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TOWARD OPTIMUM SYNERGY OF MONETARY POLICY IN DUAL FINANCIAL/BANKING SYSTEM Ascarya, Ascarya
Journal of Indonesian Economy and Business Vol 24, No 1 (2009): January
Publisher : Journal of Indonesian Economy and Business

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In a country adopting dual financial/banking system, where a conventional financialÂ system coexists with an Islamic financial system, monetary authority has the responsibilityÂ to maintain financial/monetary stability and synergy of both systems. This study analysesÂ and compares one of the main pillars of conventional monetary system and IslamicÂ monetary system (i.e., interest system vs. profit-and-loss sharing/PLS system) and try toÂ come up with the possible conduct of optimum monetary policy under dualÂ financial/banking system. The results show that PLS system is superior to interest systemÂ in fairness, justice, efficiency, and stability. Therefore, the optimum synergy in the dualÂ financial/banking system can be achieved when monetary policy in conventional systembenchmarks its policy rate to the PLS market return in Islamic financial market of IslamicÂ system, which will ensure optimum market efficiency that maximize distributive socialÂ welfare and justice. Monetary policy in managing money supply is only a response to thedynamic activity in the real sector. While, active monetary policy can be conducted, not byÂ altering M, but by altering V, i.e. to increase the flow of money in the economy by issuingÂ central bank SUKUK with PLS market return to finance government projects,Â commercially as well as socially, in the real sector.Keywords: Islamic Monetary System, Islamic Financial System, Dual Banking FinancialÂ System

TOWARD OPTIMUM SYNERGY OF MONETARY POLICY IN DUAL FINANCIAL/BANKING SYSTEM Ascarya Ascarya
Journal of Indonesian Economy and Business (JIEB) Vol 24, No 1 (2009): January
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

In a country adopting dual financial/banking system, where a conventional financial system coexists with an Islamic financial system, monetary authority has the responsibility to maintain financial/monetary stability and synergy of both systems. This study analyses and compares one of the main pillars of conventional monetary system and Islamic monetary system (i.e., interest system vs. profit-and-loss sharing/PLS system) and try to come up with the possible conduct of optimum monetary policy under dual financial/banking system. The results show that PLS system is superior to interest system in fairness, justice, efficiency, and stability. Therefore, the optimum synergy in the dual financial/banking system can be achieved when monetary policy in conventional systembenchmarks its policy rate to the PLS market return in Islamic financial market of Islamic system, which will ensure optimum market efficiency that maximize distributive social welfare and justice. Monetary policy in managing money supply is only a response to thedynamic activity in the real sector. While, active monetary policy can be conducted, not by altering M, but by altering V, i.e. to increase the flow of money in the economy by issuing central bank SUKUK with PLS market return to finance government projects, commercially as well as socially, in the real sector.Keywords: Islamic Monetary System, Islamic Financial System, Dual Banking Financial System

MENCARI SOLUSI RENDAHNYA PEMBIAYAAN BAGI HASIL DI PERBANKAN SYARIAH INDONESIA Ascarya Ascarya; Diana Yumanita
Buletin Ekonomi Moneter dan Perbankan Vol 8 No 1 (2005)
Publisher : Bank Indonesia

The lack of the profit and loss sharing (PLS) financing or the domination of the Non-PLS financing, especially murabahah, is a global phenomenon in Islamic banks everywhere. This paper analyses the problem in Indonesia using Analytic Network Process (ANP) methodology, preceeded with a focus group discussion (FGD) and an indepth interview with scholars and practitioners of Islamic banking to fully understand the problem and to develop an appropriate ANP network.The cause of this problem can be grouped into four aspects, namely 1) internal of the Islamic bank; 2) customer; 3) regulation; and 4) government and other institutions. This research finds that the cause of the lack of PLS financing of Islamic banks in Indonesia can be summed up into two main causes from internal and regulation aspects, namely the lack of understanding and quality of human resource (Islamic bankers) and the lack of supportive regulations. The suggested solution is to increase the understanding and the quality of human resource by setting the minimum budget for training and education, implementing the insentive or subsidy system, setting the minimum standard for managers of Islamic banks through periodical fit and proper test, conducting training for short term needs, and encouraging the establishment of Islamic economic and banking education institutions for long term needs. Other suggested solution is to give support through regulation by reviewing the non supporting regulation, such as the collectibility classification of PLS financing, and developing incentive system to increase PLS financing. Moreover, the most effective policy strategy to overcome the problems of Islamic banks is by implementing directed market driven strategy, where policies are intended to direct the development of Islamic banks to stay on its syariahtracks towards the desired development goals.JEL: C49, E58, G21, L22Keywords: ANP, Bank Syariah, Islamic Bank, Bagi Hasil, Profit and Loss Sharing

THE ROOT CAUSES OF FINANCIAL CRISIS IN ISLAMIC ECONOMIC PERSPECTIVE Ascarya, Ascarya
Jurnal Ekonomi Islam Vol 8 No 02 (2017): November, 2017
Publisher : Universitas Muhammadiyah Prof Dr Hamka

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The ongoing global financial crisis is just a repeat of financial crises which have occurred one after another since the England crisis in 1825. The crises have subsided in the period under Bretton Woods Agreements (BWA) in 1950-1972, with the implementation of the gold standard. The crises have reemerged with the collapse of BWA in 1971, and up to 2011, there are 421 financial crises covering 147 banking crises, 218 currency crises (10 episodes in 2008-2011), and 66 sovereign debt crisis, including 68 twin crises and 8 triplet crises (Laeven and Valencia, 2012). These repeated man-made financial crises happened due to the transgressions of God?s laws in financial dealings, especially in the abandonment of main pillars of Islamic financial system, namely prohibition of rib? (usury or interest), prohibition of maysir (game of chance or speculation) and prohibition of gharar (excessive uncertainty), in their many forms, as well as due to misbehaviors of economic actors, poor governance and unsustainable fiscal system. This study applies Analytic Network Process (ANP) to determine the main root causes of the financial crisis from Islamic economic perspective which are grouped into five clusters, namely: Misbehavior, External Factor, Poor Governance, Unstable Monetary System and Unsustainable Fiscal System. Each cluster will have six relevant elements obtained from literature and in-depth interviews with several experts. The ANP results show that the main root causes of financial crisis from Islamic economic perspective are Social Instability (External Factor), Speculation (Misbehavior), Ineffective Fiscal System (Unsustainable Fiscal System), Hedonism (Misbehavior), Fractional Reserve Banking System (Unstable Monetary System), Political Instability (External Factor), Corruption (Poor Governance), Interest Rate (Unstable Monetary System), Fiat Money (Unstable Monetary System), and Wrong Man in the Wrong Place (Poor Governance). These main root causes should be removed gradually in order to systematically and gradually improve the stability of financial system so that financial crisis will not reappear again and again in the future.

COMPARISON AND PREDICTING FINANCIAL PERFORMANCE OF ISLAMIC AND CONVENTIONAL BANKS IN INDONESIA TO ACHIEVE GROWTH SUSTAINABILITY Fakhri, Ulumuddin Nurul; Anwar, Saiful; Ismal, Rifki; Ascarya, Ascarya
al-Uqud : Journal of Islamic Economics Vol 3, No 2 (2019): July
Publisher : Universitas Negeri Surabaya

Islamic banking fall on stagnation of financial performance in 2011 after successfully overcoming the financial crisis in 1998 and 2008, as though the Islamic banking sector had only run in place and had no clear purpose in developing the Islamic finance business. The purpose of this study is to clarify the variables that predispose financial performance, as well as predict the decrease and increase of financial performance. This study uses an Artificial Neural Network (ANN) model to find out the variables that affect financial performance and predict the decrease and increase of financial performance of sharia and conventional banking for the next five months. This research generates the variables which affect the financial performance of sharia banking and the prediction of financial performance over the next five months. The variables which affect the level of financial performance of sharia banking affected dominantly by inflation, although the results of conventional banking are the same but not too significant. This shows that sharia banking CBGB (Commercial Bank â€“ Group of Business) 2 is very vulnerable with macroeconomic factors compared with conventional banking. ANN predictions produce an average of 80% success in predicting performance over the next five months.

LESSONS LEARNED FROM REPEATED FINANCIAL CRISES: AN ISLAMIC ECONOMIC PERSPECTIVE Ascarya Ascarya
Buletin Ekonomi Moneter dan Perbankan Vol 12 No 1 (2009)
Publisher : Bank Indonesia

Financial crises have been repeated again and again over a long period of time since the demise of gold regime in 1915, have been temporarily subsided in the period under Bretton Woods Agreement with gold standard in 1950-1972, and have been reemerged after the collapse of Bretton Woods Agreement with higher frequency and magnitude. The recent subprime mortgage crisis in the US has spread out throughout the world threatening global meltdown. It seems that the conventional world have not really learned the lessons and have handled the crisis only partially in the symptoms without touching the root cause of the crisis. This study tries to determine the anatomy and root causes of the crisis and layout strategies to cure it using analytic descriptive and quantitative approaches under Islamic perspectives.The study concludes that the root causes of the crisis from Islamic economic perspective can be human error and natural phenomenon uncontrollable by human. Human error can be divided into three groups, namely (1) moral decadences that trigger (2) system or conceptual flaws and (3) internal weaknesses. Conceptual system flaws include 1) excess money supply from seigniorage, fractional reserve banking system, credit card and derivatives; 2) Speculation; 3) interest system; 4) international monetary system; and 5) real and monetary sectors decoupling.Empirical results show that riba rooted causes of financial crises (excess money supply 2.8%, interest rate 45.2%, and exchange rate 18.6%) give 66.6% share to financial crises in Indonesia, while if we substitute these three systems according to Islamic perspective (just money supply 0.7%, PLS return 2.5%, and single global currency 0.2%) will give only 3.4% share to financial crises in Indonesia, or a massive reduction of 63.2%.JEL Classification: E44, E51, G21Keywords: Financial Crisis, Fiat Money, Fractional Reserve, Interest, Speculation, Narrow Banking, Profit-and-Loss Sharing, Single Global Currency.

Cash Waqf Models of Baitul Maal wat Tamwil in Indonesia Ascarya Ascarya; Siti Rahmawati; Raditya Sukmana
Al-Awqaf: Jurnal Wakaf dan Ekonomi Islam Vol 10 No Special (2017): Al-Awqaf: Jurnal Wakaf dan Ekonomi Islam
Publisher : Badan Wakaf Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.47411/al-awqaf.v10iSpecial.51

Cash waqf is one type of contemporary waqf which has been widely applied by waqf institutions and Islamic financial institutions in Muslim majority countries as well as in Muslim minority countries. This study is intended to identify and analyze the cash waqf model applied by three Baitul Maal wat Tamwil (BMT) as certified Nazhir with their unique characteristics, not only to achieve triple bottom-line (outreach, sustainability and welfare impact), strengthen its role as the agent of holistic financial inclusion (HFI) and develop micro enterprises (MEs), but also to improve its social programs, to improve its stability as well as to contribute to financial system stability. The results show that managing cash waqf (direct and indirect) will benefit not only final mauquf alaih (beneficiaries of BMT’s social programs), but also intermediate mauquf alaih (BMT and its MEs members). BMT would benefit from the placement of cash waqf funds in its waqf equity and investment deposit accounts, not only as source of fund, but also provides better liquidity risk and reduce mismatch, which in the long run would improve BMT stability and its resilience to external shock. BMT members and MEs would benefit from cheaper cost of micro-financing. Final mauquf alaih would benefit from more variety and better quality social programs. To improve the participation of BMTs in managing cash waqf, BMT should be authorized and encouraged, with incentives and necessary regulations, to independently manage its own cash waqf collected. Moreover, the determinants of BMT soundness should not only include its Baitut Tamwil performance, but also include its Baitul Maal performance. JEL Classification: D60, G210 Keywords: Waqf, Cash Waqf, Baitul Maal wat Tamwil

COMPARING THE EFFICIENCY OF ISLAMIC BANKS IN MALAYSIA AND INDONESIA Ascarya Ascarya; Diana Yumanita
Buletin Ekonomi Moneter dan Perbankan Vol 11 No 2 (2008)
Publisher : Bank Indonesia

This study measures and compares the efficiency of Islamic banks in Malaysia and Indonesia using Data Envelopment Analysis (DEA), which is a non-parametric and deterministic methodology for determining the relative efficiency. The intermediation approach will be applied.This study identifies the sources and the level of inefficiency of the inputs and outputs. The results show that the Islamic banking in Indonesia is more efficient than the one in Malaysia in all three measurements; the technical, the scale, and the overall efficiency. Technically, financing is one of the sources of inefficiency in Malaysia, while human resource is one of the sources of inefficiency in Indonesia.Islamic windows should be encouraged to convert to subsidiaries or Islamic full branches to improve the scale and the overall efficiencies in Malaysia. Furthermore, the accelerated expansion both organically and inorganically is needed to improve the scale and the overall efficiencies of the Islamic banking in Indonesia.JEL Classification: C14, G21, G28Keywords: Islamic banking, performance, efficiency, Data Envelopment Analysis (DEA).

ANALISIS PENGARUH SOCIAL VALUES TERHADAP JUMLAH PERMINTAAN UANG ISLAM DI INDONESIA Ebrinda Daisy Gustiani; Ascarya Ascarya; Jaenal Effendi
Buletin Ekonomi Moneter dan Perbankan Vol 12 No 4 (2010)
Publisher : Bank Indonesia

Sebagai salah satu instrumen yang ada dalam sistem ekonomi Islam, zakat menjadi penting untuk diteliti pengaruhnya dalam formulasi kebijakan moneter di Indonesia, terutama berhubungan dengan jumlah uang. Selama ini masih belum ada seseorang yang membuktikan secara empiris pengaruh zakat sebagai salah satu instrumen dalam kebijakan moneter, terutama jumlah uang di Indonesia. Oleh karena itu, perlu dibuktikan apakah zakat sebagai salah satu yang merupakan variabel social values dalam pemikiran Umer Chapra berpengaruh dalam jumlah permintaan uang Islam di Indonesia. Data yang digunakan dalam penelitian ini seluruhnya merupakan data sekunder dalam series bulanan berawal dari Januari 2001 sampai dengan Desember 2007. Metode yang digunakan dalam penelitian ini adalah metode Vector Autoregression (VAR) yang dilanjutkan dengan metode Vector Error Correction Model (VECM) jika terdapat kointegrasi dengan bantuan software Eviews 4.1. dan Microsoft Excel 2003. Secara umum kita dapat melihat hubungan pada jangka panjang hanya pada model permintaan tabungan mudharabah dan deposito mudharabah saja. GDP berpengaruh signifikan untuk setiap model permintaan uang (kecuali pada giro wadi’ah) karena baik pada sistem syariah maupun konvensional, jika masyarakat lebih sejahtera maka asumsinya permintaan uang akan meningkat. Untuk variabel social values dan return syariah pada beberapa model pengaruhnya negatif dikarenakan sistem syariah masih di dominasi oleh sistem konvensional. Hal ini disebabkan karena faktor uang kartal, conspicious consumption dan social values itu sendiri. RS tidak signifikan pada beberapa model persamaan dapat dijelaskan dengan melihat opportunity cost dari memegang uang. Untuk saat ini karena beberapa alasan sebelumnya variabel social values belum begitu terlihat pengaruhnya terhadap jumlah permintaan uang di Indonesia.JEL Classification: JEL Classification: C32, E41, P52Keywords: Money demand, social values, Islam, VAR/VECM

PELAJARAN YANG DIPETIK DARI KRISIS KEUANGAN BERULANG: PERSPEKTIF EKONOMI ISLAM Ascarya Ascarya
Buletin Ekonomi Moneter dan Perbankan Vol 12 No 1 (2009)
Publisher : Bank Indonesia

Financial crises have been repeated again and again over a long period of time since the demise of gold regime in 1915, have been temporarily subsided in the period under Bretton Woods Agreement with gold standard in 1950-1972, and have been reemerged after the collapse of Bretton Woods Agreement with higher frequency and magnitude. The recent subprime mortgage crisis in the US has spread out throughout the world threatening global meltdown. It seems that the conventional world have not really learned the lessons and have handled the crisis only partially in the symptoms without touching the root cause of the crisis. This study tries to determine the anatomy and root causes of the crisis and layout strategies to cure it using analytic descriptive and quantitative approaches under Islamic perspectives.The study concludes that the root causes of the crisis from Islamic economic perspective can be human error and natural phenomenon uncontrollable by human. Human error can be divided into three groups, namely (1) moral decadences that trigger (2) system or conceptual flaws and (3) internal weaknesses. Conceptual system flaws include 1) excess money supply from seigniorage, fractional reserve banking system, credit card and derivatives; 2) Speculation; 3) interest system; 4) international monetary system; and 5) real and monetary sectors decoupling.Empirical results show that riba rooted causes of financial crises (excess money supply 2.8%, interest rate 45.2%, and exchange rate 18.6%) give 66.6% share to financial crises in Indonesia, while if we substitute these three systems according to Islamic perspective (just money supply 0.7%, PLS return 2.5%, and single global currency 0.2%) will give only 3.4% share to financial crises in Indonesia, or a massive reduction of 63.2%.JEL Classification: E44, E51, G21Keywords: Financial Crisis, Fiat Money, Fractional Reserve, Interest, Speculation, Narrow Banking, Profit-and-Loss Sharing, Single Global Currency.

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