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The determinant of equity financing in sharia banking and sharia business units

Author

Listed:
  • Jaenal Effendi
  • Syifa Kamilia
  • Mustica Bintang Sabiti
  • Tita Nursyamsiah

    (Bogor Agricultural University, Bogor, Indonesia
    Bogor Agricultural University, Bogor, Indonesia
    Bogor Agricultural University, Bogor, Indonesia
    Bogor Agricultural University, Bogor, Indonesia)

Abstract

Equity financing plays an important role in mobilizing financing in the real sector. The core business of sharia banking is based on the real sector, but the financing portion in sharia banking is still dominated by debt financing. This study aims to analyze the factors that affect equity financing in General Sharia Bank (BUS) and Sharia Business Unit (SBU) in Indonesia. This study uses Error Correction Model. The results show that in the long- term model of Third Party Fund (DPK), Finance to Deposit Ratio (FDR), Non-Performing Financing (NPF), Inflation and Interest Rates Credit of Conventional Bank (SBK) has a significant positive effect on equity financing. BOPO variables (Operating Cost Ratio to the Operating Income) and Return on Assets (ROA) have a positive but not significant effect on equity financing. The DPK and FDR variables have a positive and significant effect on equity financing on the short-term model.

Suggested Citation

  • Jaenal Effendi & Syifa Kamilia & Mustica Bintang Sabiti & Tita Nursyamsiah, 2018. "The determinant of equity financing in sharia banking and sharia business units," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 10(1), pages 111-120, April.
    • Handle: RePEc:uii:journl:v:10:y:2018:i:1:p:111-120
    DOI: 10.20885/ejem.vol10.iss1.art12
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    References listed on IDEAS

    as
    1. Mohamed Ariff & Munawar Iqbal (ed.), 2011. "The Foundations of Islamic Banking," Books, Edward Elgar Publishing, number 14217.
    2. Chong, Beng Soon & Liu, Ming-Hua, 2009. "Islamic banking: Interest-free or interest-based?," Pacific-Basin Finance Journal, Elsevier, vol. 17(1), pages 125-144, January.
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    More about this item

    Keywords

    Sharia Banking; Sharia Business Unit; Equity Financing; ECM;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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