Financing Crunch on Islamic Banking And Monetary Stability In Indonesia

Financing crunch is a situation where a decline in the financing supply of Islamic banking fastly as a result of a decline in the willingness of banks to channel financing to business. Financing crunch may occur as a result of the economic crisis and macroprudential policy. This study used monthly time series data from January 2007 to December 2015. Data related to the total financing extended by the Islamic banking, total funding (DPK), FDR (financing to deposit ratio) and total financing for SMEs. The research analysis which used is trend analysis in four conditions i.e. (1) the condition of the financial crisis in the United States, (2) the condition of the world economic slowdown, (3) when macroprudential policy is applied to Islamic banking; and (3) LTV and DP policies and LDR Reserve policy. This result is Islamic bank financing in crisis situation and the implementation of LTV and DP policy and LDR Reserve pol icy did not result in a financing crunch on Islamic banking. While the slowdown in financing the SMEs sector is caused by factors of economic conditions.