DO ZISWAF FUNDS AND OPERATIONAL PERFORMANCE INFLUENCE MINIMUM RESERVE REQUIREMENTS? EVIDENCE FROM INDONESIAN ISLAMIC BANKS WITH FIRM SIZE AS A MODERATING VARIABLE

Abstract

This study investigates the determinants of the Minimum Reserve Requirement (Giro Wajib Minimum/GWM) in Indonesian Islamic commercial banks by examining the roles of ZISWAF fund receipts, Operating Expenses to Operating Income (BOPO), and non-operating profit/loss, while assessing the moderating effect of firm size. Although the minimum reserve requirement is an essential macroprudential instrument for maintaining banking liquidity and financial stability, empirical evidence regarding the influence of Islamic banking-specific financial indicators and philanthropic fund management on GWM remains limited. This study addresses this research gap by integrating operational, financial, and Islamic social finance variables into a single empirical framework. A quantitative research design was employed using secondary data obtained from the annual and quarterly financial statements published by the Financial Services Authority of Indonesia (OJK) and the official websites of five Islamic commercial banks. The study covers the period from the first quarter of 2018 to the third quarter of 2023, yielding 115 panel observations. Panel data regression and Moderated Regression Analysis (MRA) were performed using EViews 12. The findings reveal that ZISWAF fund receipts, BOPO, and non-operating profit/loss do not individually have a significant effect on the Minimum Reserve Requirement. Furthermore, firm size does not significantly moderate the relationships between these variables and GWM. However, the variables jointly exhibit a statistically significant effect on GWM, although the model explains only 18.40% of the variation in reserve requirements. These findings suggest that GWM is influenced more by regulatory and macroprudential considerations than by banks' internal operational or philanthropic financial characteristics. The study contributes to the literature on Islamic banking liquidity management and provides practical insights for regulators and bank managers regarding the limited role of internal financial indicators in determining mandatory reserve requirements.