SHACRAL: Shari'ah Economics Review Journal

VOLATILITY DYNAMICS OF ISLAMIC AND CONVENTIONAL STOCKS IN INDONESIA: EVIDENCE FROM GARCH MODELS

2026-01-12T11:49:24+00:00

Understanding stock market volatility is essential for effective risk management and portfolio decision-making, particularly in emerging markets characterized by high uncertainty. Indonesia’s capital market provides a unique setting for volatility analysis due to its dual structure, which accommodates both Islamic (Shariah-compliant) and conventional stock indices. This study examines and compares the volatility dynamics of the Jakarta Islamic Index (JII) and the Indonesia Composite Index (IHSG) using a Generalized Autoregressive Conditional Heteroskedasticity (GARCH) framework. Employing daily closing price data from the Indonesia Stock Exchange for the period 2020–2025, this research applies the GARCH(1,1) model to capture volatility clustering, persistence, and time-varying risk characteristics in both market segments.

The empirical results reveal notable differences in volatility behavior between Islamic and conventional stocks. Descriptive statistics indicate that JII exhibits higher unconditional volatility than IHSG, as reflected by a larger standard deviation and wider return range. Stationarity tests confirm that both return series are suitable for GARCH modeling. The GARCH estimation results show that IHSG has a higher ARCH coefficient, suggesting a stronger short-term reaction to market shocks, while JII displays a higher GARCH coefficient, indicating greater long-term volatility persistence. The volatility persistence parameter (α + β) is close to unity for both indices, implying that volatility shocks dissipate slowly in both Islamic and conventional stock markets.

These findings contribute to the growing literature on Islamic finance by providing updated evidence on volatility dynamics in Indonesia’s capital market. The results have important implications for investors, portfolio managers, and policymakers, particularly in terms of risk assessment, portfolio diversification, and the development of Islamic capital market infrastructure. Overall, the study highlights that while Islamic and conventional stocks share common volatility features, their transmission mechanisms and persistence patterns differ, underscoring the importance of time-varying risk models in investment analysis.

THE ROLE OF ISLAMIC FINANCIAL LITERACY AND ISLAMIC FINANCIAL INCLUSION ON BUSINESS PERFORMANCE OF MUSLIM GEN Z AND MILLENNIAL ENTREPRENEURS IN INDONESIAN MSMEs.

2026-01-12T11:10:24+00:00

The rapid development of Islamic finance presents significant opportunities for strengthening the performance of micro, small, and medium enterprises (MSMEs), particularly those owned by Muslim entrepreneurs. However, limited Islamic financial literacy and low access to Sharia-compliant financial services remain critical challenges, especially among younger generations. This study aims to examine the role of Islamic financial literacy and Islamic financial inclusion in enhancing business performance among Muslim Gen Z and millennial entrepreneurs operating MSMEs in Indonesia. Using a quantitative research approach, primary data were collected through an online questionnaire distributed to Muslim MSME entrepreneurs who have operated their businesses for at least two years. A total of valid responses were analyzed using Partial Least Squares–Structural Equation Modeling (PLS-SEM) with SmartPLS 4.

The results reveal that Islamic financial literacy has a positive and significant effect on Islamic financial inclusion, indicating that higher levels of Sharia-based financial knowledge increase entrepreneurs’ access to and use of Islamic financial services. Furthermore, Islamic financial literacy is found to have a direct and significant impact on business performance, suggesting that financially literate Muslim entrepreneurs are better equipped to manage financial decisions, optimize resources, and sustain business growth. Islamic financial inclusion also demonstrates a positive and significant influence on business performance, highlighting the importance of access to Sharia-compliant financing and financial products in improving MSME outcomes. In addition, mediation analysis confirms that Islamic financial inclusion significantly mediates the relationship between Islamic financial literacy and business performance.

These findings underscore the strategic importance of strengthening Islamic financial literacy and expanding Islamic financial inclusion to enhance the performance and sustainability of Muslim-owned MSMEs, particularly among Gen Z and millennial entrepreneurs. The study provides practical implications for policymakers, Islamic financial institutions, and entrepreneurship development programs in designing targeted interventions to support young Muslim entrepreneurs and foster an inclusive Islamic economic ecosystem.

DETERMINANTS OF NON-MUSLIM BEHAVIORAL INTENTION TO USE ISLAMIC BANKING SERVICE IN INDONESIA: AN EXTENDED THEORY OF PLANNED BEHAVIOR APPROACH

2026-01-12T10:47:48+00:00

The growth of Islamic banking in Indonesia has not been accompanied by proportional adoption among non-Muslim consumers, despite increasing awareness and regulatory support. This study aims to examine the affective and cognitive factors influencing non-Muslim consumers’ behavioral intention to use
Islamic banking services in Indonesia by employing an extended Theory of Planned Behavior (TPB). Specifically, this study investigates the role of knowledge as an antecedent of attitude, subjective norm, and perceived behavioral control, and their subsequent effects on behavioral intention. This research adopts a quantitative explanatory approach using primary data collected through an online questionnaire. The sample consists of 220 nonMuslim respondents in Indonesia who are aware of Islamic banking but have not become active customers. Data were analyzed using Partial Least Squares–
Structural Equation Modeling (PLS-SEM) with SmartPLS 4. Measurement items were adapted from Mustapha et al. (2022) and assessed for reliability and validity through convergent validity, discriminant validity, and internal consistency tests.
The results indicate that all proposed hypotheses are supported. Knowledge has a strong and significant positive effect on attitude, subjective norm, and perceived behavioral control. Furthermore, attitude, subjective norm, and perceived behavioral control significantly influence behavioral intention, with attitude emerging as the strongest predictor. The model demonstrates substantial
explanatory power, explaining 63.2% of the variance in behavioral intention. These findings suggest that non-Muslim consumers’ intention to use Islamic banking services is primarily driven by cognitive understanding, evaluative judgment, social influence, and perceived capability, rather than religious considerations.
This study contributes to the literature by extending the TPB framework and providing empirical evidence from a non-Muslim context in a pluralistic society. Practically, the findings imply that Islamic banks should emphasize knowledge dissemination, ethical value communication, and service accessibility to attract non-Muslim consumers and promote inclusive financial development in Indonesia.

ISLAMIC TOURISM AS A STRATEGIC COMPONENT OF THE SHARIA ECONOMY: A SYSTEMATIC LITERATURE REVIEW

2026-01-12T11:21:37+00:00

Islamic tourism has emerged as a significant segment within the global tourism industry, particularly in countries with Muslim-majority populations and regions seeking to tap into the growing Muslim travel market. This study aims to systematically review and synthesize existing literature on Islamic tourism as an integral component of the sharia economy, focusing on its conceptual foundations, development patterns, economic implications, and governance challenges. Employing a qualitative systematic literature review approach, this article analyzes peer-reviewed journal articles, institutional reports, and policy documents published between 2010 and 2024. The review is guided by predefined inclusion criteria, emphasizing scholarly works indexed in reputable databases and official statistical sources. The findings indicate that Islamic tourism is not merely a niche market but a comprehensive economic ecosystem encompassing halal hospitality, sharia - compliant financial services, cultural preservation, and ethical consumption. Several studies highlight the role of Islamic tourism in enhancing economic inclusivity, strengthening local micro-enterprises, and supporting sustainable development goals. However, the literature also reveals persistent challenges, including conceptual ambiguities, regulatory fragmentation, inconsistent standards of halal certification, and limited integration between tourism stakeholders and Islamic financial institutions. Empirical evidence from international tourism reports and national statistical agencies, including Indonesia’s Central Bureau of Statistics (BPS), demonstrates the growing contribution of Muslim-friendly tourism to national economies. Despite this potential, the implementation of Islamic tourism remains uneven across regions due to institutional, infrastructural, and policy constraints. This study contributes to the literature by offering a structured conceptual framework that positions Islamic tourism within the broader sharia economic system. It also identifies research gaps and proposes future research directions to strengthen theoretical development and policy formulation. The article is expected to provide valuable insights for academics, policymakers, and practitioners seeking to develop Islamic tourism as a sustainable economic strategy.

ISLAMIC ECONOMICS AND PAYLATER PRACTICES IN THE DIGITAL SHOPPING ERA: A SYSTEMATIC LITERATURE REVIEW

2026-01-12T10:59:41+00:00

The rapid expansion of the digital economy has fundamentally transformed consumer behavior, particularly through the emergence of Buy Now, Pay Later (BNPL) or paylater services. These financial innovations offer instant credit access and flexible payment schemes, making them increasingly popular in digital shopping platforms. In Indonesia, the widespread adoption of paylater services has been driven by the growth of e-commerce, fintech innovation, and changing consumption patterns among younger generations. Despite their economic convenience, paylater practices raise critical concerns related to excessive consumerism, household indebtedness, and financial vulnerability. From the perspective of Islamic economics, these concerns are particularly significant due to the prohibition of interest (riba), excessive uncertainty (gharar), and unethical consumption behavior.

This article aims to systematically review existing literature on paylater practices within the framework of Islamic economics, focusing on their ethical, legal, and socioeconomic implications in the digital shopping era. Using a qualitative systematic literature review approach, this study synthesizes findings from peer-reviewed national and international journals, academic books, and institutional reports related to Islamic economics, digital finance, consumer behavior, and fintech regulation. The literature is analyzed thematically to identify key issues, scholarly debates, and areas of convergence and divergence between paylater practices and Islamic economic principles.

The review reveals that while paylater services contribute to financial inclusion and digital economic growth, their prevailing contractual structures and fee mechanisms often resemble interest-based credit, raising concerns regarding sharia compliance. Moreover, empirical studies highlight the association between paylater usage and increased impulsive consumption, debt accumulation, and financial stress. This article concludes that Islamic economics offers a critical ethical framework for evaluating paylater practices and underscores the need for sharia-compliant digital financing models that balance consumer convenience with financial responsibility and social welfare.