scholarly journals Effectiveness of Islamic Monetary Policy Transmission on Inflation and Economic Performance

2021 ◽  
Vol 6 (3) ◽  
pp. 336-360
Author(s):  
Anton Bawono ◽  
Khoir Umi Laksana ◽  
Rifda Nabila ◽  
Risdiana Himmati
Keyword(s):  
Monetary Policy ◽  
Economic Performance ◽  
Secondary Data ◽  
Monetary Policy Transmission ◽  
Study Results ◽  
Policy Transmission ◽  
Short And Long Term ◽  
The Stability ◽  
Positive Climate

The most crucial part for the economic development of a country is maintaining the stability of inflation to create a positive climate for economic and business activities. A number of efforts can be performed to achieve stable inflation and increase economic growth by designing monetary policy incorporating the variables of Bank Indonesia Sharia Certificate (SBIS), Islamic Interbank Money Market (IIMM), and Financing. Drawing on this issue, the in-hand study aims to examine the effectiveness of Islamic monetary policy transmission, using the instruments of SBIS, IIMM, and Financing, on inflation and economic performance (GDP) from the period of January 2011 to December 2020. Using secondary data, this study employs VAR/VECM approach by the assistance of Eviews program. The results reveal that in the short term period, inflation is significantly influenced by the IIMM, while GDP t is affected by the GDP t-1 and financing activities. In the long term period, both inflation and GDP are determined by SBIS and financing activities. In general, this study results in a conclusion that the variables of IIMM, financing activities, and GDP t-1 influence the economic performance both in short and long term periods. These results contribute as fruitful insights to developing financial strategies and monetary policy to maintain stable inflation and improve economic performance of a country.

scholarly journals Interest Rate Channel of Monetary Policy Transmission Mechanism and Commercial Banks Earnings in Nigeria

2021 ◽  
Vol 4 (3) ◽  
pp. 194-214
Author(s):  
Uzah K. C. ◽  
Clinton A.M. ◽  
Kpagih L.
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Commercial Banks ◽  
Transmission Mechanism ◽  
Monetary Policy Transmission ◽  
Short Term ◽  
Policy Transmission ◽  
Lending Rate ◽  
Monetary Policy Transmission Mechanism

This study examined the interest rates channel of the monetary policy transmission mechanism and the earnings of commercial banks in Nigeria. The objective was to investigate the extent to which the interest rates channel of the monetary policy transmission mechanism affects the earnings capacity of the quoted commercial banks. Time series data were sourced from annual financial reports of the commercial banks and the Central Bank of Nigeria statistical bulletin’s various issues. Earnings measures such as earnings per share and earnings before interest and tax were modeled as the function of Monetary Policy Rate, Prime Lending Rate, Short-term Savings Rate, Long-term Saving Rate and Maximum Lending Rate. The Ordinary Least Square method of Regression Analysis was used to estimate the relationship between the dependent and the independent variables. Augmented Dickey Fuller Test, Johansen Cointegration Test, Granger Causality Test and Vector Error Correction Test were used to determine the dynamic relationship among the variables. Findings showed that short-term and long-term savings rates have negative effects while monetary policy rate, maximum lending rate and prime lending rate have positive effects on the earnings capacity of Nigerian commercial banks. Therefore, we recommend that interest rate policies should be integrated with the earning objectives of the commercial banks.

scholarly journals Analysis of the Effectiveness of Monetary Policy Transmission through a Line of Credit and Inflation Expectations in Indonesia

2021 ◽  
Vol 8 (5) ◽  
pp. 299-309
Author(s):  
Suti Masniari ◽  
Sirojuzilam . ◽  
Dede Ruslan
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Regression Model ◽  
Interest Rates ◽  
Secondary Data ◽  
Transmission Mechanism ◽  
Output Gap ◽  
Inflation Expectations ◽  
Policy Transmission

This study aims to determine the effectiveness of the transmission mechanism of monetary policy by reviewing the amount of the deadline that required the transmission mechanism of monetary policy in achieving the goals of the final form of the output gap and inflation by using the channel of credit and inflation expectations. In addition, this study also aims to determine the relationship long-term and short against the target output gap and inflation. This study uses a regression model Vector Error Correction Model (VECM) to estimate the influence of the transmission mechanism of monetary policy to the output gap and inflation through the channel of credit and the regression model of Vector Autoregression (VAR) to estimate the influence of the transmission mechanism of monetary policy to the output gap and inflation through the channel of inflation expectations. The Data used in this research is the data series time quarter from 2008 to 2018. Data peneliltian used to estimate the influence of the transmission mechanism of monetary policy to the output gap and inflation through the channel of credit in the form of secondary data consisting of the benchmark interest rate of Bank Indonesia, the interest rates on the interbank money market 1 month, loan interest rates, money supply (M2) and the amount of working capital loans disbursed. While the data used to estimate the influence of the transmission mechanism of monetary policy to the output gap and inflation through the channel of inflation expectations in the form of secondary data consisting of the benchmark interest rate of Bank Indonesia, inflation expectations. The secondary Data used is sourced from the annual reports that are published from the official website of the Bank of Indonesia, the data of the Central Bureau of Statistics and the International Monetary Fund. The results of this study showed that the effectiveness of the transmission mechanism of monetary policy through the credit channels require the deadline each of the 8 (eight) of the quarter and 10 (ten) quarter in achieving the goals of the end of the output gap and inflation. While the effectiveness of the transmission mechanism of monetary policy through the channel of inflation expectations require the deadline each of the 4 (four) quarter and 6 (six) quarter in achieving the goals of the end of the output gap and inflation. The results also showed only policy transmission mechanism built rmelalui credit lines that have long-term relationships against inflation while the transmission mechanism of monetary policy through the channel of inflation expectations have short-term relationship strong. Keywords: The Transmission Mechanism Of Monetary Policy, Output Gap, Inflation.

scholarly journals ANALISIS EMPIRIS EFEKTIVITAS MEKANISME TRANSMISI KEBIJAKAN MONETER DI INDONESIA MELALUI JALUR EKSPEKTASI INFLASI PERIODE 1990:2-2007:1

2018 ◽  
Vol 13 (3) ◽  
pp. 288-307
Author(s):  
M. Natsir Natsir
Keyword(s):  
Monetary Policy ◽  
Time Lag ◽  
Impulse Response Function ◽  
Secondary Data ◽  
Monetary Policy Transmission ◽  
Inflation Expectation ◽  
Policy Transmission ◽  
Monetary Policy Transmission Mechanism ◽  
Auto Regression ◽  
Effectiveness Of Monetary Policy

This study used Vector Auto regression (VAR) model to analyze effectiveness of monetary policy transmission mechanism in Indonesia through Inflation Expectation Channel period 1990:2-2007:1. That effectiveness was measured by two indicators, they are: (1) : (1) how fast or how many time lag needed since the shock of monetary instruments (rSBI) until the realisation of final target of monetary policy (inflation). (2) How strong the variables of inflation expectation line response the shock of SBI interest rate and other variable. This study used secondary data issued by Bank Indonesia and BPS as well as from International Finance Statistic (IFS). The result of the study shows that response velocity of variable in Inflation Expectation Channel towards shock instrument of monetary policy (rSBI) until reach the final target or time tag about 12 quarterly or twenty six months. While impulse response function of variables in this channel to the shock instrument of monetary policy (rSBI) is quiet weak and the main channel that is inflation expectation and exchange rate are not able to explain diversity final target of monetary policy (inflation) about 33,88%, while variable of inflation expectation only able to explain diversity of inflation about 15,03%. Meanwhile, we still able economically to conclude that mechanism of monetary policy transmission through Inflation Expectation Channel is effective to reach the final target of monetary policy of Indonesia period of 1990:2-2007:1

scholarly journals Monetary Policy Transmission : Does Maintain the Price and Poverty Stability is Effective?

JEJAK ◽  
2018 ◽  
Vol 11 (1) ◽  
pp. 78-91
Author(s):  
Ade Novalina ◽  
Rusiadi Rusiadi
Keyword(s):  
Monetary Policy ◽  
Emerging Market ◽  
Food Price ◽  
Poor People ◽  
Monetary Policy Transmission ◽  
Economic Stability ◽  
Price Inflation ◽  
Emerging Market Countries ◽  
Policy Transmission

This study analyzes the effectiveness of monetary policy transmission of emerging market countries, both short and long-term in maintaining economic stability and reducing poverty. The main problem in this paper is that monetary transmission is incapable of controlling the economy and reducing poverty. There are five countries selected such as India, Brazil, China, Russia, and Indonesia. Long-term prediction analysis using Vector Auto Regression (VAR) model is performed to predict five emerging market countries using Regression Panel. It results suggest that monetary policy transmission affecting the number of poor people should be controlled in three stages. In the short-term, the transmission of export variables and inflation controls the number of poor people. In the medium-term, the control of the number of poor people uses variables of inflation and exports while in the long-term uses exports and Gross Domestic Product (GDP). Overall, all economic variables of emerging market countries are greatly influenced by the fluctuations of each country's exports, then by food price stability as measured by food price inflation. The result of regression panel analysis is known that the factor that most influence the poor people in emerging market country is GDP. Exports also affect poor people such as Indonesia, China, and Russia. Inflation also causes poor people like India and Brazil. The countries that have the most impact on economic fluctuations on the number of poor people are India, Indonesia, China, Brazil, and Russia.

scholarly journals Interest Rate Pass-Through: Empirical Study Towards Monetary Policy Transmission Effectiveness in Indonesia

2018 ◽  
Vol 2 (02) ◽  
pp. 14
Author(s):  
Heni Hasanah
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Central Bank ◽  
Monetary Policy Transmission ◽  
Deposit Rate ◽  
Policy Transmission ◽  
Lending Rate ◽  
Pass Through ◽  
Effectiveness Of Monetary Policy

<p><em>This research aims to measure the effectiveness of monetary policy transmission, especially through the interest rate channel. The analysis was conducted on the first stage of its transmission, namely Interest Rate Pass-through (IRPT). IRPT refers to condition in which retail interest rate (both deposit and lending rate) responds to changes in policy rate of central bank. IRPT was measured using Error Correction Model (ECM) for time series data in the period of January 2010 - December 2015. The results of this study indicated that degree of long term and short term IRPT is incomplete for deposit and lending rate. In addition, IRPT for deposit rate is higher than lending rate, but the adjustment process of lending rate faster than deposit rate. Finally, model that include other variables (macroeconomic and internal banking indicator) generate long term IRPT which is smaller than the standard model. This results implies that the Central Bank, the FSA, and government needs to pay attention to the stability of the other variables that may interfere or reduce the effectiveness of monetary policy through the interest channel.     </em></p><p><strong><em>JEL Classification: </em></strong>E42, E43, E52</p><strong><em>Keywords: </em></strong><em>Deposit rate, ECM,  IRPT, Lending Rate, Policy Rate</em>

scholarly journals ANALISIS EMPIRIS EFEKTIVITAS MEKANISME TRANSMISI KEBIJAKAN MONETER DI INDONESIA MELALUI JALUR EKSPEKTASI INFLASI PERIODE 1990:2-2007:1

2009 ◽  
Vol 13 (3) ◽  
pp. 288
Author(s):  
Muhammad Natsir
Keyword(s):  
Monetary Policy ◽  
Time Lag ◽  
Impulse Response Function ◽  
Secondary Data ◽  
Monetary Policy Transmission ◽  
Inflation Expectation ◽  
Policy Transmission ◽  
Monetary Policy Transmission Mechanism ◽  
Auto Regression ◽  
Effectiveness Of Monetary Policy

This study used Vector Auto regression (VAR) model to analyze effectiveness of monetary policy transmission mechanism in Indonesia through Inflation Expectation Channel period 1990:2-2007:1. That effectiveness was measured by two indicators, they are: (1) : (1) how fast or how many time lag needed since the shock of monetary instruments (rSBI) until the realisation of final target of monetary policy (inflation). (2) How strong the variables of inflation expectation line response the shock of SBI interest rate and other variable. This study used secondary data issued by Bank Indonesia and BPS as well as from International Finance Statistic (IFS). The result of the study shows that response velocity of variable in Inflation Expectation Channel towards shock instrument of monetary policy (rSBI) until reach the final target or time tag about 12 quarterly or twenty six months. While impulse response function of variables in this channel to the shock instrument of monetary policy (rSBI) is quiet weak and the main channel that is inflation expectation and exchange rate are not able to explain diversity final target of monetary policy (inflation) about 33,88%, while variable of inflation expectation only able to explain diversity of inflation about 15,03%. Meanwhile, we still able economically to conclude that mechanism of monetary policy transmission through Inflation Expectation Channel is effective to reach the final target of monetary policy of Indonesia period of 1990:2-2007:1

scholarly journals NFLASI DI INDONESIA PADA PERIODE 2011-2015: ANALISIS SERTIFIKAT BANK INDONESIA, SERTIFIKAT BANK INDONESIA SYARIAH, PASAR UANG ANTAR BANK, PASAR UANG ANTAR BANK SYARIAH, FINANCE TO DEPOSIT RATIO DAN LOAN TO DEPOSIT RATIO

2019 ◽  
Vol 5 (12) ◽  
pp. 1070
Author(s):  
Achmad Adnan Fauzi Wicaksana ◽  
Raditya Sukmana
Keyword(s):  
Monetary Policy ◽  
Financial Services ◽  
Inflation Rate ◽  
Secondary Data ◽  
Money Market ◽  
Monetary Policy Transmission ◽  
Long Run ◽  
Policy Transmission ◽  
Negative Effect ◽  
Effect Of Monetary Policy

This study aims to examine the effect of monetary policy transmission through conventional and sharia systems to the inflation rate in Indonesia from January 2011 to December 2015. The approach used is Vector Error Correction Model (VECM)quantitative method using Eviews 8 program. The data used was secondary data from the official website of Bank Indonesia and the Financial Services Authority (Otoritas Jasa Keuangan/OJK). The result of the research shows that in the long run, conventional monetary policy transmission has aneffect on inflation rate in Indonesia, namely the interest rate of Bank Indonesia Certificates which has a positive and significant effect to the inflation rate in Indonesia. Interbank money market variables have negative and significant influence on the inflation rate. While the loan to deposit ratio variable doesn't have any effect on inflation rate. On the sharia side, the results show that in the long run, the sharia monetary policy transmission has an effect on inflation in Indonesia, namely Bank Indonesia Sharia Certificate that has significant negative effect and sharia money market has significant positive effect,whilst finance to deposit ratio doesn't.

scholarly journals ANALISIS TRANSMISI KEBIJAKAN MONETER GANDA TERHADAP INFLASI DI INDONESIA

2019 ◽  
Vol 5 (4) ◽  
pp. 322
Author(s):  
Bimo Saputro ◽  
Raditya Sukmana
Keyword(s):  
Monetary Policy ◽  
Money Supply ◽  
Inflation Rate ◽  
Quantitative Approach ◽  
Cointegration Test ◽  
Monetary Policy Transmission ◽  
Policy Transmission ◽  
The Impact

This research aims to examines the impact of monetary policy transmission through conventional and islamic systems to inflation in Indonesia.The approach used is quantitative approach by using Cointegration Test. The result of this research is that a long-term of conventional monetary policy transmissions has an effect on inflation rate in Indonesia which are SBI has a positive and significant effect on inflation. Then, PUAB has a negative and significant effect on inflation. While, variable of conventional money supply does not have an effect on inflation rate. From the islamic side, the result of this research is that a long-term of sharia monetary policy transmissions has an effect on inflation rate in Indonesia which are SBIS has a negative and significant effect on inflation. While, PUAS has a positive and significant effect on inflation. And variable of sharia money supply does not have an effect on inflation

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