Agus Widarjono
Department Of Economics, Faculty Of Business And Economics, Universitas Islam Indonesia

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Sectoral Financing Concentration and Profitability of Islamic Banking in Indonesia Agus Widarjono; M.B. Hendrie Anto; Sahabuddin Sidiq
Share: Jurnal Ekonomi dan Keuangan Islam Vol 11, No 1 (2022)
Publisher : Faculty of Islamic Economics and Business, Universitas Islam Negeri Ar-Raniry

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.22373/share.v11i1.11133

Abstract

This paper investigates the extent to which sectoral financing concentration affects the Islamic banks' profitability in Indonesia. As additional control variables, we include bank-specific and macroeconomic conditions. This study utilizes the aggregated financial statements of Islamic banks in Indonesia from January 2010 through December 2019 and analyzed with the Autoregressive distributed lag (ARDL) model. The results confirm cointegration evidence, demonstrating the long-term relationship between the dependent and independent variables. The results clearly indicate that sectoral financing concentration increases the profitability of Islamic banks. Furthermore, excessive financing and high non-performing financing reduce the profitability of Islamic banks. As a financial sector, Islamic banks' performance is contingent on favorable economic and macroeconomic conditions, such as high economic growth and low inflation. These findings imply that Islamic banks must employ skilled workers who are experts in related economic sectors, which is one of the primary goals of Islamic bank financing.========================================================================================================== ABSTRAK – Konsentrasi Pembiayaan Sektoral dan Profitabilitas Bank Syariah di Indonesia. Tulisan ini mengkaji sejauh mana konsentrasi pembiayaan sektoral mempengaruhi profitabilitas bank syariah di Indonesia. Sebagai variabel kontrol tambahan, kami menyertakan kondisi spesifik bank dan variabel makroekonomi. Penelitian ini menggunakan agregat laporan keuangan bank syariah di Indonesia dari Januari 2010 sampai Desember 2019 dan dianalisis dengan model Autoregressive distributed lag (ARDL). Hasil kajian mengkonfirmasi bukti kointegrasi, yang menunjukkan hubungan jangka panjang antara variabel dependen dan independen. Hasil kajian memperjelas bahwa konsentrasi pembiayaan sektoral dapat meningkatkan profitabilitas bank syariah, sementara pembiayaan yang berlebihan dan pembiayaan bermasalah yang tinggi mengurangi profitabilitas bank syariah. Sebagai institusi yang bergerak di sektor keuangan, kinerja bank syariah sangat bergantung pada kondusifitas sistem ekonomi dan kondisi makroekonomi, seperti pertumbuhan ekonomi yang tinggi dan inflasi yang rendah. Temuan ini menyiratkan bahwa bank syariah harus mempekerjakan pekerja terampil yang ahli di sektor ekonomi terkait, yang merupakan salah satu tujuan utama pembiayaan bank syariah.
Evaluasi Kritis Kinerja IMF dalam Krisis Asia Agus Widarjono
Unisia No 50/XXVI/IV/2003
Publisher : Universitas Islam Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.20885/unisia.vol26.iss50.art2

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The IMF established after World War II is a part of world society's effort to save the world from economic depression. Initially it had well-defined purposes. With the collapse of fixed exchange rate system in 1971, the IMF lost its original purposes. The institution then brings free market ideology. Fiscal Austerity, privatization and market liberalization are the three pillars of Washington Consensus advice to help countries facing economic problem. Washington Consensus, however, was designed originally to respond economic problem in Latin America where those countries have huge deficit and loose monetary policy. It is not surprise that these recipes cannot run well in the case of the East Asia Crisis. Indeed, the IMF's advice worsened the economic crisis of the regions and spread to other regions 
THE SECTORAL FINANCING DIVERSIFICATION AND THE PROFITABILITY OF ISLAMIC BANKING IN INDONESIA Agus Widarjono; Sahabudin Sidiq Sidiq
Jurnal Ekonomi dan Bisnis Islam | Journal of Islamic Economics and Business Vol. 8 No. 2 (2022): JULY - DECEMBER 2022
Publisher : Universitas Airlangga

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.20473/jebis.v8i2.36316

Abstract

This study investigates the influence of sectoral financing concentration on the profitability of Islamic banking in Indonesia. The data is aggregated by Indonesian Islamic banks from January 2015 to June 2021. Islamic banks are divided into two, namely Islamic commercial banks and Islamic window banks. The study used Autoregressive distributed lag (ARDL) and Panel Mean Group (PMG). The results showed that sectoral financing concentration increased the profitability of Islamic commercial banks while diversification of sectoral financing boosted the profitability of Islamic window banks. In addition, this study also showed that size and inefficiency negatively affected the profitability of Islamic commercial banks and window banks. This result implies that the right sectoral financing policy for Islamic commercial banks is financing concentration. This strategy implies that Islamic commercial banks must build competitiveness in certain sectors of the economy. For this reason, there is a need to increase the skills of the worker to build a competitive advantage in the sector that is the focus of financing. In comparison, sectoral financing diversification is more applicable for Islamic window banks. To support this diversification strategy, banks must conduct good supervision in the financing, especially sectoral financing based on profit-sharing contracts.
Determinants of Financial System Stability in ASEAN Countries Qonitat Az-Zahra; Agus Widarjono
Jurnal Keuangan dan Perbankan Vol 19, No 1 (2022): Jurnal Keuangan Dan Perbankan, Volume 19 No. 1, Desember 2022
Publisher : STIE Indonesia Banking School

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.35384/jkp.v19i1.347

Abstract

Stabilitas sistem keuangan Asia rentan terhadap inklusi keuangan dan variabel makroekonomi yang mempengaruhi di dalamnya termasuk GDP dan Inflasi. Penelitian ini bertujuan untuk menganalisis dampak inklusi keuangan, GDP dan inflasi terhadap stabilitas sistem keuangan di negara Indonesia, Malaysia, Thailand, dan Filipina selama periode tahun 2004 – 2016. Penelitian ini menggunakan Panel Vector Error Correction Model (PVECM). Dalam penelitian ini menggunakan Stabilitas Sistem Keuangan (SSK) diukur menggunakan Indeks Stabilitas Perbankan. Hasil estimasi PVECM menunjukkan bahwa Pertumbuhan ekonomi berpengaruh signifikan positif terhadap SSK baik dalam jangka panjang maupun pendek, sedangkan inflasi berpengaruh tidak signifikan dalam jangka panjang namun signifikan negatif dalam jangka pendek terhadap SSK. Dari hasil impulse response menunjukkan bahwa pertumbuhan ekonomi direspon positif oleh SSK di negara kawasan Asia Tenggara, sedangkan inflasi direspon negative. Menurut hasil variance decomposition, kontribusi terbesar dalam mempengaruhi variasi perubahan SSK adalah Inflasi dan yang memberikan kontribusi terkecil adalah pertumbuhan ekonomi.
Indonesia Islamic Banking Stability in The Shadow of Covid-19 Outbreak Sintia Dewi Nur Ajizah; Agus Widarjono
Jurnal Ekonomi Syariah Teori dan Terapan Vol. 10 No. 1 (2023): Januari-2023
Publisher : Universitas Airlangga

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.20473/vol10iss20231pp57-68

Abstract

ABSTRACT:   The Covid-19 pandemic that has occurred in the world has harmed economies since 2020, especially Indonesia. Therefore, it is very important to study the impact of this pandemic on the stability of Islamic banking in Indonesia and examine potential signs of post-pandemic recovery. This study examines the stability of Islamic banking in Indonesia. Stability is measured using ROA and Z-score. The data in this study are panel data for Islamic Commercial Banks (BUS) and Islamic Business Units (UUS). The data used is quarterly data for 2016-2020. This study uses the Generalized Method of Moment (GMM). The results of this study are ROA for Assets, CAR, FDR, and Covid-19 do not affect profits. However, NPF and BOPO have a negative effect. Whereas on the Z-score for Assets, CAR FDR has a positive effect. NPF and BOPO harm the stability of Islamic banking, except for Covid-19. Lower efficiency and problematic financing reduce the stability of Islamic banking. In addition, the results of our analysis, based on profitability and financial stability during the quarterly period, Islamic banking was able to survive during the Covid-19 pandemic. This research implies that even though some variables do not significantly affect profits, Islamic banks must still pay attention to other variables, such as ROA, owned assets, CAR, FDR, and Covid-19 which are likely to have a large negative impact on the long term. Apart from that, Islamic banks must also maintain profits and stability to survive and compete with conventional banking amid the Covid-19 pandemic. Keywords: Generalized Method of Moment, Islamic Bank, Banking Stability, Return on   Assets, Z Score ABSTRAK:   Pandemi Covid-19 yang terjadi di dunia memberikan dampak negatif bagi perekonomian sejak tahun 2020, khususnya Indonesia. Oleh karena itu, sangat penting untuk mengkaji dampak pandemi terhadap stabilitas perbankan syariah di Indonesia dan mengkaji potensi pemulihan pasca pandemi. Penelitian ini mengkaji tentang stabilitas perbankan syariah di Indonesia. Stabilitas diukur menggunakan ROA dan Z-score. Data dalam penelitian ini adalah data panel untuk Bank Umum Syariah (BUS) dan Unit Usaha Syariah (UUS). Data yang digunakan adalah data triwulanan tahun 2016-2020. Penelitian ini menggunakan Generalized Method of Moment (GMM). Hasil penelitian ini adalah ROA untuk Aset, CAR, FDR, dan Covid-19 tidak berpengaruh terhadap keuntungan perbankan syariah. Namun NPF dan BOPO berpengaruh negatif. Sedangkan pada Z-score untuk Aset, CAR FDR berpengaruh positif. NPF dan BOPO berpengaruh negatif terhadap stabilitas perbankan syariah, kecuali Covid-19. Efisiensi yang lebih rendah dan pembiayaan bermasalah mengurangi stabilitas perbankan syariah. Selain itu, hasil analisis, berdasarkan profitabilitas dan stabilitas keuangan selama periode triwulanan, perbankan syariah mampu bertahan selama pandemi. Hasilnya  menunjukkan implikasi bahwa meskipun beberapa variabel tidak berpengaruh signifikan terhadap keuntungan, namun Bank Syariah harus tetap memperhatikan variabel lain, seperti ROA, Aset yang dimiliki, CAR, FDR, dan  Covid-19 yang kemungkinan akan terjadi dampak negatif yang besar dalam jangka panjang. Selain itu, Bank Syariah juga harus mampu menjaga keuntungan dan stabilitas agar mampu bertahan dan bersaing dengan perbankan konvensional di tengah pandemi. Kata Kunci: Generalized Method of Moment, Perbankan Islam, Stabilitas Keuangan, Return on Assets, Z Score   REFERENCES Abbas, F., Iqbal, S., & Aziz, B. (2019). The impact of bank capital, bank liquidity and credit risk on profitability in postcrisis period:"Ž A comparative study of US and Asia. Cogent Economics and Finance, 7(1).doi:10.1080/23322039.2019.1605683 Aliyu, S., & Yusof, R. M. (2016). 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Analysis of impact of CAR, NPF, BOPO on profitability of Islamic banks (year 2015-2017). Journal of Islamic Economic Laws, 2(1), 30–59.doi:10.23917/jisel.v2i1.6370 Lubis, K. A. (2013). Penerapan generalized method of moments pada persamaan simultan panel dinamis untuk pemodelan pertumbuhan ekonomi di Indonesia. Unpublished thesis. Institute Teknologi Sepuluh November. Thamrin, Liviawati, & Rita Wiyati. (2011). Analisis perbandingan kinerja keuangan bank umum sayriah dan bank umum konvensional serta pengaruhnya terhadap keputusan investasi. Pekbis Jurnal, 3(1), 406–412.doi:10.31258/pekbis.3.01.%p Maritsa, F. H. N., & Widarjono, A. (2021). Indonesian islamic banks and financial stability: An empirical analysis. Jurnal Ekonomi Dan Bisnis, 5(1), 71–87.doi:10.14421/EkBis.2021.5.1.1279 Pravasanti, Y. A. (2018). Pengaruh NPF dan FDR terhadap CAR dan dampaknya terhadap ROA pada perbankan syariah di Indonesia. 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Determinants of bank's profitability: Role of poor asset quality in Asia. China Finance Review International, 8(2), 216–231.doi:10.1108/CFRI-10-2016-0118 Suryani. (2012). Analisis pengaruh financing to deposit ratio (FDR) terhadap profitabilitas perbankan syariah di Indonesia (rasio keuangan pada BUS dan UUS Periode 2008-2010). Economica: Jurnal Ekonomi Islam, 2(2), 153–170.doi:10.21580/economica.2012.2.2.854 Tahliani, H. (2020). Tantangan perbankan syariah dalam menghadapi pandemi Covid-19. Madani Syari'ah, 3(2), 92–113.doi:10.51476/madanisyari'ah.v3i2.205 Taurif, M., Otok, B. W., & Latra, I. N. (2014). Estimation of generalized method of moment in logistic regression model. Proceeding of Seminar Nasional Matematika, Universitas Jember:19 November. Page 167–174. Widarjono, A. (2020). Stability of islamic banks in Indonesia: Autoregressive distributed lag approach. Jurnal Keuangan dan Perbankan, 24(1), 40–52.doi:10.26905/jkdp.v24i1.3932 Widarjono, A., Mifrahi, M. N., & Perdana, A. R. A. (2020). Determinants of Indonesian islamic rural banks' profitability: Collusive or non-collusive behavior?. Journal of Asian Finance, Economics and Business, 7(11), 657–668.doi:10.13106/jafeb.2020.vol7.no11.657 Youssef, A. H., El-Sheikh, A. A., & Abonazel, M. R. (2014). Improving the efficiency of GMM estimators for dynamic panel models. Far East Journal of Theoretical Statistics ,47(2),171-189. Zarrouk, H., Ben Jedidia, K., & Moualhi, M. (2016). Is islamic bank profitability driven by same forces as conventional banks?. International Journal of Islamic and Middle Eastern Finance and Management, 9(1), 46–66.doi:10.1108/IMEFM-12-2014-0120  
Profit-Loss Sharing Financing and Stability of Indonesian Islamic Banking Agus Widarjono; Zhafira Mardhiyah
International Journal of Islamic Business and Economics (IJIBEC) Vol. 6 No. 1 (2022): IJIBEC VOL. 6 NO. 1 JUNE 2022
Publisher : Faculty of Islamic Economics and Business of UIN K.H. Abdurrahman Wahid Pekalongan

Show Abstract | Download Original | Original Source | Check in Google Scholar | Full PDF (357.405 KB) | DOI: 10.28918/ijibec.v6i1.4196

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The study analyzes the extent to which Profit-Loss Sharing (PLS) financings with some control variables influence the stability of Islamic banks. Because of different scheme financings between Musharakah and Mudarabah, we also split them. This study measures stability utilizing Z-score. We employ the Autoregressive distributed lag (ARDL) model using monthly aggregate data of Islamic banks, covering from 2010:M1 to 2019:M12. This study is among studies who are pioneer in analyzing the role of PLS financing on stability. The findings shows that the PLS financings strengthen Islamic banks' stability for which Musharakah financing enhances the stability but Mudarabah financing weakens stability. Evidence also underlines that bank capital adequacy ratio (CAR) support stability but non-performing financing (NPF) and inefficiency lower stability. Macroeconomic conditions persistently support stability for which economic upturn fortifies stability but sharp depreciation weakens stability. This study implies that, in addition to Murabahah, Islamic banks have to diversify their financing on Musharakah.
PLS Financing and Stability of Indonesian Islamic Banking agus widarjono
International Journal of Islamic Business and Economics (IJIBEC) Vol 6 No 1 (2022): Volume 6 Nomor 1 Tahun 2022
Publisher : FEBI UIN K.H. Abdurrahman Wahid Pekalongan

Show Abstract | Download Original | Original Source | Check in Google Scholar

Abstract

Islamic banks are prohibited from using interest rates in any transaction, including financing. Instead, Islamic banks apply a profit-loss sharing (PLS) and non-PLS contract system. PLS financing consists of Musyarakah and Mudharabah. Our study analyzes the extent to which PLS financings with some control variables influence the stability of Islamic banks. This study measures stability utilizing Z-score. We employ the Autoregressive distributed lag (ARDL) model using monthly aggregate data of Islamic banks, covering from 2010:M1 to 2019:M12. According to the bound testing approach, the long-run relationship between dependent and explanatory variables is found. The PLS financings strengthen Islamic banks' stability for which Musyarakah financing enhances the stability but Mudharabah financing weakens stability. Evidence also underlines that bank characteristics such as CAR and efficiency affect stability. High CAR boosts stability but low efficiency deteriorates stability. More importantly, macroeconomic conditions persistently support stability for which economic upturn fortifies stability but sharp depreciation weakens stability.
Effect of Stability and Funding Risk on Shariah Rural Bank's Profitability Dyah Widhowaty Eko Purnomo Putri; Agus Widarjono
Jurnal Ekonomi Syariah Teori dan Terapan Vol. 10 No. 6 (2023): November-2023
Publisher : Universitas Airlangga

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.20473/vol10iss20236pp620-631

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ABSTRACT This study examined the effect of stability and funding risk, as well as bank-specific factors and macroeconomic variables, on Shariah Rural Bank's margin. We investigated 83 Shariah Rural Banks (SRBs) on the island of Java from 2017 to 2021 with quarterly data. We employed the dynamic panel data regression with the two-step system GMM method. Our study also splits SRBs into large and small SRBs. Our findings show that the stability and funding risk positively influence the margin. The CAR positively influences the margin but assets, CIR, and NPF are negatively associated with the margin. However, stability and funding risk can increase margin only for large SRBs. Our results imply that SRBs should increase their equity and mobilize their third party to improve their margin. In addition, SRBs should improve their operating efficiency and manage low financing risk. This research contributed to Islamic banking literature by including stability and funding risk in influencing margins. Keywords: Stability, funding risk, bank-specific variable, Margin, Shariah rural banks   ABSTRAK Penelitian ini menganalisis pengaruh stabilitas dan resiko pendanaan serta faktor spesifik bank dan kondisi makroekonomi terhadap margin dari Bank Pembiayaan Rakyat Shariah (BPRS). Studi ini menganalisis BPRS di Jawa yang berjumlah 83 bank pada 2017-2021 dengan data kuartalan. Metode estimasi adalah regresi panel dinamis dengan metode two-step system GMM. Selanjutnya, studi ini membagi BPRS menjadi BPRS besar dan kecil. Hasilnya menunjukkan bahwa stabilitas dan resiko pendanaan berpengaruh positif terhadap margin. CAR berpengaruh positif sedangkan asset, CIR, dan NPF berpengaruh negatif terhadap margin. Namun, stabilitas dan resiko pendanaan berpengaruh terhadap margin hanya pada BPRS besar. Implikasinya, BPRS harus meningkatkan permodalan dan memobilisasi deposito supaya meningkatkan margin serta BPRS harus memperbaiki efisiensi dan mengurangi pembiayaan macet. Kontribusi penelitian adalah penggunaan variabel stabiltias dan resiko pendanaan di dalam mempengaruhi margin. Kata kunci: Stabilitas, Resiko pendanaan, Bank spesifik, Margin, BPRS.