Intermediary performance of Islamic banks in the disruption era: Does it contribute to economic growth?

  • Received January 9, 2021;
    Accepted February 23, 2021;
    Published March 18, 2021
  • Author(s)
    Umrotul Khasanah
    ORCID ,
    Ahmad Tibrizi Soni Wicaksono
    ORCID
  • DOI
    http://dx.doi.org/10.21511/bbs.16(1).2021.10
  • Article Info
    Volume 16 2021 , Issue #1, pp. 103-115
  • TO CITE АНОТАЦІЯ
  • Cited by
    4 articles
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Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License

The study aims to measure the intermediary performance of Islamic banks in relation to economic growth in Indonesia in the short and long term. There are four main variables used, namely financing, fund placement in BI (Central Bank of Indonesia), investment in securities, and third-party funds in all Islamic banks from 2007 to 2019. The data were tested using vector error correction models (VECM), Granger Causality, Impulse Response Function (IRF), and Variant Decomposition (VDC) to examine causality relationships, the short- and long-term effects, shocks, and variances in Islamic bank intermediary performance to economic growth. The results show that there is a two-way causality relationship between financing and third-party funds to economic growth. While in the short term, fund placement in BI, investment in securities, and financing have a significant influence on economic growth, but in the long run, only the placement of funds in BI will affect economic growth. Also, only fund placement in BI can shock and significantly contribute to economic growth in the long term. The overall intermediary performance of Islamic banks has not contributed to Indonesia’s economic growth in the long term.

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    • Figure 1. IRF analysis
    • Table 1. Stationarity test
    • Table 2. Lag criteria test
    • Table 3. Cointegration rank test
    • Table 4. Granger causality test
    • Table 5. VECM short-run test
    • Table 6. VECM long-run test
    • Table 7. VDC analysis
    • Conceptualization
      Umrotul Khasanah, Ahmad Tibrizi Soni Wicaksono
    • Formal Analysis
      Umrotul Khasanah
    • Funding acquisition
      Umrotul Khasanah
    • Methodology
      Umrotul Khasanah, Ahmad Tibrizi Soni Wicaksono
    • Resources
      Umrotul Khasanah, Ahmad Tibrizi Soni Wicaksono
    • Validation
      Umrotul Khasanah
    • Writing – original draft
      Umrotul Khasanah, Ahmad Tibrizi Soni Wicaksono
    • Writing – review & editing
      Umrotul Khasanah, Ahmad Tibrizi Soni Wicaksono
    • Project administration
      Umrotul Khasanah
    • Supervision
      Umrotul Khasanah
    • Data curation
      Ahmad Tibrizi Soni Wicaksono
    • Investigation
      Ahmad Tibrizi Soni Wicaksono
    • Software
      Ahmad Tibrizi Soni Wicaksono
    • Visualization
      Ahmad Tibrizi Soni Wicaksono
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Banks and Bank Systems
Banks and Bank Systems