Open AccessSUKUK AND ISLAMIC BANKING FINANCING : HOW THE IMPACT FOR REAL SECTOR ?
Author(s) -
Budi Trianto,
Masrizal Masrizal
Publication year - 2021
Publication title -
journal of islamic monetary economics and finance
Language(s) - English
Resource type - Journals
eISSN - 2460-6146
pISSN - 2460-6618
DOI - 10.21098/jimf.v7i4.1407
Subject(s) - sukuk , islam , islamic banking , business , islamic finance , finance , financial system , real economy , financial services , economics , monetary economics , geography , archaeology
Indonesia continues to strive to develop Islamic finance especially its Islamic banking and sukuk to support the real sector. The growth of Islamic finance in Indonesia is expected to encourage the development of the national economy. This study aims to investigate the impact of Islamic banking financing and sukuk financing on Indonesia’s industrial output. Applying the Autoregressive Distributed Lags (ARDL) framework to monthly data from January 2011 to December 2018, we find Islamic bank financing to contribute positively to the real sector in both the long and short term. In addition, we also document positive long run contribution of sukuk financing to industrial output . Indeed, over the long run, sukuk financing tends to have a greater real impact than Islamic banking financing. The results of the study implies that Islamic banking and sukuk play a vital role in supporting the real sector in Indonesia. Accordingly, recent initiatives by Indonesia to further develop its Islamic finance are steps in the right direction.