Jurnal Ekonomi & Keuangan Islam

Macroeconomic and demographic impacts on Islamic life insurance demand in Indonesia

Tari Yulia Tilova, Ranti Wiliasih, Tita Nursyamsiah — Wed, 22 Jan 2025 00:00:00 +0000

Purpose – This study examines the influence of macroeconomics and population demographics on demand for Islamic life insurance in Indonesia.
Methodology – This study uses time-series data analysis using the autoregressive distributed lag (ARDL)method. The study period is from January 2015 to December 2022.
Findings – According to the ARDL model, inflation and education levels have a positive effect on the demand for Islamic life insurance in the long run, while the Muslim population has a negative effect. In the short term, gross domestic product (GDP) per capita has a positive effect, while inflation and the Muslim population have a negative effect on the demand for Islamic life insurance in Indonesia.
Implications – This study provides valuable insights for the Islamic life insurance industry and policymakers. The industry should develop inclusive and affordable products tailored to diverse financial capacities and preferences, including those of the younger generations. Policymakers should promote public awareness and collaboration with financial institutions in order to expand access. These findings can guide strategies to enhance market penetration and financial inclusion.
Originality – This study fills the research gap by analyzing the relationship between Islamic life insurance demand, macroeconomics, and population demographics, where Muslim population has never been discussed by previous studies.

Determinants of Muslim’s intention to boycott Israel-affiliated products: Evidence from Indonesia

Uus Ahmad Husaeni, Mohammed Ashfaq Ayoob — Wed, 22 Jan 2025 00:00:00 +0000

Purpose – The purpose of this study is to examine the factors that influence the intention to boycott products made or affiliated with Israel among Muslims in Indonesia. This study is grounded in the context of ongoing wars and conflicts in the Middle East, specifically in Palestine.
Methodology – This research uses primary data collected from 412 respondents and the partial least squares structural equation model (PLS-SEM) method for data analysis.
Findings – The main results show that animosity, intrinsic religious motivation, self-enhancement, product judgment, and attitude toward the boycott influence the intention to boycott. However, brand distrust does not determine the intention to boycott products affiliated with Israel.
Implications – Indonesia is one of the largest markets for Muslims worldwide. Understanding the purchasing behavior of Muslim consumers in Indonesia can help marketers and multinational companies anticipate and strategically respond to potential boycotts, minimising financial losses. This is important because Muslim consumers in Indonesia often opt for alternative products when choosing to avoid those affiliated with Israel.
Originality – Animosity was the most influential variable in this study. This reflects deep-seated resentment among Muslim consumers toward Israel, leading to a reluctance to purchase Israeli-affiliated products. They directly targeted Israeli-affiliated companies or products for boycotting as a form of expression of their anger and disapproval of Israel's invasion of Palestine. Interestingly, Muslim consumers in Indonesia still positively and favourably view products affiliated with Israel, even though they are reluctant to buy them.

How destination image and trust mediate e-WOM's impact on halal tourism intentions

Dian Prihardini Wibawa, Yanto Yanto, Ariandi Zulkarnain — Wed, 22 Jan 2025 00:00:00 +0000

Purpose – This study examines the mediating role of destination image and destination trust in the relationship between Electronic Word-of-Mouth (e-WOM) and the intention to visit halal tourism destinations, specifically focusing on Bangka Belitung.
Methodology – This study employed a quantitative approach, collecting data from 292 respondents via an online survey. SEM was used to test the relationships among e-WOM, destination image, destination trust, and intention to visit. Validity and reliability tests, as well as goodness-of-fit measures, were applied to assess the model's robustness.
Findings – The results indicate that e-WOM significantly influences both destination trust and destination image. However, neither destination image nor destination trust directly affect the intention to visit, and e-WOM itself does not have a direct significant impact on the intention. These findings suggest that, while e-WOM fosters positive perceptions and trust, other factors are more critical in driving the halal tourism intention.
Implications – This study provides valuable insights for tourism stakeholders, particularly in halal tourism, by highlighting the importance of managing e-WOM to enhance trust and image. However, halal tourism providers must prioritize authenticity, cultural sensitivity, and visitor engagement to attract and retain tourists.
Originality – This study contributes to the literature by exploring the mediating effects of destination image and trust in halal tourism, challenging the assumption that positive perceptions are always translated into behavioral intentions. It expands the understanding of how e-WOM impacts tourist decision making within a specific cultural and religious context.

The effect of environmental disclosure on stock return of Islamic and conventional banks

Mega Ayu Widayanti, Sulistya Rusgianto, Hesti Eka Setianingsih, Zurina Kefeli — Wed, 22 Jan 2025 00:00:00 +0000

Purpose – We examine the effects of environmental, social, and governance (ESG) disclosure and green building policies on the stock returns of Islamic and conventional banks.
Methodology – Data were obtained from 17 Islamic banks and 17 conventional banks from eight countries (Arab Saudi Arabia, UAE, Qatar, Kuwait, Malaysia, Indonesia, Pakistan, and Bahrain) over seven years from 2017 to 2023. We conducted panel least squares with fixed effects (dummy variables) for cross-sections using EViews to process the data.
Findings – The estimated results show that the green building policy variable is statistically significant to the stock return of Islamic banks, while the environmental, social, and governance variables are not. Meanwhile, the social dimension is statistically significant for the stock returns of conventional banks, but environmental, governance, and green buildings are not.
Implications – Investors and policymakers should consider the implementation of ESG and green building policies to contribute on sustainability issues and gain financial return.
Originality – This study tests non-financial performance, such as ESG disclosure and green building policy, on the stock returns of Islamic and conventional banks, which has not been extensively studied by the existing literature.

Integrating technological innovation in the halal industry: An analysis using PRISMA

Ririn Riani, Ihsanul Ikhwan, Aam Slamet Rusydiana — Wed, 22 Jan 2025 00:00:00 +0000

Purpose – This study aims to provide a comprehensive evaluation of the integration of digitalization and technological advancements in the halal industry, highlighting their implications for industry development and addressing key challenges and opportunities.
Methodology – We used the Preferred Reporting Items for Systematic Reviews and Meta Analyses (PRISMA) methodology to conduct a systematic literature review, analyzing 54 research papers published between 2014 and 2024.
Findings – This study identifies the challenges and opportunities in adopting technologies such as IoT, blockchain, and AI within the halal sector, and offers suggestions for overcoming these challenges based on the existing literature. The study finds that adopting advanced technologies is essential for the sustainable growth of the halal market and emphasizes the importance of creating explicit regulations and fostering cooperation for technological innovation.
Implications – This study has significant implications for academic researchers, policymakers, and industry practitioners by providing insights into the intersection of technology and halal industry.
Originality – The originality of this study lies in its systematic exploration of the crucial role of technology in halal market growth and sustainability. This encourages industry professionals to adopt advanced technologies to enhance product visibility and regulatory compliance.

Aligning Indonesia's economic goals with SDGS: Strengthening Qur'anic principles in Islamic finance

Azwar Azwar, Abur Hamdi Usman — Wed, 22 Jan 2025 00:00:00 +0000

Purpose – This research examines the relationship between Islamic bank financing aligned with the Sustainable Development Goals (SDGs) and economic growth, incorporating Qur'anic principles in Islamic finance.
Methodology – Quarterly time-series data from Q1 2014 to Q1 2022 were analyzed using the cointegration and ARDL approaches. Data sources include the PSIFIs for Islamic Banks (IFSB Database), Indonesia's GDP (BPS), and the Financial Services Authority (OJK).
Findings – Long-term analysis reveals that Islamic financing in SDG sectors such as SDG1 (No Poverty), SDG2 (Zero Hunger), SDG3 (Good Health and Well-being), SDG4 (Quality Education), and SDG11 (Sustainable Cities and Communities) positively correlate with economic growth, while SDG8 (Decent Work and Economic Growth) shows an inverse relationship. In the short term, financing in SDG2, SDG3, SDG8, and SDG9 (Industry, Innovation, and Infrastructure) positively impacts economic growth, whereas SDG6 (Clean Water and Sanitation) exhibits a negative association. These findings highlight Islamic finance's potential to address socio-economic challenges rooted in Qur'anic values, such as Surah al-Nisā’ [4]: 29 and al-Baqarah [2]: 261.
Implications – Policymakers are encouraged to promote Islamic microfinance for SMEs and invest in rural sanitation infrastructure (SDG6). Furthermore, financing renewable energy projects (SDG7) aligns with sustainable development goals.
Originality – This study bridges Islamic finance and sustainable development by integrating a Qur'anic perspective into the SDG framework, offering insights into leveraging Islamic finance to achieve sustainability and economic growth, while adhering to Islamic ethical principles.

Studying investor rationality on stock price: A case of Bank Syariah Indonesia

Hafidz Yudhanto Kresnaputra, An'im Kafabih — Wed, 22 Jan 2025 00:00:00 +0000

Purpose – This study aims to analyze the behavior of investors' investment decisions, as reflected in the volatility of stock prices, especially at PT Bank Syariah Indonesia Tbk (BSI). The analysis here compares aspects of rationality and irrationality as well as their relationship with the stock prices of Bank Syariah Indonesia.
Methodology – This study uses the Autoregressive Distributed Lag (ARDL) method to test aspects of rationality proxied by Price-to-Book Value (PBV) and Price-to-Earnings Ratio (PER), while aspects of irrationality proxied by mood sentiment (SWAV). Data were collected from February 2021 to February 2024 on a monthly basis, resulting in 37 research samples.
Findings – The results show that PBV, PER, and mood sentiment have a significant effect on BSI stock prices. In the long term, PBV has a positive effect, while PER and mood sentiment have negative effects on BSI stock prices. In this situation, mood sentiment has the greatest influence on BSI stock prices, indicating that the volatility of BSI stocks is driven by irrationality.
Implications – As the stock price is driven mostly by irrationality, investors must have fundamental and macroeconomic analysis skills as well as expertise when buying and selling stocks in order to minimize losses due to the irrational behavior. In addition, regulators and companies must provide transparent and accurate information to investors to reduce the irrational behavior.
Originality – This study modifies the objective of Islamic banks’ stock prices in Indonesia by elaborating rational and irrational factors as the determinants of stock prices.

How do Islamic corporate social responsibility and environmental performance relate to company value?

Dini Rahmayanti, Ziinatul Arifah, Putri Jamilah — Thu, 23 Jan 2025 00:00:00 +0000

Purpose – This study aims to provide a comprehensive analysis of the impact of the investment opportunity set (IOS), profitability, Islamic corporate social responsibility (ICSR), and environmental performance (EP) on the value of environmentally sensitive companies. The research explores both short-term and long-term impacts of these variables on corporate value.
Methodology – This study utilized Vector Error Correction Model (VECM) approach to analyze annual data from 2016 to 2022, focusing on environmentally sensitive companies in the Indonesian Sharia stock index.
Findings – The VECM method yielded several key findings, including no significant impact of IOS on company value in either short or long term. However, variables such as ICSR, environmental performance, and profitability exhibited a significant influence on company value over the same timeframe.
Implications – This study suggests that, to enhance credibility, companies should prioritize financial stability, credibility in financial reporting, social responsibility, and environmental regulations. They should identify the best investment opportunities and collaborate with the government to achieve environmental sustainability.
Originality – Our study seeks to delve into the relationship between several variables, including IOS, profitability, ICSR, environmental performance, and the overall value of environmentally sensitive companies. This topic has not been explored in-depth by previous research, and our study aims to shed light on both short- and long-term effects of these factors on corporate value.

Mudharabah, musyarakah, financing risk, and performance of Islamic banks: Empirical evidence from Indonesia

Radhita Asfarina Annizar, Eddy Junarsin — Fri, 31 Jan 2025 00:00:00 +0000

Purpose – This study examines the effects and thresholds of mudharabah and musyarakah on the financing risk and performance of Indonesian Islamic banks.
Methodology – Using panel data and quadratic regression analysis, we explore the nonlinear relationships among mudharabah, musyarakah, financing risk, and performance of Islamic banks in Indonesia using a sample of 14 Indonesian Islamic banks during the period to 2008-2020.
Findings – We find that mudharabah is negatively related to financing risk and positively (in the initial stage) linked to Islamic bank performance. Mudharabah will reduce financing risk if the proportion of mudharabah to total loans is in the range of 5.5-12.6%. A proportion of mudharabah below 5.5% or above 12.6% worsens non-performing financing (NFP), loan loss provision (LLP), and Z-score. In contrast, musyarakah is found to be positively (although marginally) related to financing risk and negatively and weakly associated with the performance of Indonesian Islamic banks.
Implications – Our findings have consequential implications for both practitioners and policymakers. Understanding the dual effects of mudharabah and musyarakah can help to implement strategies that optimize investment portfolios, enhance profitability, and minimize risk. For policymakers, these results highlight the need for regulatory frameworks that encourage optimum thresholds of mudharabah financing to mitigate risk while spurring performance.
Originality – This study contributes to the literature by identifying a turning point in mudharabah financing that minimizes financing risk, a realm previously underexplored in Islamic finance. By incorporating this nuanced insight, our study provides a novel perspective on how Islamic banks can attain strategic equilibrium between risk management and performance improvement.

Measuring the level of muzakki satisfaction on Zakat institution performance

Fri, 14 Feb 2025 00:00:00 +0000

Purpose – This study aimed to measure muzakki satisfaction through institutional image zakat institutions’ performance and expectation disconfirmation theory.
Methodology – This study uses Structural Equation Modeling Partial Least Squares (SEM-PLS) supported by SmartPLS 3.0, with a quantitative approach to measure muzakki satisfaction. Data were collected using a questionnaire, totaling 395 respondents from all branches of the Baitul Mal TAMZIS office.
Findings – This study shows that institutional image, zakat institution performance, and desire disconfirmation have a significant positive effect on muzakki satisfaction, while expectation disconfirmation and perceived performance do not have a significant effect. This was supported by systematic programs and strategies, transparent reporting, and the use of electronic money to facilitate muzakki. Baitul Mal TAMZIS, with 42 branches spread across Wonosobo, Yogyakarta, Central Java, and West Java, continues to increase the collection and distribution of Zakat, Infaq, Sadaqah, and Waqf (ZISWAF) funds, with 70% of the muzakki becoming regular donors.
Implications – The results of this study can be used by policymakers of Islamic Social Institutions such as Zakat Institutions, by paying attention to the image of the institution and the performance of zakat institutions.
Originality – This study uses the theory of expectation disconfirmation, which is usually applied to non-profit institutions, to measure muzakki satisfaction in zakat institutions. The application of this theory in the context of zakat has not been widely explored, thus providing a new contribution to the literature on zakat management.