•  
  •  
 
Bulletin of Monetary Economics and Banking

Document Type

Article

Abstract

The transmission mechanism of monetary policy has been an area of abundant economic researchin many countries. The financial system links monetary policy and the real economy. Thus, events ortrends that affect the financial system can also change the monetary transmission mechanism. This studytries to analyze shariah transmission mechanism in Indonesian dual monetary system, using Vector AutoRegression (VAR) and Vector Error Correction Model (VECM) methods.Results show that the relationship between SWBI (SBI Shariah) and shariah financing (LNFINCG) isnegative. It means, when SWBI be higher, the quantity of shariah financing would be lower. And so do SBI and inflation (LNIHK). When the total of shariah financing be increase, it will gives positive contributionfor reducing inflation rate in Indonesia, because with this system possibility to make equal growth among monetary and real sectors appears. Therefore, it will be strategic action for monetary authority to grow up shariah banking share in Indonesia, for minimizing "bad inflation" in economy. Other recommendation, SWBI as shariah monetary instrument should be reconsidered to achieve positive impact for real sector.

First Page

345

Last Page

367

Creative Commons License

Creative Commons Attribution-NonCommercial 4.0 International License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

Indonesia

Affiliation

Lembaga Penelitian dan Pemberdayaan Masyarakat (LPPM) Tazkia Bogor

Share

COinS