Macro Economic Factors Cause Problems Financing

Macro Economic Factors Cause Problems Financing – The rapid growth of the Islamic banking industry is influenced by the current economic conditions and the factors that influence its development. Sharia Commercial Bank (BUS) is a sharia bank that has a role as a service provider in payment traffic. The bank is a financial intermediary institution.

Funds that have been collected from third parties will be channeled to finance people who need funds. Financing is one of the banking functions in distributing funds from parties who have more funds to support other parties who need investment. The amount of disbursement of funds in the form of financing that continues to increase than the existing deposit in the BUS will lead to the consequence of increasing the risk that the bank itself must bear.

One of the risks experienced by BUS is the risk of non-performing or non-performing financing as reflected in the Non-Performing Financing (NPF) ratio. The occurrence of non-performing financing or NPF has a long-term impact on the Islamic banking industry. The failure to achieve one of the main functions of Islamic banks, namely the lack of maximum financing for people who need funds for consumptive and productive activities.

So that Islamic banks will find it difficult to develop, operate moderately, and reduce customer confidence so that they can bankrupt. In the following, we will explain the Macro economic Factors that Cause Problem Financing at Islamic Commercial Banks in Indonesia.

Macro economic Factors Cause Problems Financing

Industrial Production Index (IPI)

IPI is an economic indicator that is presented every month to determine the size of real output in industries in the fields of manufacturing, electricity, mining, and gas which is relative to the base year.


Inflation is a continuous increase in the price of an item that occurs widely and can cause other goods to increase in price, not just one or two goods.

Exchange Rate (Exchange Rate)

An exchange rate is the price of one currency measured against another. Some of the things that become exchange rates include the interaction between households, the government, companies, the central bank, and private financial institutions. The exchange rate fluctuates to equalize the quantity of foreign currency demanded and supplied.

Methods and Results

This research uses Error Correction Model (ECM) data analysis technique with independent variables such as IPI, inflation, exchange rate, and SBIS. While the dependent variable is NPF. IPI is a proxy for Gross Domestic Product (GDP).

Among the four external factors, only inflation affects NPF. When inflation increases, the NPF ratio will also increase and vice versa. With increasing inflation, it will reduce people’s purchasing power so that the return that will be received by the company or seller as a debtor will decrease. As a result of this decline in yields, it is difficult for the company to pay for the financing provided by the bank.

Another impact is given when inflation occurs, a decrease in people’s real income, resulting in difficulties in paying obligations to banks because part of the payments has been used for daily needs.

Suggestions that can be given to the government are to better control policies related to inflation because they have an impact on improving non-performing financing in Islamic banking, where these banks are constantly threatened with bankruptcy. The Islamic banking industry is expected to be wiser in placing its liquidity, especially in terms of financing distribution. In addition, they must look closely at the customer portfolio.

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