Oil Price Volatility, Macroeconomic and Islamic Banking Investments: Evidence in Indonesia

Irfan  Nurfalah

doi:10.58968/iem.v3i2.563

Authors

Irfan Nurfalah SMART Indonesia

DOI:

https://doi.org/10.58968/iem.v3i2.563

Keywords:

Oil Price Volatility, Macroeconomic, Islamic Banking, VECM

Abstract

Oil price volatility refers to fluctuations in oil prices over time due to changes in supply, demand, geopolitical events, market speculation, and other factors. High volatility can have widespread economic implications, particularly for oil-dependent economies and industries. The unpredictable volatility of world crude oil prices has caused the world economy to be in uncertainty and disrupt economic stability. The drastic and rapid movement of world crude oil prices will also affect the macroeconomy and microeconomy in each country. The objectives of the study are: Understand the effect of world crude oil prices, FDI and GDP on Islamic banking investment in Indonesia. The results show that the world crude oil price of Brent oil significantly affects the growth of Islamic Investment Bank in Indonesia. The negative coefficient indicates that an increase in the world price of crude oil brent oil can reduce the growth rate of Islamic Investment Bank in Indonesia.

Downloads

Download data is not yet available.

References

Ascarya, A. (2012). Transmission channel and effectiveness of dual monetary policy in Indonesia. Bulletin of Monetary Economics and Banking, 14(3), 269-298.

Balcilar, M., Hammoudeh, S., & Toparli, E. A. (2018). On the risk spillover across the oil market, stock market, and the oil related CDS sectors: A volatility impulse response approach. Energy economics, 74, 813-827.

Furqani, H. and Mulyany, R. (2009), Islamic banking and economic growth: empirical evidence from Malaysia, Journal of Economic Cooperation and Development, 30(2), 59-74.

Gujarati, D. N. (2009). Basic econometrics.

Hesse, H., & Poghosyan, T. (2016). Oil prices and bank profitability: Evidence from major oil-exporting countries in the Middle East and North Africa (pp. 247-270). Palgrave Macmillan US.

Jones, D. W., Leiby, P. N., & Paik, I. K. (2004). Oil price shocks and the macroeconomy: what has been learned since 1996. The Energy Journal, 25(2), 1-32.

Majid, S.A. and Kassim, S. (2010), “Islamic finance and economic growth: the Malaysian experience”, paper presented at Kuala Lumpur Islamic Finance Forum, Kuala Lumpur, 2-5 August.

Nurfalah, I., Rusydiana, A. S., Laila, N., & Cahyono, E. F. (2018). Early warning to banking crises in the dual financial system in Indonesia: The markov switching approach. Journal of King Abdulaziz University: Islamic Econ., 31(2), 133-156.

Rusydiana, A. S. (2009). Hubungan antara perdagangan internasional, pertumbuhan ekonomi dan perkembangan industri keuangan syariah di Indonesia. Tazkia Islamic Finance and Business Review, 4(1).

Tabash, M.I. (2018), Islamic financial investments and economic growth evidence from emerging economy, United Arab Emirates. International Journal of Economics and Business Research, 15(1), 125-139.

Tabash, M. I., & Khan, S. H. (2018). The impact of oil price volatility, gross domestic product, foreign direct investment on Islamic banking investments: An empirical evidence of the United Arab Emirates. International Journal of Energy Economics and Policy, 8(5), 306-312.

Tabash, M.I., Anagreh, S. (2017), Do Islamic banks contribute to growth of the economy? Evidence from United Arab Emirates(UAE). Banks and Bank Systems, 12(1-1), 113-118.

Tabash, M.I., Dhankar, R. (2014), Islamic banking and economic growth: An empirical evidence from Qatar. Journal of Applied Economics and Business, 2(1), 51-67.

Tabash, M.I., Dhankar, R.S. (2014), The flow of Islamic finance and economic growth: An empirical evidence of Middle East. Journal of Finance and Accounting, 2(1), 11-19.

Tajgardoon, G., Noormohamadi, K., Behname, M. (2012), Foreign direct investment and Islamic banking: Agranger causality test. Economics and Finance Review, 2(5), 08-13.

Yahya, A.T., Akhtar, A., Tabash, M.I. (2017), The impact of political instability, macroeconomic and bank-specific factors on the profitability of Islamic banks : Empirical evidence. Investment Management and Financial Innovations, 14(4), 30-39.