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Effect Of Inflation On Total Deposits And Financing Of Sharia Commercial Banks: A Monthly Data Evidence From Indonesia

Author

Listed:
  • IKHSAN

    (Senior Lecturer, Faculty of Economics and Business, UniversitasSyiah Kuala, Banda Aceh, Indonesia)

  • Cut Dian FITRI

    (Lecturer, Faculty of Islamic Economics and Business, Universitas Islam Negeri Ar-raniry, Banda Aceh, Indonesia)

  • Hafiizh MAULANA

    (Lecturer, Faculty of Islamic Economics and Business, Universitas Islam Negeri Ar-raniry, Banda Aceh, Indonesia)

  • Khairul AMRI

    (Lecturer, Faculty of Islamic Economics and Business, Universitas Islam Negeri Ar-raniry, Banda Aceh, Indonesia)

Abstract

The main purpose of the paper is to determine the effect of inflation on total deposits and the financing of sharia commercial banks in Indonesia. A monthly time series data over the period of 2012.1-2017.6 was analyzed using Johansen Co-integration test, vector error correction model, and Granger causality test. The co-integration test indicates that there is a long-run relationship between the variables. In the long-run, inflation is negatively related to total deposits and sharia financing. In the short-run, the inflation has no significant effect on the two variables. The sharia financing has a negative effect on itself at the 1 and 2-month period. The result of the Granger causality test points out that there is a bidirectional causality relationship between total deposits and sharia financing. Furthermore, unidirectional causality running from the inflation to sharia financing and from total deposits to the inflation.

Suggested Citation

  • IKHSAN & Cut Dian FITRI & Hafiizh MAULANA & Khairul AMRI, 2020. "Effect Of Inflation On Total Deposits And Financing Of Sharia Commercial Banks: A Monthly Data Evidence From Indonesia," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(1), pages 103-114, June.
    • Handle: RePEc:hrs:journl:v:xii:y:2020:i:1:p:103-114
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    Cited by:

    1. Ikhsan Ikhsan & Khairul Amri, 2023. "Sectoral Growth Impacts of Bank Credit Allocation: The Role of COVID-19 Pandemic as Moderating Variable," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 32-50.

    More about this item

    Keywords

    Inflation; Total Deposits; Sharia Financing; VECM; and Granger Causality Test;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East

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