INTERNET USERS AND MACROECONOMIC FACTORS' IMPACT ON INDONESIA-MALAYSIA ISLAMIC FINANCE INDEX
Downloads
Introduction: The rise of the internet has revolutionized the way businesses operate and people interact globally, without exception, including Islamic finance. This paper aims to investigate whether or not the level of internet users, GDP per capita, exchange rate, labor force, and poverty are the determinants of the increase of the Islamic Finance Index (IFI) in Indonesia and Malaysia.
Methods: This research is a quantitative study that employs a balance panel regression and causality tests for the period 2013 to 2020 quarterly.
Results: It is empirically found that there was a relationship between internet users and other macroeconomic variables on IFI in the long term, which was significant. However, only the labor force and exchange rate have significantly and negatively impacted IFI. While the remaining variables were expected to be positive, poverty uniquely did not contribute to the performance of Islamic finance. Furthermore, the empirical findings portrayed that all determinants influenced the endogenous variable, but not the contrary.
Conclusion and suggestion: By analyzing and delving into the link between internet users, macroeocnomic factors and Islamic finance, this study fills the literature gap which will be a guide for both policymakers and academies to grasp what dominant variables to prioritize for the acceleration of Islamic finance rectification in both Indonesia and Malaysia, aligned with the increasing rate and impact of internet users.
Abidin, I. S. Z., and Haseeb, M. (2018). Malaysia-GCC bilateral trade, macroeconomic indicators and Islamic finance linkages: A gravity model approach. Academy of Accounting and Financial Studies Journal, 22(Specialissue), 1–7.
Elseoud, M. S. A., Yassin, M., and Ali, M. A. M. (2020). Using a panel data approach to determining the key factors of Islamic banks' profitability in Bahrain. Cogent Business & Management, 7(1). https://doi.org/10.1080/23311975.2020.1831754
Adhitama, F., Soediro, A., and Farhan, M. (2022). Unrevaling Sharia Compliance. AKUNTABILITAS, 16(2), 257–278.
Ahmad, M. I. (1989). The Economic Upturn in Malaysia. Southeast Asian Affairs, 236–246.
Al Fathan, R., and Arundina, T. (2019). Finance-growth nexus: Islamic finance development in Indonesia. International Journal of Islamic and Middle Eastern Finance and Management, 12(5), 698–711. https://doi.org/10.1108/IMEFM-09-2018-0285
Ali, H. S., Mukhtar, U., and Maniam, G. S. (2015). Dynamic links between exchange rates and stock prices in Malaysia: An asymmetric cointegration analysis. Journal of Economics and Political Economy, 2(3), 411–417.
Ali, M. M., Devi, A., Furqani, H., and Hamzah, H. (2020). Islamic financial inclusion determinants in Indonesia: an ANP approach. International Journal of Islamic and Middle Eastern Finance and Management, 13(4), 727–747. https://doi.org/10.1108/IMEFM-01-2019-0007
Ali, Q., Maamor, S., Yaacob, H., and Tariq Gill, M. U. (2018). Impact of Macroeconomic Variables on Islamic Banks Profitability. International Journal of Business Ethics and Governance, 1(2), 20–35. https://doi.org/10.51325/ijbeg.v1i2.14
Athari, S. A., and Bahreini, M. (2021). The impact of external governance and regulatory settings on the profitability of Islamic banks: Evidence from Arab markets. International Journal of Finance and Economics, December 2020, 1–24. https://doi.org/10.1002/ijfe.2529
Batorshyna, A., Tokar, V., Kolinets, L., Sybyrka, L., and Almarashdi, O. (2021). The interplay between the global Islamic finance and economic growth of muslim countries. Financial and Credit Activity Problems of Theory and Practice, 3(38), 231–239.
Bhoopathy, G., and Kanagaraj, P. (2023). The Impact of Digital Payments on Consumer Spending Habits. Tuijin Jishu/Journal of Propulsion Technology, 44(4), 5373–5380. https://doi.org/10.52783/TJJPT.V44.I4.1896
Bloom, D. E., and Freeman, R. B. (1986). The effects of rapid population growth on labor supply and employment in developing countries. Population and Development Review, 381–414.
Boukhatem, J., and Moussa, F. Ben. (2018). The effect of Islamic banks on GDP growth: Some evidence from selected MENA countries. Borsa Istanbul Review, 18(3), 231–247.
Budiandru, B., and Yuniarti, S. (2020). Economic Turmoil in Islamic Banking Investment. Etikonomi, 19(2), 271–286.
Butt, H. A., Sadaqat, M., and Shear, F. (2023). Does Islamic financial development foster economic growth? International evidence. Journal of Islamic Accounting and Business Research, 14(6), 1013–1029.
Chadha, P., Gera, R., and Ahuja, V. (2022). Determinants of MSA adoption intentions and usage behaviour of internet savvy and younger consumers: insights from an emerging market. International Journal of Electronic Business, 17(1), 87–107.
Cham, T. (2018). Determinants of Islamic banking growth: an empirical analysis. International Journal of Islamic and Middle Eastern Finance and Management, 11(1), 18–39. https://doi.org/10.1108/IMEFM-01-2017-0023
Chen, J. (2022). Exchange Rate. https://www.investopedia.com/terms/e/exchangerate.asp#:~:text=Key Takeaways-,An exchange rate is a rate at which one currency,of a specific country's currency.
Choudhury, P., Foroughi, C., and Larson, B. (2019). Work-From-Anywhere: The Productivity Effects of Geographic Flexibility. SSRN Electronic Journal. https://doi.org/10.2139/SSRN.3494473
Das, K., Gryseels, M., Sudhir, P., and Tan, K. T. (2016). Unlocking Indonesia ' s digital opportunity (Issue October).
Mangku, D. G. S., Yuliartini, N. P. R., Suastika, I. N., and Wirawan, I. G. M. A. S. (2021). The Personal Data Protection of Internet Users in Indonesia. Journal of Southwest Jiaotong University, 56(1). https://doi.org/10.35741/ISSN.0258-2724.56.1.23
Dewi, S. Y. (2022). The Effect of Exchange Rates and Interest Rates on Sharia Stock Index in Indonesia: Before and During the Covid-19 Pandemic. ITQAN: Journal of Islamic Economics, Management, and Finance, 1(2), 43–52.
Erdoğan, S., Gedikli, A., and í‡evik, E. Ä°. (2020). Volatility spillover effects between Islamic stock markets and exchange rates: Evidence from three emerging countries. Borsa Istanbul Review, 20(4), 322–333. https://doi.org/10.1016/j.bir.2020.04.003
Fernando, J. (2022). Gross Domestic Product (GDP): Formula and How to Use It. https://www.investopedia.com/terms/g/gdp.asp
Fidiantowi, R., and Sukarno, S. (2023). Financing Strategy to Support Required Business Growth (Case Study: XYZ). European Journal of Business and Management Research, 8(2), 103–107.
Hachicha, N., and Ben Amar, A. (2015). Does Islamic bank financing contribute to economic growth? The Malaysian case. International Journal of Islamic and Middle Eastern Finance and Management, 8(3), 349–368.
Hanif, M. (2018). SharÄ«Ê¿ah-compliance ratings of the Islamic financial services industry: a quantitative approach. ISRA International Journal of Islamic Finance, 10(2), 162–184.
He, Y. (2019). The Importance of Artificial Intelligence to Economic Growth. Korean Journal of Artificial Intelligence, 7(1), 17–22. https://doi.org/10.24225/KJAI.2019.7.1.17
Hidayat, K., and Darmadi, D. (2019). Indonesia and two great narratives on Islamic studies. Studia Islamika, 26(1), 201–205.
Ilić, B., Milojević, I., and Miljković, M. (2022). The role of joint stock company in sustainability of capital development. Održivi Razvoj, 4(1), 19–28.
Intan and Alam. (2019). Analysis of Impact of Car , Bopo , Npf on Profitability of Islamic Banks. Journal of Islamic Economic Laws, 2(1), 30–59.
Islamic Finance Development. (2021). Islamic Finance Development Report 2021: Advancing Economies. In Refinitiv: An LSEG Business.
Istan, M., and Fahlevi, M. (2020). The Effect of External and Internal Factors on Financial Performance of Islamic Banking. Jurnal Ekonomi & Studi Pembangunan, 21(1). https://doi.org/10.18196/jesp.21.1.5036
Johar, R. S., and Suhartanto, D. (2019a). The adoption of online internet banking in Islamic banking industry. IOP Conference Series: Materials Science and Engineering, 662(3), 032032.
Juhro, S. M., Narayan, P. K., Iyke, B. N., and Trisnanto, B. (2020a). Is there a role for Islamic finance and R&D in endogenous growth models in the case of Indonesia? Pacific Basin Finance Journal, 62(July 2019), 101297. https://doi.org/10.1016/j.pacfin.2020.101297
Kemp, S. (2022). DIGITAL 2022: MALAYSIA. https://datareportal.com/reports/digital-2022-malaysia
Khairulanam, P. A., Parno, P., Pratiwi, A., and Parlina, T. (2021). Pengaruh Nilai Tukar Rupiah Dan Bi 7 Days Repo Rate Terhadap Indeks Saham Syariah Indonesia (Periode 2016-2019). Borneo Islamic Finance and Economics Journal, 49–66.
Khana, M. M. S., Alheetyb, S. N. Y., and Bardaic, B. (2020). Impact of Human Capital Skills on Corporate Performance: A Case of Islamic Banks in Pakistan. Journal of Islamic Finance, 9(1), 76–88.
Lubis, N., and Febrianty, H. F. (2018). Internet Influencing Economic Growth: What and How Much? A Case Study of Indonesia Using Time Series Data (2001-2016). SSRN Electronic Journal. https://doi.org/10.2139/SSRN.3216419
Maulida, A. Z., and Purnomo, A. (2022). SHARE WAQF: ECONOMIC GROWTH AND POVERTY ALLEVIATION IN INDONESIA. Tasharruf: Journal Economics and Business of Islam, 7(1), 57–77.
Mensi, W., Hammoudeh, S., Tiwari, A. K., and Al-Yahyaee, K. H. (2020). Impact of Islamic banking development and major macroeconomic variables on economic growth for Islamic countries: Evidence from panel smooth transition models. Economic Systems, 44(1), 100739. https://doi.org/10.1016/J.ECOSYS.2019.100739
Muhtianingsih, R., and Amanah, F. (2023). The Importance of Regulation in The Implementation of Islamic Philanthropy. Proceeding of International Conference on Islamic Philantrophy, 1, 160–169.
Mushtaq, S., and Siddiqui, D. A. (2016). Effect of interest rate on economic performance: evidence from Islamic and non-Islamic economies. Financial Innovation, 2, 1–14.
Muthi'ah, R., and Jannah, N. (2022). Analisis Kepatuhan Syariah (Shariah Compliance) Produk Kredit Perumahan Rakyat (KPR) dengan Akad Murabahah pada Bank Sumut Kantor Cabang Syariah Medan. Regress: Journal of Economics & Management, 2(1), 12–20.
Sihotang, M. K., Hasanah, U., and Hayati, I. (2022). Model of Sharia Bank Profitability Determination Factors by Measuring Internal and Externals Variables. Indonesian Interdisciplinary Journal of Sharia Economics (IIJSE), 5(1), 235–251. https://doi.org/10.31538/IIJSE.V5I1.1949
Narayanasamy, K., Rasiah, D., and Tan, T. M. (2011). The adoption and concerns of e-finance in Malaysia. Electronic Commerce Research, 11(4), 383–400. https://doi.org/10.1007/S10660-011-9081-5/METRICS
Nasrat, N., Hamidi, R., Mubashir, A. R., and Safi, S. (2023). Ways to Reduce Poverty in the Economic System of Islam. Integrated Journal for Research in Arts and Humanities, 3, 113–120.
Nastiti, N. D., and Kasri, R. A. (2019). The role of banking regulation in the development of Islamic banking financing in Indonesia. International Journal of Islamic and Middle Eastern Finance and Management, 12(5), 643–662. https://doi.org/10.1108/IMEFM-10-2018-0365
Nawaz, H., Abrar, M., Salman, A., and Bukhari, S. M. H. (2019). Beyond finance: Impact of Islamic finance on economic growth in Pakistan. Economic Journal of Emerging Markets, 8–18.
Naz, S. A., and Gulzar, S. (2023). Islamic financial development & economic growth: the emergence of Islamic financial market in Pakistan. Journal of Islamic Accounting and Business Research, 14(6), 989–1012.
Nisa', M. (2022). The Application of Error Correction Model (ECM) in Assessing the Impact of Exchange, Interest, and Inflation Rates on the Gross Domestic Product of Indonesia. Muslim Business and Economic Review, 1(1). https://doi.org/10.56529/mber.v1i1.31
Oseni, U. A., Adewale, A. A., and Omoola, S. O. (2018). The feasibility of online dispute resolution in the Islamic banking industry in Malaysia: an empirical legal analysis. International Journal of Law and Management, 36(1). https://doi.org/10.1108/IJLMA-06-2016-0057
Othman, A. H. A., Soualhi, Y., and Kassim, S. (2021). Do Islamic Banking Financial Instruments Achieve Equitable Income and Wealth Distribution? Al Qasimia University Journal of Islamic Economics, 1(2), 48–81.
Parewangi, A. M. A., & Iskandar, A. (2020). THE NEXUS OF ISLAMIC FINANCE AND POVERTY. Hitotsubashi Journal of Economics, 61(2), 111–139.
Rahim, N. F., Bakri, M. H., Fianto, B. A., Zainal, N., and Hussein Al Shami, S. A. (2022). Measurement and structural modelling on factors of Islamic Fintech adoption among millennials in Malaysia. Journal of Islamic Marketing. https://doi.org/10.1108/JIMA-09-2020-0279
Rahim, S. R. M., Mohamad, Z. Z., Bakar, J. A., Mohsin, F. H., and Isa, N. M. (2018). Artificial Intelligence, Smart Contract and Islamic Finance. Asian Social Science, 14(2), p145. https://doi.org/10.5539/ASS.V14N2P145
Rahmanto, D. N. A., Muhammad, I. S., Nurwiyanti, F., and Sani, A. A. (2023). Islamic Banks: Study of Financial Literacy, Digital Marketing, Accessibility, Age, and Education. Journal of Islamic Economics and Finance Studies, 4(1), 66–82.
Rathore, H. S. (2016). Adoption of Digital Wallet by Consumers. BVIMSR's Journal of Management Research, 8(1). https://papers.ssrn.com/abstract=3215675
Riwanda, A., and Wafa, A. (2023). Comparative Study of Poverty Alleviation in The Verses of The Qur'an and The Green Economy Program SGDS. JURNAL PENELITIAN, 17(1), 31–60.
Roa, M. J., Saura, D., and Vázquez, F. J. (2011). Economic growth, labor market and demographic patterns. Structural Change and Economic Dynamics, 22(1), 81–91.
Rofiqo, A., and Afrianti, N. (2019). the Influence of Sharia Banking Characteristics and Macroeconomics Factors on Sharia Banking Profitability: Empirical Studies in Indonesia. International Journal of Islamic Business Ethics, 4(1), 540. https://doi.org/10.30659/ijibe.4.1.540-550
Roubaud, D., Unal, I. M., and Aysan, A. F. (2022). Fintech, Digitalization, and Blockchain in Islamic Finance: Retrospective Investigation. FinTech 2022, Vol. 1, Pages 388-398, 1(4), 388–398. https://doi.org/10.3390/FINTECH1040029
Shen, Y., Hu, W., and Hueng, C. J. (2018). The effects of financial literacy, digital financial product usage and internet usage on financial inclusion in China. MATEC Web of Conferences, 228, 05012.
Shen, Y., Hueng, C. J., and Hu, W. (2020). Using digital technology to improve financial inclusion in China. Applied Economics Letters, 27(1), 30–34.
Sitompul, S. (2021). The Influence of Exchange Rate, Inflation, For the Results of the Development Assets of Islamic Banks. Journal of Economics, Finance and Management Studies, 04(03), 138–148. https://doi.org/10.47191/jefms/v4-i3-05
Sitompul, S., and Nasution, S. K. (2019). The Effect of Car, BOPO, NPF, and FDR on Profitability of Sharia Commercial Banks in Indonesia. Budapest International Research and Critics Institute (BIRCI-Journal) : Humanities and Social Sciences, 2(3), 234–238. https://doi.org/10.33258/birci.v2i3.412
Sunni, M. I., Wanof, M. I., and Wijaya, A. K. (2024). Do Household Consumption and Literacy Rate Impact the Fluctuation of the Unemployment in Indonesia? Journal of Asset Management and Public Economy, 3(1), 14–30.
Susilawati, C., Sulaiman, A. A., Abduh, M., Prasetyo, Y., and Athoillah, M. A. (2021). Comparative Study on the regulation of Sharia Financial Technology in Indonesia and Malaysia. Jurisdictie: Jurnal Hukum Dan Syariah, 12(1), 1–19.
State of the Global Islamic Economy Report. (2020). State of the Global Islamic Economy Report. DinarStandard. Dubai.
Tabash, M. I., and 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.
Tatli, A., Ozturk, M. B., and Aldossari, M. (2017). Equal opportunity and workforce diversity in Asia. In Routledge Handbook of Human Resource Management in Asia (pp. 256–272). Routledge.
Thaker, H. M. T., Khaliq, M. A. M. T. T. and A., Allah, A. P., & Hussain, H. I. (2022). Behavioural intention and adoption of internet banking among clients' of Islamic banks in Malaysia: an analysis using UTAUT2. Journal of Islamic Marketing, 13(5), 1171–1197. https://doi.org/10.1108/JIMA-11-2019-0228
Tho'in, M., and Prastiwi, I. E. (2019). An Analysis the Rupiah Exchange Rates Effect Against the American Dollar and Inflation Against the Growth of Islamic Banking Mudharabah Deposits in Indonesia. International Journal of Islamic Business and Economics (IJIBEC), 3(1), 61–69.
Tjiptono, F., Khan, G., Yeong, E. S., and Kunchamboo, V. (2020). Generation Z in Malaysia: The four ‘E'generation. In The new Generation Z in Asia: Dynamics, differences, digitalisation (pp. 149–163). Emerald Publishing Limited.
Tumewang, Y. K., Isnaini, R. N., and Musta'in, J. L. (2019). The impact of macro economy toward profitability of Islamic bank. Asian Journal of Islamic Management (AJIM), 1(2), 101–108. https://doi.org/10.20885/ajim.vol1.iss2.art4
Uddin, M. H., Ali, M. H., and Hassan, M. K. (2020). Cybersecurity hazards and financial system vulnerability: a synthesis of literature. Risk Management, 22(4), 239–309. https://doi.org/10.1057/S41283-020-00063-2/METRICS
Wang, Z., Rasool, Y., Asghar, M. M., and Wang, B. (2019). Dynamic linkages among CO2 emissions, human development, financial development, and globalization: empirical evidence based on PMG long-run panel estimation. Environmental Science and Pollution Research, 26(36), 36248–36263. https://doi.org/10.1007/s11356-019-06556-2
Yahya, A. (2021). sharia fintech Development in Indonesia. Proceedings of the 1st International Conference on Economics Engineering and Social Science, InCEESS 2020, 17-18 July, Bekasi, Indonesia.
Zahid, S., and Basit, AB. (2018). Impact of Macroeconomic Factors on the Growth of Islamic Banking: A Case of Pakistan. Journal of Finance and Economics Research, 3(2), 37–50. https://ideas.repec.org/a/gei/jnlfer/v3y2018i2p37-50.html
Zahid, S., and Basit, A. B. (2017). Impact of Selected Macroeconomic Variables on the Growth of Islamic Finance. SSRN Electronic Journal. https://doi.org/10.2139/SSRN.3146727
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
- Every manuscript submitted to JEBIS must obey to the policy and terms set by Journal of Economics and Business Islamic.
- Publication rights on the contents of manuscript published by JEBIS is owned by JEBIS under consent and approval by the corresponding author(s).
- Full text of electronic publication of manuscripts can be accessed free if used for the purpose of education and research according to copyright regulation.
- Share ” copy and redistribute the material in any medium or format
- Adapt ” remix, transform, and build upon the material
- You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.
- You may not use the material for commercial purposes.
- If you remix, transform, or build upon the material, you must distribute your contributions under the same license as the original.
Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
.png)
