CREDIT RISK AND MACROECONOMICS OF ISLAMIC BANKING IN INDONESIA
The purpose of this study is to analyze the effect of macroeconomic variables, namely GDP, Inflation and Unemployment on the credit risk of Islamic banking of Indonesia. The data for this study were collected from secondary sources via Statistics Center Indonesia (BPS) and financial statements of the 7th Islamic Bank of Indonesia. The data used here are annual ones, running from 2009 to 2016. This research uses an explanatory analysis, based on panel data regression testing using the statistical package Eviews 9. The result of panel data regression with random effect model lead to the conclusion that GDP and unemployment rate have significant negative effects on the credit risk of Islamic banking in Indonesia. In the same time, inflation is found to have a negative but statistically insignificant on credit risk of Islamic banking system of Indonesia.