE INTENTION TOWARDS FOOD PRODUCTS FROM MENA COUNTRIES: A SEM STUDY ]]>
<![CDATA[Firdaus Fanny Putera Perdana]]>;
<![CDATA[Muhammad Tahir Jan]]>;
<![CDATA[Remzi Altunişik]]>;
<![CDATA[Irwandi Jaswir]]>;
<![CDATA[Betania Kartika]]>
<![CDATA[ Journal of Islamic Monetary Economics and Finance Vol 5 No 1 (2019) ]]>
Publisher : <![CDATA[Bank Indonesia ]]>
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DOI: 10.21098/jimf.v5i1.1048
<![CDATA[Kullu Halal (all Halal) is a concept that is highly applied in the Middle Eastern and North African (MENA) region as the majority of the population is Muslim. Many products from non-Muslim countries are also exported to the MENA countries and some of them are exposed to animal-based ingredients. Halal certification studies in the MENA region are found to be quite minimal to non-existent. The paper is designated to analyze the effects of Halal certification towards the purchase intention of Muslim consumers on food products from Muslim majority countries in the MENA countries. Theory of Planned Behavior (TPB) was used as a platform to predict the consumers’ intention to purchase the Halal certified products. A self-administered questionnaire was selected as a method and the respondents are the Muslim consumers living in certain areas of Klang Valley, Malaysia. Five hundred questionnaires were distributed, and 417 questionnaires were considered usable. Structural Equation Modeling (SEM) was used as a method in this research. Attitude, Subjective Norm, and Perceived Behavioral Control showed a strong correlation with Purchase Intention and the results were statistically significant at p < 0.05. Algeria was found to be the least trustworthy country by the respondents, followed by Iran, Lebanon, Iraq, and Bahrain. The results indicate that the presence of Halal certification is important and will be profitable for the food industry players in the MENA region. Despite being Muslim majority countries, it is important to ensure the presence of Halal certification in the products from MENA countries, especially from those that received low scores in the country of origin study.]]>
<![CDATA[HALAL GOVERNANCE IN INDONESIA: THEORY, CURRENT PRACTICES, AND RELATED ISSUES ]]>
<![CDATA[Fahmi Ali Hudaefi]]>;
<![CDATA[Irwandi Jaswir]]>
<![CDATA[ Journal of Islamic Monetary Economics and Finance Vol 5 No 1 (2019) ]]>
Publisher : <![CDATA[Bank Indonesia ]]>
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DOI: 10.21098/jimf.v5i1.1049
<![CDATA[Considering Indonesia’s target to lead halal industry worldwide, the discussion upon the current practices of halal governance in the country is critical to get into a comprehensive insight. Several major drawbacks within the previous studies on this topic is found along the followings. There has never been a study that has specifically discussed the term of halal governance substantively or comprehensively investigated the subject matters in Indonesia. Driven by this gap, we set out to review halal governance practices in Indonesia by employing a qualitative method of documentary. In doing so, the present paper firstly discusses the substantive materials upon lines of defense in halal governance that covers the four themes, which the present paper particularly reviews as the current practices in Indonesia. From the present discussion, this paper offers the novelty on the explanation of lines of defense in halal governance, and that of the current practices in Indonesia along with the related issues presently associated with it. In addition, this paper further delivers the applicable advises for the improvement of the practices. This study is relevant for the stakeholders of halal industry including the domestic government agencies, practitioners and academics.]]>
<![CDATA[PRINCIPAL-AGENT PREFERENCES IN IMPERFECT MARKETS: THEORETICAL ANALYSIS ON MURABAHAH AND IJARAH ]]>
<![CDATA[Hechem Ajmi]]>;
<![CDATA[Hassanuddeen Abdul Aziz]]>;
<![CDATA[Salina Kassim]]>;
<![CDATA[Walid Mansour]]>
<![CDATA[ Journal of Islamic Monetary Economics and Finance Vol 5 No 1 (2019) ]]>
Publisher : <![CDATA[Bank Indonesia ]]>
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DOI: 10.21098/jimf.v5i1.1050
<![CDATA[This paper aims to determine the optimal contract for the principal and the agent in imperfect market, when murabahah and ijarah are used. The financial contracting enforceability approach is employed to determine the contract that maximizes the value of the firm subject to agents’ constraints when the shock is low and high, and regarding market frictions. Furthermore, this approach allows us to assess the level of market frictions that agents may bear in case of low shock and high shocks. Findings reveal that the simulated values of the market frictions’ parameters for both contracts increase when moving from the low shock to the high shock. Such evidence implies that the agent is more likely to cheat and hide significant information about the project when the shock is high. As a response to this higher risk, the simulated values of the profit margin parameters for the principal rise also when the shock is high in order to compensate for the increase of market frictions and mitigate conflicts of interest. By comparing both contracts based on the simulated optimal values of the firm, it is noticeable that the gap between both contracts is very tight, which can be attributed to their common debt-based financial arrangements. However, the results show that ijarah allows the principal and the agent to generate the highest value in case of low shock and high shock, comparing to murabahah. Therefore, ijarah seems to be more attractive for the principal and the agent than murabahah.]]>
<![CDATA[CONSUMER PURCHASING BEHAVIOR OF HALAL COSMETICS: A STUDY ON GENERATIONS X AND Y ]]>
<![CDATA[Elfira Maya Adiba]]>
<![CDATA[ Journal of Islamic Monetary Economics and Finance Vol 5 No 1 (2019) ]]>
Publisher : <![CDATA[Bank Indonesia ]]>
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DOI: 10.21098/jimf.v5i1.1052
<![CDATA[The halal economic industry is currently developing not only in Indonesia, but also on the global level. The global economic sector is not only limited to the sharia financial sector and halal food, but also halal cosmetics. The increasing number of Muslim population in the world has caused the increasing demand for halal cosmetics, as many other factors influencing the demand for halal cosmetics. The purpose of this study is to examine the influence of halal knowledge and Islamic religiosity toward customer behavior that is mediated by consumer attitude. Data were collected from questionnaires distributed to respondents in Surabaya, Sidoarjo, and Gresik, East Java, Indonesia. 145 respondents were identified as generation Y, while 40 as generation X. Primary data were analyzed by PLS. The results showed that halal knowledge and Islamic religiosity had a significant effect on consumer behavior perfectly mediated by attitude. Such results give implication to the halal cosmetics company to design appropriate marketing strategies in order to increase Indonesian exports for halal products, so it could help the national economy.]]>
<![CDATA[STRENGTHENING NATIONAL ECONOMIC GROWTH AND EQUITABLE INCOME THROUGH SHARIA DIGITAL ECONOMY IN INDONESIA ]]>
<![CDATA[Amrin Barata]]>
<![CDATA[ Journal of Islamic Monetary Economics and Finance Vol 5 No 1 (2019) ]]>
Publisher : <![CDATA[Bank Indonesia ]]>
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DOI: 10.21098/jimf.v5i1.1053
<![CDATA[The rapid progress of information and communication technology (ICT) creates a new look of the Indonesian economy, transforming from the conventional economy into a digital economy. The part of the digital economy currently developing worldwide, include in Indonesia is, Fintech (Financial Technology) and E-commerce. Additionally, Indonesia contributes to 4 percent of total e-commerce sales around the world. The development of Fintech in Indonesia is still at early stages, as many industries have not developed such a practice. Besides, there are many opportunities that have not been explored to its full potential. The research employs Input Output (I-O) analysis, using shock of IDR 3.90 trillion in investment of the sharia e-commerce subsector, we found through this study that the national economic growth grew by 0.048 percent or the economic output increased by IDR 5.08 trillion. As for the impact on gross value added (GVA) grew by 0.072 percent or increased by IDR 3.72 trillion. In addition, national labor income increased by IDR 795.36 billion with investment in sharia e-commerce subsectors. After an additional shock to the Fintech and the trade sector, economic growth increased by 0.052 percent or IDR 5.48 trillion. Sharia e-commerce and sharia Fintech should be able to have a big impact on the economic growth, increasing the amount of labor needed so that it can absorb more national labor. Thus, economic growth, increased income, and job creation will potentially reduce poverty and inequality in that the implications in the long term will further strengthen sustainable national economic growth.]]>
<![CDATA[DEVELOPING HALAL TRAVEL AND HALAL TOURISM TO PROMOTE ECONOMIC GROWTH: A CONFIRMATORY ANALYSIS ]]>
<![CDATA[Abrista Devi]]>;
<![CDATA[Irman Firmansyah]]>
<![CDATA[ Journal of Islamic Monetary Economics and Finance Vol 5 No 1 (2019) ]]>
Publisher : <![CDATA[Bank Indonesia ]]>
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DOI: 10.21098/jimf.v5i1.1054
<![CDATA[The purpose of this paper is to identify the factors of various backgrounds in the literature having to do with halal purchase intention of Muslim travellers on halal travel and tourism sector. It also aims to investigate which antecedents, among all, that have the dominant determinants toward the development of halal travel and tourism purchaseintention. A total of 255 respondents originating from several major cities of West Java were involved in random sampling technique to measure their personal perception on the determinant factors of halal purchase intention. Data were collected through structured questionnaire with a five-point Likert scale. The questionnaire has been divided into two main parts, the first part identifies the respondent identity, while the second part provide 6 main sub-part statements on halal awareness, personal societal perception, religious belief, halal marketing, halal travel & tourism, and infrastructure. Confirmatory Factor Analysis (CFA) will be used to acquire the most critical to the least critical indicators in explaining purchase intention on halal travel and tourism industry sector. The paper concludes that most customers rely on halal marketing, making it the dominant determinant factor. Meanwhile, the second dominant determinant is halal travel and tourism. Then, the third determinant is halal awareness. Religious beliefs and personal societal perceptions are the last two priorities. This paper offers a detailed insight into various behaviors of customer’s purchase intention on halal travel and tourism sector as well as delivers a new model of purchase intention through detailed latent-variables. Finally, the relevant stakeholders, in particular government, should enhance the halal marketing on travel and tourism through various programs and activities, such as massive promotion, socialization, and literacy.]]>
<![CDATA[THE HALAL ASPECT AND ISLAMIC FINANCING AMONG MICRO, SMALL, AND MEDIUM ENTERPISES (MSMEs) IN YOGYAKARTA: DOES BERKAH MATTER? ]]>
<![CDATA[Abdul Qoyum]]>;
<![CDATA[Neneng Ela Fauziyyah]]>
<![CDATA[ Journal of Islamic Monetary Economics and Finance Vol 5 No 1 (2019) ]]>
Publisher : <![CDATA[Bank Indonesia ]]>
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DOI: 10.21098/jimf.v5i1.1055
<![CDATA[The development of Halal industry points out an amazing result around the world, including Indonesia. Surprisingly, the biggest contributor for its growth is Micro, Small and Medium Enterprises (MSMEs). In order to improve its significant contribution, the combination of Halal MSMEs and Islamic financing becomes very crucial. Nevertheless, there is still a lack of awareness of the concept and of intention from MSMEs regarding the penetration of Islamic financing. Therefore, this study investigates the determinants affecting the MSMEs’ desire for utilizing Islamic financing from the Islamic financial institution and encouraging Halal MSMEs to adopt Islamic financing in all business activities. A survey was conducted on 58 MSMEs in Yogyakarta, Indonesia by employing self-administered questionnaire as the main approach for data collection. By using Structural Equation Modeling- Partial Least Square (SEM-PLS) analysis, this study reveals that from the variables examined, Cost Benefit and Halal Awareness are the two factors that have impact on the Use of Islamic Financing. In addition, Cost Benefit and Reputation are the two variables that have direct impact on the Attitude of MSMEs toward Islamic Financing. Interestingly, this research also finds that Berkah as the key component in Islamic financing will be gained by MSMEs when they use Islamic financing instrument, and, thus will encourage Halal MSMEs’ intention to reuse Islamic financing. Moreover, service quality and competitiveness are very crucial to maintain the customer satisfaction. In addition, preaching Berkah as key component in Muslim life is an important agenda in the future development of Halal Industry, especially in MSMEs sectors.]]>
