Jurnal Ilmu Ekonomi Terapan

Does Exchange Rate Depreciation and Trade Balance Impede Economic Growth in Nigeria?

Adeyemi Michael Anagun, Peter Minasu Agosu — Thu, 05 Dec 2024 00:00:00 +0700

The Nigerian currency has experienced a significant depreciation due to its exchange with foreign currencies, particularly the dollar. This exchange rate depreciation affects purchasing power, real wages, foreign trade, debt servicing, macroeconomic stability, and interest rates. The study then seeks to fill a knowledge gap on the asymmetric link between exchange rate depreciation, trade balance, and economic growth in Nigeria. The Phillip-Perron and Augmented Dickey-Fuller unit root tests found mixed stationarity, whereas the ARDL bound cointegration test revealed a long-term link between these variables. As such, the study revealed that the depreciation of the exchange rate and trade balance positively affects economic growth. As the currency weakens, interest rates and money supply rise, and the economic growth rate rises. The study uses the error correction model to correct the disequilibrium by 59.8% to correct this economic hardship in the Nigerian economy, demonstrating that exchange rate depreciation considerably influences economic growth in the long run but not in the short term. Therefore, the practical implication is that the cost of production, importation, and inflation is high, causing fiscal restraints, governmental regulations, and economic shocks to macroeconomic stability, which may all influence economic growth. They recommend that interest rates be readjusted and that the government give grants and non-interest rate loans to small and medium enterprises to mash up with the import and export of consumable goods.

The Effect of Institutional Quality and Macroeconomics Variables on Non-Performing Loans in Developing Countries

Muhammad Bagja Fajariyanto, Wasiaturrahma Wasiaturrahma — Thu, 05 Dec 2024 00:00:00 +0700

This study intends to examine how institutional quality and macroeconomic factors affect non-performing loans within developing countries in 2010–2019. The estimation results employing the Generalized Method of Moment (GMM) method reveal that the institutional quality variable with a proxy for the government effectiveness index and regulatory quality index has a significant effect with a negative coefficient on the non-performing loans ratio (NPL). Moreover, macroeconomic variables such as inflation, unemployment, and real interest rates significantly affect NPL. In contrast, economic growth has a significant negative effect on NPL. Policymakers should focus on creating effective regulations to reduce NPLs. The government can make clear, consistent, and transparent regulations to promote a strong and competitive private sector.

Comparative Effects of Profitability and Risk Management on Financial Stability in A Dual Banking System: Does Yield Matter?

M. Yusril Hafidz Nur Izza, Amila Zamzabila Putri — Thu, 05 Dec 2024 00:00:00 +0700

This study aims to examine the impact of risk management and profitability on the stability of conventional and Islamic commercial banks in Indonesia and to assess whether yield can moderate this effect. The research analyzes data from Indonesian Sharia and conventional commercial banks from 2016 to 2023 using fixed-effects panel data regression with robust standard errors. The findings reveal that Sharia banks exhibit greater risk resilience than conventional banks, demonstrating a lower probability of instability. Additionally, yield enhances the effect of non-performing financing (NPF) on bank stability in Sharia banks and mitigates the impact of non-performing loans (NPL) in conventional banks. These results offer valuable insights for policymakers and contribute to the literature by highlighting the need for a balanced approach to ensure that bank profitability enhances stability rather than undermines it. It underscores that higher profits are not inherently beneficial, nor are lower profits necessarily detrimental. Banks must strike a balance, maintain public trust, and promote prudent risk management to achieve long-term stability.

The Role of Government Effectiveness Boosting The Influence of Financial Development and International Trade in ASEAN-5 Country

Salwa Nabella Aksi Humanita, Hikmah Endraswati — Thu, 05 Dec 2024 00:00:00 +0700

The main focus of this study is the crucial role of an effective government in managing financial development and its impact on international trade. This study aims to analyze the effectiveness of government intervention in moderating the effect of financial development on international trade in the ASEAN-5 region. Annual panel data covering the period 1997-2023 of ASEAN-5 countries will be used in the analysis. The proposed analysis method is Panel Data Regression and Moderated Regression Analysis (MRA) using EViews version 10. The results show that financial development measured using the proxy of bank deposits and liquid liabilities can significantly affect international trade. In contrast, when measured using bank credit, it has a significant negative effect. Government effectiveness can strengthen the influence of bank credit and liquid liabilities on international trade. In contrast, bank deposits can weaken it because the effectiveness of the government in regulating and developing the financial system can interfere with the openness of international trade.

The Role of Profitability and Liquidity in Meeting the Feasibility Standards of Sharia Banking with Capital Adequacy as A Moderating Variable in Indonesia

Padli Pawaid Yahya, Joko Setyono — Thu, 05 Dec 2024 00:00:00 +0700

This study investigates the impact of profitability and liquidity on bank viability, considering capital adequacy as a moderating factor in Islamic commercial banks in Indonesia. The research sample consists of 9 Islamic commercial banks from 2018 to 2022. The dependent variable, bank survival, is assessed using Return on Assets (ROA). The independent variable, profitability, is measured by Return on Equity (ROE), with Capital Adequacy Ratio (CAR) as the moderating variable. Control variables include Net Profit Margin (NPM), Operational Efficiency (BOPO), and Loan to Deposit Ratio (LDR). Analysis is conducted using multiple linear regression with a Fixed Effects model. The findings indicate that capital adequacy functions as a pure moderator, enhancing the relationship between NPM and ROA while weakening the relationship between ROE and ROA.

The Role of Government Expenditure on Per Capita Income Convergence in East Java Province

Erwin Hardianto, Achmad Solihin — Thu, 05 Dec 2024 00:00:00 +0700

This research aims to test and analyze the absolute and conditional convergence of per capita income from 38 districts/cities in East Java with the variables PAD, BOS and BOK during the period 2020 - 2022. According to the Chow, Hausmann test and Lagrange Multiplier, the panel data convergence model estimates using the fixed effect model method. Results show that in the districts/cities and observation period, divergent conditions occurred. Also, conditional variables did not have a significant influence on the growth of per capita income. This condition can occur because capital and technology are distributed unevenly between districts/cities. The implication of this research is to improve the allocation and distribution of the government budget, especially those related to School Operational Assistance (BOS) and Health Operational Assistance (BOK).

The Effect of Human Development Index (HDI), Inequality and Consumption on Poverty Levels in All Provinces in Indonesia

Abdullah, Muhammad Ghafur Wibowo — Thu, 05 Dec 2024 00:00:00 +0700

This study aims to analyze the effect of human development index (HDI), income inequality, and consumption on Indonesia’s poverty rate for 2018-2022. The approach used is quantitative with statistical panel data analysis method using 3 model approaches namely CEM, FEM, and REM. The selected model is the Fixed Effect Model as a result of the Chow and Hausman tests. The results showed that HDI and inequality variables had no significant effect on the poverty rate. Meanwhile, the consumption variable has a negative and significant effect on poverty. Simultaneously, all independent variables have a significant effect on the dependent variable. This research is expected to provide input for the government in formulating poverty alleviation policies in Indonesia by focusing more on reducing public consumption. Research limitations on secondary data in aggregate so that the results are less representative for each province.

Exploring Export Potential and Green Economic Practices in Archipelagic Regions

Syarifatus Salafin, Uswatun Nurul Afifah, Royhan Faradis — Thu, 05 Dec 2024 00:00:00 +0700

The leading exports of the island provinces still rely on primary goods rather than derivative goods. The exploitation of nature continues to be a strategy for island regions to enhance economic growth, but this approach does not promote a sustainable economy. This research aims to further describe the export commodities that remain dominant in provinces with archipelagic topography and to examine in greater detail the impact of these export activities on environmental resilience. The research methodology employs panel data regression with the Environmental Quality Index (EQI) serving as the dependent variable. The analysis reveals that economic activities, particularly exports, collectively influence the EQI. Furthermore, the research findings indicate a tendency for a weak relationship between superior commodity export activities and labor absorption.

The Impact of Changes in World Oil Prices, Interest Rates, and Net Exports on The Exchange Rate of ASEAN-4 Countries

Dyah Ayu Palupi, Rudi Purwono — Thu, 05 Dec 2024 00:00:00 +0700

This research examines the impact of changes in world oil prices, interest rates, and net exports on exchange rates in four ASEAN countries (Indonesia, Malaysia, Thailand, and the Philippines). The method used is the Panel Vector Error Correction Model (PVECM) over 2000Q1-2020Q4. The variables analyzed include exchange rates, world oil prices, interest rates, and net exports. The research findings indicate that (1) world oil prices affect exchange rates in both the short and long term, with exchange rates appreciating in the initial period and depreciating after the third period due to oil price shocks; (2) interest rates influence both the short and long term, with exchange rates tending to appreciate in response to interest rate shocks; and (3) net exports only affect the exchange rates in the long term, with exchange rates tending to depreciate in response to net export shocks.

Comparison of Stock Portfolio Performance of Conventional Banks and Islamic Banks Using Sharpe Ratio, Treynor Ratio, and Jensen Ratio (2021-2023)

Asiska Nur Abidah, Putri Hidayanti Pratiwi, Triya Oftafiana, Muhammad Aswad — Thu, 05 Dec 2024 00:00:00 +0700

Before purchasing shares on the stock exchange, potential investors and investors need to measure the performance of the stock portfolio of companies listed on the stock exchange to identify the level of return to be received and whether the level of return is comparable to the risk borne to maximize the return. Along with the development of the Islamic sector in Indonesia, the stock exchange is filled with conventional stocks and Islamic stocks owned by companies that operate based on Islamic principles. Some researchers have different opinions regarding which stock performance is superior between Islamic and conventional stocks. This study aims to measure the performance of stock portfolios in Islamic banking and conventional banking and then compare the performance of both. This study used samples of conventional commercial banks such as BPTN Bank, Bukopin Bank, and CIMB Niaga Bank. At the same time, Islamic Commercial Banks were BPTN Syariah Bank, Panin Dubai Syariah Bank, and Bank Syariah Indonesia. The research methods used to measure stock portfolio performance are the Sharpe Method, Treynor Method, and Jensen Method. The study results show that the performance of the stock portfolio in conventional commercial banks using the Sharpe index, Treynor index, and Jensen index for 2021 to 2023 is superior to that of Islamic commercial banks.

Multipolarity in Development Banking: The Asian Infrastructure & Investment Bank (AIIB) and Asian Development Bank (ADB)

Yeremia Nicolaus Widjanarko — Thu, 05 Dec 2024 00:00:00 +0700

This research analyzed multipolarity in development financing, focusing on the Asian Infrastructure Investment Bank (AIIB) and the Asian Development Bank (ADB). These two banks represent a shift in global economic power from the West to the Far East, particularly with the rising role of China. Using the Neorealism theoretical framework, the research examined the political-economic differences, leadership structures, and financing patterns of AIIB and ADB. The data showed that AIIB and ADB significantly differ in membership, objectives, initial capital, geographical coverage, environmental policies, and relationships with major economies such as China, Japan, and the United States. Their financing patterns across various Asian economies, such as India and Bangladesh, reflect a more balanced power distribution and the resilience of the international system. Additionally, the flexible approach of AIIB contrasts with ADB’s stricter conditionality, highlighting differing strategies in development financing. The findings indicate that multipolarity in development financing enhances stability and order in the international system, consistent with Neorealism’s view on the importance of natural power competition. The presence of both institutions encourages innovation and adaptation, contributing to a more robust and diverse global financial architecture.

The Effect of Visitor Export, International Tourist Arrival, Foreign Direct Investment, and Labor on Economic Growth in ASEAN in 2010-2022

Widya Sylviana, Rosa Dewi Puspita — Thu, 05 Dec 2024 00:00:00 +0700

This study seeks to investigate the impact of tourism factors on economic growth, specifically international tourist arrivals (ITA), visitor exports, foreign direct investment (FDI), labor, and COVID-19 as a dummy variable in ASEAN from 2010 to 2022, both partially and simultaneously. The dependent variable in this study is the Gross Domestic Product (GDP) value. The independent variables are international tourist arrivals (ITA), visitor exports, FDI, labor, and COVID-19 as dummy variables. This study utilized dynamic panel data regression using the Generalized Method of Moments (GMM). The selected model is the System Generalized Method of Moments (SYS-GMM). The findings of this study demonstrate that all independent variables collectively exert a significant influence on economic growth across the 10 ASEAN nations. In contrast, foreign direct investment and labor considerably impact economic growth in ten ASEAN nations. In contrast, partially, international tourist arrivals, visitor exports, and the COVID-19 dummy variable have no influence.