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The impact of Islamic bank financing on business

Author

Listed:
  • Sri Herianingrum

    (Airlangga University, Indonesia)

  • Ririn Tri Ratnasari

    (Airlangga University, Indonesia)

  • Tika Widiastuti

    (Airlangga University, Indonesia)

  • Imron Mawardi

    (Airlangga University, Indonesia)

  • Rachmi Cahya Amalia

    (Airlangga University, Indonesia)

  • Hanif Fadhlillah

    (Airlangga University, Indonesia)

Abstract

From the test results concluded that the Local Number Index (LNI) variable (business tendency index) affects Local Number Portability (LNP) variable (Islamic bank financing). The LNP variable (Islamic bank financing) does not affect this variable (business tendency index). So, there is one-way causality from the LNI (business tendency index) to LNP (Islamic bank financing). Other statistical test results showed that there is a long-term relationship between Islamic bank financing and business tendency. This is clarified by the results obtained from Johansen cointegration test. The result of cointegration test in this research is there is long-term relationship between syariah bank financing and business tendency. From the test results can be seen that the trace statistic is greater than the critical value of 5%. So in the long term, Islamic financing variables and business tendencies will affect each other. This shows that the financing of sharia banks whose allocation of financing is directed to the real sector, even forbidden to finance riba investments and speculation, will drive the business nationally, and vice versa, business that runs well and smoothly, will contribute to the development of Islamic banking performance.

Suggested Citation

  • Sri Herianingrum & Ririn Tri Ratnasari & Tika Widiastuti & Imron Mawardi & Rachmi Cahya Amalia & Hanif Fadhlillah, 2019. "The impact of Islamic bank financing on business," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(1), pages 133-145, September.
    • Handle: RePEc:ssi:jouesi:v:7:y:2019:i:1:p:133-145
    DOI: 10.9770/jesi.2019.7.1(11)
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    Cited by:

    1. Natalia Konovalova & Aina Caplinska, 2021. "Financial Resources Management in Commercial Banks: Evidence From Latvia," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(1), pages 369-387, January.

    More about this item

    Keywords

    business tendency; conventional banks; Islamic banks; Islamic Bank financing; Johansen Cointegration test;
    All these keywords.

    JEL classification:

    • Z23 - Other Special Topics - - Sports Economics - - - Finance
    • Z29 - Other Special Topics - - Sports Economics - - - Other

    Statistics

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