The problem of default by debtors becomes a primary concern for Islamic banking recently.
This study analyzes the effect of economic pressure on the risk of default on Islamic banks,
both in the short and long term, the risk response of default, and also other variables'
contribution in explaining the diversity of risk of default of Islamic banks. This study used
monthly data from 2007 to 2020 by using a vector error correction model. The results show
that inflation and exchange rates affect the risk of default in the short term, while inflation …

Stability of financial institutions is a crucial issue amid the economic crisis that hit the US and
Europe. Islamic banking in Indonesia as financial institutions are also required to have good
stability in order to maintain the stability of the national economy. The aim of this research is
to determine the stability of Islamic banking in Indonesia, and understand the factors that
affect the stability. Stability of Islamic banking will be measured using Merton model to
estimate the Probability Default (PD). Panel data regression was used to estimate the factors …