Hayati, Siti Lulu (2018) ANALYSIS OF IMPACT OF MACROECONOMIC VARIABLES AND FOREIGN DIRECT INVESTMENT (FDI) TOWARDS THE GROWTH OF TOTAL ASSETS OF ISLAMIC BANKING IN INDONESIA (2010-2017). D4 Diploma thesis, UNIDA.

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Abstract

ABSTRACT Analysis of the Impact of the Macroeconomic Variables and Foreign Direct Investment toward the Growth of Total Assets of Islamic Banking in Indonesia (2010-2017) Siti Lulu Hayati 35.2014.4.1.0070 There are many studies conducted that used the macroeconomic variables (economic growth, money supply, and inflation) as exogenous variables and the total assets growth of Islamic banking as endogenous variable to capture the relationship among them. However, it is still rare to find a research that use FDI as exogenous variable. FDI is the reflection of the dependence level on Indonesian banking towards foreign corporate and explain the credibility level of foreign corporate towards Islamic banking. Therefore, the author uses FDI as additional variable in conjunction with macroeconomic variables. There are three purposes in this research: first, this research predicts the speed adjustment of the total assets growth of Islamic banking on the shock of macroeconomic variables and FDI; second, it predicts the contribution of macroeconomic variables and FDI in explaining the fluctuation of total assets growth of Islamic banking and third, it discerns the relationship between the total assets growth of Islamic banking, macroeconomic variables, and FDI. This research is quantitative research. To achieve those goals, the author uses secondary data obtained from the bank of Indonesia (BI), Islamic banking statistics Indonesia (SPS-BI), banking statistics Indonesia (SPI-BI), financial services authority (OJK), and the Central Statistics Agency (BPS). The period of this research is from January 2010 until December 2017 (time series data). This research uses some data analysis techniques such as pre-estimation test to find the best model, Vector Auto Regressive in combine with Vector Error Correction models and Granger Causality Test. From this research, the author concludes that the macroeconomic variables have a significant effect. These results reflect that the Islamic banks have mutual relationship towards the macroeconomic variables. However, in contrary FDI has a negative significant effect towards Islamic banking. It reflects that the existence of FDI has a negative effect on the growth of total assets of Islamic banking. This is because FDI gives less contribution to Islamic banking in fact. Moreover, FDI prefers to contribute to another sector and FDI does not have granger cause against Islamic banking. The researcher hopes Islamic bank department to defend the improvement of financial stability and economic stability by improving their quality in financial sector; it can be more limiting the contribution of the foreign investment in Islamic banking. Finally, researcher hopes over next researchers to analyze the impact of foreign banks towards growth of Islamic banking in Indonesia. Keywords: Total Asset of Islamic Banking, Macroeconomic Variables, FDI

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