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Empirical Determinants of Saving in the Islamic Banks: Evidence from Indonesia المحددات التجريبية للادخار في البنوك الإسلامية: أدلة من إندونيسيا

Author

Listed:
  • Rahmatina A. Kasri

    (Researcher, Islamic Economics and Business Center (PEBS) Lecturer, Department of Economics, Faculty of Economics and Business, University of Indonesia)

  • Salina Hj. Kassim

    (Assistant Professor, Depart. of Economics, Kuliyyah of Economics and Management Sciences, International Islamic University of Malaysia)

Abstract

This study attempts to determine the factors affecting saving in the Islamic banks in Indonesia. By employing the Vector Autoregressive and its associated Impulse Response Function analysis for all Islamic banks in Indonesia from March 2000 to August 2007, the study analyzes the importance of real rate of return on Islamic deposit, interest rate on conventional deposit, real income and number of Islamic bank branches in determining the level of savings in the Islamic banks. The results highlight the influential role of conventional interest rate in determining the level of saving in the Islamic banks. In particular, higher Islamic deposit is significantly correlated with higher rate of return and lower interest rate. Furthermore, the study finds the existence of displaced commercial risk between the Islamic and conventional banks, such that the Islamic banks’ depositors transfer their funds to the conventional banks when the rate of return provided by the Islamic banks is significantly lower than the interest rate of its counterpart. The findings of this study have important implications on the risk management practices in the Islamic banks in Indonesia. تحاول هذه الدراسة تحديد العوامل التي تؤثر على الادخار في البنوك الإسلامية في إندونيسيا، عن طريق استخدام القوة الموجهة الارتدادية تلقائيا وما يرتبط بها من وظيفة تحليل استجابة قوة الدفع لجميع البنوك الإسلامية في الفترة من مارس 2000 إلى أغسطس 2007م، وتحلل الدراسة أهمية معدل العائد الحقيقي على الودائع الإسلامية، وسعر الفائدة على الودائع التقليدية، والدخل الحقيقي، وعدد من فروع البنوك الإسلامية في تحديد مستوى المدخرات في البنوك الإسلامية. والنتائج التي توصل إليها البحث تسلط الضوء على دور سعر الفائدة في تحديد مستوى الادخار في المصارف الإسلامية، وعلى وجه الخصوص فإن ارتفاع الودائع الإسلامية يرتبط بشكل كبير بارتفاع معدل العائد وانخفاض سعر الفائدة. وعلاوة على ذلك، وجدت الدراسة أن مخاطر الانتقال التجارية بين المصارف الإسلامية والتقليدية، ومنها تحويل المودعين في البنوك الإسلامية الأموال إلى المصارف التقليدية عندما يكون معدل العائد التي تقدمها المصارف الإسلامية أقل بكثير من سعر فائدة نظيرتها. نتائج هذه الدراسة مهمة على ممارسات إدارة المخاطر في المصارف الإسلامية في إندونيسيا.

Suggested Citation

  • Rahmatina A. Kasri & Salina Hj. Kassim, 2009. "Empirical Determinants of Saving in the Islamic Banks: Evidence from Indonesia المحددات التجريبية للادخار في البنوك الإسلامية: أدلة من إندونيسيا," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 22(2), pages 181-201, July.
    • Handle: RePEc:abd:kauiea:v:22:y:2009:i:2:no:7:p:181-201
    DOI: 10.4197/islec.22-2.7
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    2. Matteo Luciani & Madhavi Pundit & Arief Ramayandi & Giovanni Veronese, 2018. "Nowcasting Indonesia," Empirical Economics, Springer, vol. 55(2), pages 597-619, September.
    3. El Mehdi Ferrouhi, 2017. "Determinants Of Bank Performance In A Developing Country: Evidence From Morocco," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 8(1).
    4. Rizkiah, Siti K. & Disli, Mustafa & Salim, Kinan & Razak, Lutfi A., 2021. "Switching costs and bank competition: Evidence from dual banking economies," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 75(C).
    5. Caturida Meiwanto Doktoralina & Fikki Mutarotun Nisha, 2020. "Mudharabah Deposits Among Conventional Bank Interest Rates, Profit-Sharing Rates, Liquidity and Inflation Rates," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(1), pages 25-33, January.
    6. Nur Setyowati, 2019. "Macroeconomic Determinants of Islamic Banking Products in Indonesia," Economies, MDPI, vol. 7(2), pages 1-15, June.
    7. Solarin, Sakiru Adebola & Hammoudeh, Shawkat & Shahbaz, Muhammad, 2018. "Influence of economic factors on disaggregated Islamic banking deposits: Evidence with structural breaks in Malaysia," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 55(C), pages 13-28.
    8. Kabir, Anis & Abdul Rehman Shah, Syed Muhammad & Hassan, M. Kabir & Akmal, Muhammad, 2022. "The Transmission Mechanism of Monetary Policy via Bank’ Balance Sheet: An Empirical Study of Dual Banking System in Pakistan," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 56(2), pages 129-140.
    9. Saba Mushtaq & Danish Ahmed Siddiqui, 2016. "Effect of interest rate on economic performance: evidence from Islamic and non-Islamic economies," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 2(1), pages 1-14, December.
    10. E. H. Ergeç & B. G. Arslan, 2013. "Impact of interest rates on Islamic and conventional banks: the case of Turkey," Applied Economics, Taylor & Francis Journals, vol. 45(17), pages 2381-2388, June.
    11. Habib, Farrukh & Masih, Mansur, 2017. "The effect of interest rates and rate of profit on islamic investment deposits: evidence from Malaysia," MPRA Paper 99909, University Library of Munich, Germany.
    12. Azmat, Saad & Skully, Michael & Brown, Kym, 2015. "Can Islamic banking ever become Islamic?," Pacific-Basin Finance Journal, Elsevier, vol. 34(C), pages 253-272.
    13. Sana Rhoudri & Lotfi Benazzou, 2021. "Predictive Factors of Withdrawal Behavior among Profit-Sharing Investment Depositors in Morocco: A Qualitative Study from the Perspective of Push-Pull-Mooring Framework," Post-Print hal-03328276, HAL.
    14. Mobin, Mohammad Ashraful & Masih, Mansur, 2014. "Do the macroeconomic variables have any impact on the Islamic bank deposits?An application of ARDL approach to the Malaysian market," MPRA Paper 62342, University Library of Munich, Germany.
    15. Farida Mohammed Shehu & Al-Hasan Al-Aidaros, 2015. "A Proposed Framework on the Relationship between Islamic Microfinance Related Factors and Women Entrepreneurs Business Performance in Nigeria," Journal of Education and Vocational Research, AMH International, vol. 6(4), pages 38-44.
    16. Nazib, Nur Afiyah & Masih, Mansur, 2017. "The response of monetary policy shocks on Islamic bank deposits: evidence from Malaysia based on ARDL approach," MPRA Paper 82094, University Library of Munich, Germany.
    17. Abdullahi Osman Ali, 2021. "Impact of Monetary Policy Fluctuations on Conventional and Islamic Banks in Malaysia: Evidence from ARDL Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 11(1), pages 101-108.
    18. Hassan, M. Kabir & Aliyu, Sirajo, 2018. "A contemporary survey of islamic banking literature," Journal of Financial Stability, Elsevier, vol. 34(C), pages 12-43.
    19. Muhamad Nadratuzzaman Hosen & Sabrina Fitria, 2018. "The Performance of Islamic Rural Banks in Indonesia: 2010-2015," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 3), pages 423-440.
    20. FERROUHI, El Mehdi & LEHADIRI, Abderrassoul, 2014. "Savings Determinants of Moroccan banks: A cointegration modeling approach," MPRA Paper 76371, University Library of Munich, Germany.

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