Granger Causality Factors that Influence the Dynamics of Profit Sharing Financing

Abstract

Banks play an important role in the country's economy. Malaysia and Indonesia are two countries with prominent sharia banking development. This research aims to analyze the influence of third party funds, profit sharing and non-performing financing on profit sharing financing. The research method uses a quantitative approach with time series secondary data using the Vector Error Correction Model (VECM) and the help of the Eviews 9 program. The data used is monthly data contained in the Sharia Banking Statistics published by the Financial Services Authority for the 2018-2023 period. The results show that there is a one-way relationship from DPK to NPF and from profit sharing to NPF. VECM estimates show that in the long term DPK, BH, and NPF have an influence on profit sharing financing. However, in the short term DPK, BH, NPF have no effect on profit sharing financing. IRF analysis shows that all variables respond significantly and fluctuate in the short term, but are stable in the long term. VD analysis shows that the largest contribution to profit sharing financing comes from the variable itself.