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Financial market discipline in stability of Sharia banking: evidence from Indonesia state

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  • Rini Kurnia Sari
  • Muhammad Alfarizi

Abstract

The global banking sector, grappling with the COVID-19 pandemic, faced economic challenges hindering growth. Sharia banking authorities and customers, emphasising financial transparency and consumer protection, recognised market discipline. Islamic banking, aligning with Islamic teachings, bolstered sector stability in Muslim nations. In Indonesia, deposits played a crucial role in enhancing liquidity and trust in Islamic banking. This research in Indonesia explores market discipline elements in Islamic banking, assessing their impact on deposit performance. Variables like returns on deposits, capital adequacy ratio (CAR), return on assets (ROA), BI7DRR, and inflation were considered. The study suggests increasing CAR for deposit growth, incorporating bank size in marketing strategy, and addressing inflation and BI7DRR for competitive rates. Financial authorities could incentivise CAR and support smaller banks.

Suggested Citation

  • Rini Kurnia Sari & Muhammad Alfarizi, 2026. "Financial market discipline in stability of Sharia banking: evidence from Indonesia state," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 34(2), pages 135-156.
    • Handle: RePEc:ids:gbusec:v:34:y:2026:i:2:p:135-156
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