THE ROLE OF MACRO-MONETARY POLICY ON ISLAMIC BANKING STABILITY IN THE BUSINESS CYCLE IN INDONESIA: STUDY OF KEYNES'S THEORY AND IBN KHALDUN'S THEORY

According to the theory of Keynes and Ibn Khaldun, government must be in control national economy with active policies influence movement economy. The macro-monetary policy can reduce output imbalances through instruments credit growth, affecting aggregate demand. This study aims analyze role on Islamic banking stability business cycle Indonesia. used Vector Error Correction Model (VECM) simultaneous equation method Eviews-12 program. secondary data banks from various institutions such as Financial Services Authority, Bank Indonesia Central Bureau Statistics. this are 2008 2021. research resulted findings that, long-term cycle, Statutory Reserves positively financing. Buffer capital or Capital Non-Performing Financing negatively sharia Meanwhile, economic growth Gross Domestic Product does not affect short term, none affects results Impulse Response Function (IRF) Forecast Variance Decompositions (FEVD) show that shock makes most significant contribution financing cycle. encourage use controlling a proxy for distribution balanced, prudent quality manner Then it anticipate losses disrupt Banks.