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Islamic banking deposits in Indonesia: Do spatial effects matter?

Author

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  • Eko Suprayitno
  • Silvia Vara Dhita

Abstract

This study aims to analyse the spatial effect on Islamic banking deposits and identify the factors that influence Islamic banking deposits in a province in Indonesia as an archipelagic country. This study used a Spatial Autoregressive Model (SAR Moran's I), a Spatial Error Model (SEM), and the Local Indicator of Spatial Association (LISA). The result of the Moran's I model showed a strong spatial influence on Islamic bank deposits. Jakarta and West Java Provinces enjoy high Islamic bank deposits. However, Banten Province enjoys only low Islamic bank deposits despite being surrounded by high-value neighbouring provinces. The Lagrange Multiplier (SAR) test results on the factors that affect the geographic spatial concentration of the deposit distribution patterns are at the level of GRDP, offices, and total assets. Meanwhile, the LISA test shows how the value of deposits in a province affects a particular province.

Suggested Citation

  • Eko Suprayitno & Silvia Vara Dhita, 2022. "Islamic banking deposits in Indonesia: Do spatial effects matter?," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 15(4), pages 386-405.
    • Handle: RePEc:ids:ijmefi:v:15:y:2022:i:4:p:386-405
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