Title: Financial market discipline in stability of Sharia banking: evidence from Indonesia state

Authors: Rini Kurnia Sari; Muhammad Alfarizi

Addresses: Management Department, BINUS Online Learning, Bina Nusantara University, West Jakarta, DKI Jakarta Province, Indonesia ' Management Department, BINUS Online Learning, Bina Nusantara University, West Jakarta, DKI Jakarta Province, Indonesia

Abstract: The global banking sector, grappling with the COVID-19 pandemic, faced economic challenges hindering growth. Sharia banking authorities and customers, emphasising financial transparency and consumer protection, recognised market discipline. Islamic banking, aligning with Islamic teachings, bolstered sector stability in Muslim nations. In Indonesia, deposits played a crucial role in enhancing liquidity and trust in Islamic banking. This research in Indonesia explores market discipline elements in Islamic banking, assessing their impact on deposit performance. Variables like returns on deposits, capital adequacy ratio (CAR), return on assets (ROA), BI7DRR, and inflation were considered. The study suggests increasing CAR for deposit growth, incorporating bank size in marketing strategy, and addressing inflation and BI7DRR for competitive rates. Financial authorities could incentivise CAR and support smaller banks.

Keywords: bank size; BI7DRR; capital adequacy ratio; CAR; deposits performance; financial authorities; inflation; Indonesia; Islamic banks; market discipline; Indonesia.

DOI: 10.1504/GBER.2026.151152

Global Business and Economics Review, 2026 Vol.34 No.2, pp.135 - 156

Received: 12 Jan 2024
Accepted: 01 Apr 2024
Published online: 15 Jan 2026 *

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