Interaction of Macroeconomic Variable Shocks and Monetary Policy Interventions on the Profitability of Sharia Commercial Banks in Indonesia

This study analyzes the impact of macroeconomic variable shocks (real effective exchange rate and consumer price index) and monetary policy interventions (BI Rate) on the profitability of Sharia commercial banks in Indonesia. Using an error correction model with data from January 2015 to May 2022, the study finds that the real effective exchange rate and consumer price index significantly affect profitability in the long term but not in the short term. Monetary policy shows no significant effect. Capital adequacy ratio significantly influences profitability in both the short and long term. The findings highlight the vulnerability of banking performance to short-term macroeconomic shocks and the effectiveness of internal capital management.

Mohammad Aliman Shahmi