IIMEFC 2019 ANAL YSIS OF UMER CHAPRA THOUGHT ON ISLAMIC MONETARY INSTRUMENTS IN INDONESIA: A VAR/VECM APPROACH Ahlis Fatoni 1 , Faroq Ansori 2 , Mohamad Mahbubi Ali 3 1 International Islamic University Malaysia, ahlisfatoni@gmail.com 2 International Islamic University Malaysia, offjcial.faroq@gmail.com 3 International Institute of Advanced Islamic Studies, mahbub@iais.org.my
IIMEFC 2019 I. INTRODUCTION II. LITERATURE REVIEW III. METHODOLOGY IV. RESUL TS AND ANAL YSIS V. CONCLUSION AND RECOMMENDATION
IIMEFC 2019 I. INTRODUCTION Monetary Policy ? Interest Rate % = Riba ( 1 ) g r o w t h T a r g e t i n M a n d M0 , ( 2 ) t h e s h a r e s o f a p u b l i c r a l l y a g a i n s t d e p o s i t ( mo n e y g i r a l ) , ( 3 ) t h e o ffjc i a l ma n d a t o r y R e s e r v e s , ( 4 ) c r e d i t r e s t r i c t i o n s , ( 5 ) t h e a l l o c a t i o n o f c r e d i t t o t h e v a l u e - M. U me r C h a p r a o r i e n t e d , ( 6 ) t h e d w a r f t h e o t h e r s .
IIMEFC 2019 II. LITERATURE REVIEW The focus of Islamic monetary policy is more focused on maintaining the rotation of economic resources, which is the core of the Islamic economy in all forms of policies and provisions permitted by sharia.
IIMEFC 2019 Previous Studies 1. Tittle The Flow of T ransmission and Efgectiveness of Double Monetary Policy in Indonesia Researcher Ascarya (2012) (year) Methodology Granger and VAR Result Monetary policy to "reduce infmation" with the sharia pattern is more efgective than with the conventional pattern. 2 Tittle Monetary Policy Transmission Mechanism under Dual Financial System in Indonesia: Interest-Profjt Channel Researcher Ascarya (2013) (year) Methodology ECM, VECM, and ARDL Result SBIS Islamic policy interest rates are still largely unsatisfjed results, because it is based on juualah and benchmarked to conventional SBI rates policies, so that SBIS must be increased by using a mode (PLS) that refmects back in the real sector, to provide macroeconomic impact and stability price and sustainable economic growth. In addition, low and stable infmation and increased economic growth can be achieved under a dual fjnancial system by increasing the share of the Islamic fjnancial system, particularly Islamic banking.
IIMEFC 2019 3 Tittle Central Bank Islamic Monetary Instrument: a Theoritical Approach Researcher Rifki Ismal (2011) (year) Methodology Qualitatif Result This paper concludes that based on values in Islam, Islamic monetary instruments can contribute to stabilizing the economy. 4 Tittle The Welfare efgects of infmation and fjnancial innovation in a model of economic growth, an Islamic perspective Researcher Abdeel Hamieed M. Bashir(2002) (year) Methodology Qualitatif Result The model demonstrates that the fjxed interest payment ban prohibits monetary policy in the Islamic economy to enhance and innovate alternative fjnancial instruments that do not have a fjxed nominal value and do not hold a fjxed rate of return. 5 Tittle The Islamic gracious monetary instruments: a theoretical approach Researcher Rifki Ismal(2013) (year) Methodology Qualitatif Result Central bank is able to have alternative in Islamic monetary instruments such as qard hasan, waqf, and hibah which it has potential to improve people’s welfare especially for the needy.
IIMEFC 2019 III. METHODOLOGY D a t a T y p e s a n d S o u r c e s Data Variable Period Unit Source (Variable) M0 LNM0 Monthly Index Bank Indonesia Deposit LNDM Monthly Index Bank Money Indonesia Statutory SRR Monthly Index Bank Reserve Indonesia Requireme nts Economic LNEG Monthly Percent Bank Growth Indonesia (IPI) by utilizing VAR/VECM for 2004-2017 Exchange LNEXC Monthly Index Bank Rate Indonesia period, Stability (IDR)
IIMEFC 2019 IV. RESUL TS AND ANAL YSIS D a t a S t a t i o n a r y T e s t , C o i n t e g r a t i o n T e s t , C o r r e l a t i o n T e s t , V A R Mo d e l S t a b i l i t y , O p t i mu m L a g T e s t , C o i n t e g r a t i o n A n a l y s i s T e s t F i g u r e 1 . L N E G V a r i a b l e R e s p o n s e t o L N D M, L N M0 a n d S R R F i g u r e 2 . L N E X C V a r i a b l e R e s p o n s e t o L N M0 , L N D M a n d S R R
IIMEFC 2019 F i g u r e 3 . F E V D o f L N E G F i g u r e 4 . F E V D o f L N E X C
IIMEFC 2019 V. CONCLUSION AND RECOMMENDATION • One contemporary Muslim economist thinker, Umer Chapra, has an idea about the Islamic monetary instrument itself, with the aim of economic growth, exchange rate stability. The instrument variables used are the growth of M and M0, Deposit Money, Statutory Reserve Requirements. • From the results of the IRF of the LNEG variable studied, it was found that the shock that occurred in the LNDM variable was responded negatively by the LNEG variable. This can be interpreted if there is an increase in the amount of demand deposits, then economic growth will have a negative efgect, even though the response given is not too large. Then the shocks that occurred in the LNM0 variable responded positively by LNEG even though the response given was not too large. This means that when there is an increase in M0 growth, economic growth will increase. While shocks that occur in the variable reserve requirement responded positively by LNIPI • From the IRF results of the studied LNEXC variable, it was found that the shock that happened in the LNM0 variable was responded negatively by the LNEXC variable. This can be interpreted if there is an increase in the number of demand deposits, then economic growth will experience a negative trend, even though the response given is not too large. Then the shock that occurs in the LNDM variable is responded negatively by
IIMEFC 2019 • The contribution or share of the infmuence provided by each monetary instrument variable on economic growth, namely the LNM0 variable, ofgers the most signifjcant contribution to economic growth in Indonesia by 7.25%. The next variable that had the most signifjcant contribution after LNM0 was SRR with a contribution of 2.9%. and the last is the LNDM variable which contributed 2.13%. • While the contribution or share of the infmuence provided by each monetary instrument variable on exchange rate stability in Indonesia is the SRR variable of 33.5%. The next variable that has the most signifjcant contribution after the reserve requirement is LNDM with a contribution of 0.8%. and the last is LNM0 variable which contributes 0.6%.
IIMEFC 2019 Wallahu a’lam
Recommend
More recommend
