Does the Flexible Mortgage Rate Exhibit Asymmetric Response to Changes in the Repo Rate? Are the Effects Consistent with Upward or Downward Rigidity?

The purpose of the research is to examine and analyze the effect of macroeconomic variables GDP and inflation on Islamic banking financing in Indonesian. Islamic bank financing is the dependent variable, whereas GDP, reference interest rates, and inflation are the independent variable. The data used is Islamic banking financing, GDP, reference interest rates, and inflation in Indonesian from 2010-1018. This empirical study uses a quantitative approach and method of OLS (Ordinary Least Square). The results of this research indicate that the GDP variable has positive and statistically significant effect on Islamic banking financing, the variable reference interest rates (BI Rate and BI Rate 7days Repo Rate) have negative and statistically significant effect on Islamic banking financing, the inflation variable has positive and statistically significant effect on Islamic banking financing.

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Effectiveness and Forecasting of Interest Rate Reversal BI 7-Day Repo Rate in Indonesia: Lower Bound on Monetary Policy?

Mediterranean Journal of Social Sciences ◽

10.2478/mjss-2018-0016 ◽

2018 ◽

Vol 9 (1) ◽

pp. 171-180

Author(s):

I Gede Sanica ◽

I Ketut Nurcita ◽

I Made Mastra ◽

Desak Made Sukarnasih

Keyword(s):

Monetary Policy ◽

Interest Rate ◽

Time Series Data ◽

Moving Average ◽

Series Data ◽

Autoregressive Integrated Moving Average ◽

Implementation Of Monetary Policy ◽

Repo Rate ◽

The Right ◽

The Impact

AbstractThis study aims to analyze effectivity and forecast of interest rate BI 7-Day Repo Rate as policy reference in the implementation of monetary policy. The method was used in this study contains Vector Autoregression (VAR) to estimate effectivity of BI 7-Day Repo Rate and Autoregressive Integrated Moving Average (ARIMA) to forecast of BI 7-Day Repo Rate. Period of observation in this study used time series data during 2016.4 until 2017.6. The result of this research shows that the transformation of the BI Rate to BI 7-Day Repo Rate is the right step in the monetary policy operation in the effort to reach deepening of the financial market and strengthen the interbank money market structure so that it will decrease loan interest rate and encourage credit growth. The effectiveness of the use of BI 7 Day-Repo Rate on price stability is indicated by the positive relationship between the benchmark interest rate and inflation compared to the BI Rate. The impact of BI 7-Day Repo Rate on economic growth that tends to be positive. Forecasting the use of BI 7-Day Repo Rate shows good results with declining value levels, so this will encourage deepening the financial markets.

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