COVID-19 and depositors' response: what are the factors behind the growth?

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The deposits level of Indonesian commercial banks during the COVID-19 pandemic has surged, meanwhile, the overall country's economic performance and business activities were slowed down and the interest rates were cut down by the Central Bank of Indonesia. This paper investigates factors determining the deposit growth in Indonesia. It also examines the distribution of the deposit growth into Wadi ah- deposits and Mudarabah depositors during the COVID-19 pandemic. Using monthly data from August 2019 to January 2022, the study found that factors such as Uncertainty about the future (UC), Unemployment (UN), Economic Slowdown (ES), and Interest Rate (IN) were significant to the growth of deposits while not Consumption (C). The sample t-test found that there is no shift in Islamic banking products from safekeeping (Wadiah) to partnership (Mudharabah). During COVID-19 pandemic where the market undergonea period of financial anxieties, people hold money, that is save money for precautionary purposes against future mishaps like a prolonged Covid-19 pandemic. Banks are expected to make more loans from the increased savings which will complement Central banking countercyclical policy to stimulate the economy through various policies such as reducing the statutory reserve requirement, liquidity coverage ratio and capital conservation buffer.
COVID-19 , Islamic banking , Indonesia , Project paper (MSc)
Chairiandini, S. S. (2022). COVID-19 and depositors' response: what are the factors behind the growth? (Master dissertation). INCEIF, Kuala Lumpur. Retrieved from

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