Article Sidebar

Download
Full text PDF
Statistic
Read Counter : 642 Download : 586

Downloads

Download data is not yet available.

Main Article Content

Abstract

Purpose – This research examines the relationship between Islamic bank financing aligned with the Sustainable Development Goals (SDGs) and economic growth, incorporating Qur'anic principles in Islamic finance.
Methodology – Quarterly time-series data from Q1 2014 to Q1 2022 were analyzed using the cointegration and ARDL approaches. Data sources include the PSIFIs for Islamic Banks (IFSB Database), Indonesia's GDP (BPS), and the Financial Services Authority (OJK).
Findings – Long-term analysis reveals that Islamic financing in SDG sectors such as SDG1 (No Poverty), SDG2 (Zero Hunger), SDG3 (Good Health and Well-being), SDG4 (Quality Education), and SDG11 (Sustainable Cities and Communities) positively correlate with economic growth, while SDG8 (Decent Work and Economic Growth) shows an inverse relationship. In the short term, financing in SDG2, SDG3, SDG8, and SDG9 (Industry, Innovation, and Infrastructure) positively impacts economic growth, whereas SDG6 (Clean Water and Sanitation) exhibits a negative association. These findings highlight Islamic finance's potential to address socio-economic challenges rooted in Qur'anic values, such as Surah al-Nisā’ [4]: 29 and al-Baqarah [2]: 261.
Implications – Policymakers are encouraged to promote Islamic microfinance for SMEs and invest in rural sanitation infrastructure (SDG6). Furthermore, financing renewable energy projects (SDG7) aligns with sustainable development goals.
Originality – This study bridges Islamic finance and sustainable development by integrating a Qur'anic perspective into the SDG framework, offering insights into leveraging Islamic finance to achieve sustainability and economic growth, while adhering to Islamic ethical principles.

Keywords

SDGs islamic banking economic growth ARDL Indonesia

Article Details

License

Copyright (c) 2025 Azwar Azwar, Abur Hamdi Usman

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Authors who publish with this journal agree to the following terms:

  1. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
  2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
  3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
How to Cite
Azwar, A., & Abur Hamdi Usman. (2025). Aligning Indonesia’s economic goals with SDGS: Strengthening Qur’anic principles in Islamic finance. Jurnal Ekonomi & Keuangan Islam, 11(1), 80–99. https://doi.org/10.20885/JEKI.vol11.iss1.art6
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX
Crossref
Scopus
Google Scholar
Europe PMC

References

  1. A'la Mawdudi, S. A. (2013). First principles of Islamic economics. Kube Publishing Ltd.
  2. Abduh, M., & Omar, M. A. (2012). Islamic banking and economic growth: The Indonesian experience. International Journal of Islamic and Middle Eastern Finance and Management, 5(1), 35–47. https://doi.org/10.1108/17538391211216811
  3. Abdul-Hamid, A.-W., & Aziz, H. B. A. (2022). SDGs, Islamic banks and economic growth nexus: A case study of Malaysia. https://www.uvu.edu/global/docs/wim22/sdg8/sdg8-abdul-hamid.pdf
  4. Abojeib, M. & Haneef, MA. M. & Mohamed, M. O. (eds) (2018). Islamic economics: Principles and analysis, Kuala Lumpur, International Shari’ah Research Academy for Islamic Finance (ISRA). https://www.researchgate.net/publication/340091248_Islamic_Economics_Principles_and_Analysis
  5. Adrangi, B., & Kerr, L. (2022). Sustainable development indicators and their relationship to gdp: evidence from emerging economies. Sustainability, 14(2), 658. https://doi.org/10.3390/su14020658
  6. Al-Zarqa, M. (1998). Al-Madkhal al-Fiqhī al-’Āmm. Damascus: Dār al-Qalam.
  7. Alhammadi, S. (2024). Islamic finance as a driver for enhancing economic sustainability and innovation in the GCC. Journal of Science and Technology Policy Management. https://doi.org/10.1108/JSTPM-11-2023-0206.
  8. Andespa, R., Yeni, Y. H., Fernando, Y., & Sari, D. K. (2024). Sustainable development of Islamic banks by creating Islamic branding: challenges, importance, and strategies of Islamic branding. International Journal of Sustainable Development & Planning, 19(2). doi: http://dx.doi.org/10.18280/ijsdp.190221.
  9. Anggraini, Y. (2018). Peran green sukuk dalam memperkokoh posisi Indonesia di pasar keuangan syariah global. El Barka: Journal of Islamic Economics and Business, 1(2), 251–268. https://doi.org/10.21154/elbarka.v1i2.1453.
  10. Auda, J. (2008). Maqasid Al-Shariah as Philosophy of Islamic Law, A Systems Approach. International Institute of Islamic Thought. https://iiit.org/wp-content/uploads/Maqasid-Al-Shariah-as-a-Philosophy-of-Islamic-Law-Combined.pdf
  11. Azwar, A. (2023). The role of Islamic philanthropy in green economy development: Case in Indonesia. International Journal of Islamic Economics and Finance Research, 6(2 December), 40–55. doi: https://doi.org/10.53840/ijiefer105.
  12. Biglari, S., Beiglary, S., & Arthanari, T. (2022). Achieving sustainable development goals: Fact or fiction? Journal of Cleaner Production, 332, 130032. https://doi.org/10.1016/j.jclepro.2021.130032.
  13. Bougatef, K., Nakhli, M. S., & Mnari, O. (2020). The nexus between Islamic banking and industrial production: Empirical evidence from Malaysia. ISRA International Journal of Islamic Finance, 12(1), 103–114. https://doi.org/10.1108/IJIF-05-2018-0052
  14. Cernev, T., & Fenner, R. (2020). The importance of achieving foundational Sustainable Development Goals in reducing global risk. Futures, 115, 102492. https://doi.org/10.1016/j.futures.2019.102492.
  15. Coscieme, L., Mortensen, L. F., Anderson, S., Ward, J., Donohue, I., & Sutton, P. C. (2020). Going beyond gross domestic product as an indicator to bring coherence to the sustainable development goals. Journal of Cleaner Production, 248, 119232. https://doi.org/10.1016/j.ecolecon.2016.07.009
  16. Cox, C. (2020). The sustainable development goals and aging: Implications for social work. Journal of Human Rights and Social Work, 5(1), 39–47. https://doi.org/10.1007/s41134-019-00110-3.
  17. D’Adamo, I., Gastaldi, M., & Morone, P. (2022). Economic sustainable development goals: Assessments and perspectives in Europe. Journal of Cleaner Production, 354, 131730. https://doi.org/10.1016/j.jclepro.2022.131730.
  18. De Zwart, P. (2022). Inequality in late colonial Indonesia: new evidence on regional differences. Cliometrica, 16(1), 175–211. https://doi.org/10.1007/s11698-020-00220-3.
  19. Diaz-Lopez, C., Martin-Blanco, C., De la Torre Bayo, J. J., Rubio-Rivera, B., & Zamorano, M. (2021). Analyzing the scientific evolution of the sustainable development goals. Applied Sciences, 11(18), 8286. https://doi.org/10.3390/app11188286.
  20. Dickens, C., McCartney, M., Tickner, D., Harrison, I. J., Pacheco, P., & Ndhlovu, B. (2020). Evaluating the global state of ecosystems and natural resources: Within and beyond the SDGs. Sustainability, 12(18), 7381. https://doi.org/10.3390/su12187381.
  21. Ermolina, M., Matveevskaya, A., & Baranuk, M. (2021). Climate change and the UN 2030 agenda for sustainable development. Proceedings of Topical Issues in International Political Geography, 226–237. Springer. http://dx.doi.org/10.1007/978-3-030-78690-8_20.
  22. Fallah Shayan, N., Mohabbati-Kalejahi, N., Alavi, S., & Zahed, M. A. (2022). Sustainable development goals (SDGs) as a framework for corporate social responsibility (CSR). Sustainability, 14(3), 1222. https://doi.org/10.3390/su14031222.
  23. Gani, I. M., & Bahari, Z. (2021). Islamic banking’s contribution to the Malaysian real economy. ISRA International Journal of Islamic Finance, 13(1), 6–25. https://doi.org/10.1108/IJIF-01-2019-0004
  24. Halkos, G., & Gkampoura, E.-C. (2021). Where do we stand on the 17 sustainable development Goals? An overview on progress. Economic Analysis and Policy, 70, 94–122. https://doi.org/10.1016/j.eap.2021.02.001.
  25. Harahap, B., Risfandy, T., & Futri, I. N. (2023). Islamic law, Islamic finance, and sustainable development goals: A systematic literature review. Sustainability, 15(8), 6626. https://doi.org/10.3390/su15086626.
  26. Huan, Y., Liang, T., Li, H., & Zhang, C. (2021). A systematic method for assessing progress of achieving sustainable development goals: A case study of 15 countries. Science of the Total Environment, 752, 141875. https://doi.org/10.1016/j.scitotenv.2020.141875.
  27. International Financial Service Board. (2020). Islamic Financial Services Industry: Stability Report 2020. Kuala Lumpur. https://www.ifsb.org/wp-content/uploads/2023/10/Islamic-Financial-Services-Industry-Stability-Report-2020_En.pdf
  28. Iskandar, A., & Aqbar, K. (2019). Green economy Indonesia dalam perspektif maqashid syari’ah. Al-Mashrafiyah: Jurnal Ekonomi, Keuangan, dan Perbankan Syariah, 3(2), 83–94. https://doi.org/10.24252/al-mashrafiyah.v3i2.9576.
  29. Iskandar, A., Possumah, B. T., & Aqbar, K. (2020). Islamic financial development, economic growth and CO2 emission in Indonesia. Journal of Islamic Monetary Economics and Finance, 6(2), 353–372. https://doi.org/10.21098/jimf.v6i2.1159.
  30. Jan, A., Mata, M. N., Albinsson, P. A., Martins, J. M., Hassan, R. B., & Mata, P. N. (2021). Alignment of islamic banking sustainability indicators with sustainable development goals: Policy recommendations for addressing the Covid-19 pandemic. Sustainability, 13(5), 2607. https://doi.org/10.3390/su13052607.
  31. Kamali, M. H. (1998). Maqasid al-Shariah: The objective of Islamic law, Islamic Studies, 38(2), 193-208. https://karamah.org/wp-content/uploads/2020/04/Maqasid-Al-Shari%E2%80%99ah-The-Objectives-of-Islamic-Law.pdf
  32. Kassim, S. (2016). Islamic finance and economic growth: The Malaysian experience. Global Finance Journal, 30, 66–76. https://doi.org/10.1016/j.gfj.2015.11.007
  33. Kurniawan, R., Safitri, N. A., & Hamidy, A. (2023). The role of Islamic banks in strengthening the halal value chain in South Kalimantan. Tasharruf: Journal Economics and Business of Islam, 8(2), 176–204. http://dx.doi.org/10.30984/tjebi.v8i2.2824.
  34. Leal Filho, W., Lovren, V. O., Will, M., Salvia, A. L., & Frankenberger, F. (2021). Poverty: A central barrier to the implementation of the UN sustainable development goals. Environmental Science & Policy, 125, 96–104. https://doi.org/10.1016/j.envsci.2021.08.020.
  35. Menne, F., Mardjuni, S., Yusuf, M., Ruslan, M., Arifuddin, A., & Iskandar, I. (2023). Sharia economy, Islamic financial performance and factors that influence it—Evidence from Indonesia. Economies, 11(4), 111. https://doi.org/10.3390/economies11040111.
  36. Mensi, A., & Udenigwe, C. C. (2021). Emerging and practical food innovations for achieving the sustainable development goals (SDG) target 2.2. Trends in Food Science & Technology, 111, 783–789. https://doi.org/10.1016/j.tifs.2021.01.079.
  37. Monaco, S. (2024a). Identity, territories, and sustainability: challenges and opportunities for achieving the UN sustainable development goals (pp. 15–23). Emerald Publishing Limited. https://doi/10.1108/9781837975495
  38. Monaco, S. (2024b). SDG 16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all, and build effective, accountable, and inclusive institutions at all levels. In Identity, Territories, and Sustainability: Challenges and Opportunities for Achieving the UN Sustainable Development Goals (pp. 157–165). Emerald Publishing Limited. https://www.unodc.org/romena/en/SDG/sdg-16_-promote-peaceful-inclusive-societies-for-sustainable-development--provide-access-to-justice-for-all-and-build-effective--accountable-and-inclusive-institutions-at-all-levels.html.
  39. Mrabet, R. (2023). Sustainable agriculture for food and nutritional security. In Sustainable agriculture and the environment (pp. 25–90). Elsevier. https://doi.org/10.1016/B978-0-323-90500-8.00013-0.
  40. Mukhid, M. (2024). Islamic social finance: Exploring zakat, waqf, and sadaqah in economic development. Economics Studies and Banking Journal (DEMAND), 1(2), 46–52. https://doi.org/10.62207/jk7p6661.
  41. Narayan, P. K. (2005). The saving and investment nexus for China: Evidence from cointegration tests. Applied Economics, 37(17), 1979–1990. https://doi.org/10.1080/00036840500278103
  42. Pesaran, H., Smith, R., & Shin, Y. (2001). Bound testing approaches to the analysis of level relationship. Journal of Applied Econometrics, 16, 289–326. https://doi.org/10.1002/jae.616
  43. Pesaran, M. H., & Shin, Y. (1995). An autoregressive distributed lag modelling approach to cointegration analysis. Cambridge University Press. https://doi.org/10.1017/CCOL521633230.011
  44. Pesaran, M. H., Shin, Y., & Smith, R. J. (1996). Testing for the’existence of a long-run relationship’. Faculty of Economics, University of Cambridge. https://ideas.repec.org/p/cam/camdae/9622.html
  45. Piliyanti, I., & Awirya, A. A. (2022). Promoting Islamic Philanthropy in Islamic Higher Education of Indonesia. In Islamic Philanthropy: Exploring Zakat, Waqf, and Sadaqah in Islamic Finance and Economics (pp. 213–228). Springer. https://doi.org/10.1007/978-3-031-06890-4_12.
  46. Purwati, S., & Komalla, S. (2023). The application of ushul al-fiqh (Principles of Islamic jurisprudence) in sharia economics: Theoretical Review. Journal of Economicate Studies, 7(2), 1–15. https://doi.org/10.32506/joes.v7i2.851.
  47. Putri, L. P., Russell, D. J., O’Sullivan, B. G., Meliala, A., & Kippen, R. (2022). A critical review of definitions of rural areas in Indonesia and implications for health workforce policy and research. Health Research Policy and Systems, 20(1), 46. https://doi.org/10.1186/s12961-022-00847-w.
  48. Racioppi, F., Martuzzi, M., Matić, S., Braubach, M., Morris, G., Krzyżanowski, M., Jarosińska, D., Schmoll, O., Adamonytė, D., (2020). Reaching the sustainable development goals through healthy environments: are we on track?, European Journal of Public Health, 30(Supplement_1), i14–i18, https://doi.org/10.1093/eurpub/ckaa028
  49. Rasche, A. (2020). The united nations global compact and the sustainable development goals. In Research handbook of responsible management (pp. 228–241). Edward Elgar Publishing. http://dx.doi.org/10.4337/9781788971966.
  50. Razak, S. H. A. (2020). Zakat and waqf as instrument of Islamic wealth in poverty alleviation and redistribution: Case of Malaysia. International Journal of Sociology and Social Policy, 40(3/4), 249–266. https://doi.org/10.1108/IJSSP-11-2018-0208.
  51. Redek, T., Domadenik, P., & Koman, M. (2020). Sustainable development goals in the EU and the challenges in their implementation. In Challenges on the Path Toward Sustainability in Europe (pp. 11–29). Emerald Publishing Limited. https://doi.org/10.1108/978-1-80043-972-620201003.
  52. Rohmana, Y. (2023). University funding through waqf: Lesson from Indonesia and selected countries. 4th International Conference on Islamic Economics, Business, Philanthropy, and PhD Colloqium (ICIEBP 2022), 218–231. Atlantis Press. https://doi.org/10.2991/978-94-6463-176-0_15.
  53. Rosyidah, A., Utomo, S. H., Mukhlis, I., & Nugroho, A. (2023). The role of zakat and waqf in achieving sustainable development goals (SDGs): A global perspective. Proceeding of International Conference on Finance Business and Banking, 171–179. https://proceeding.uinmataram.ac.id/index.php/icfbb/article/view/40/52.
  54. Saravanakumar, V., Malaiarasan, U., & Balasubramanian, R. (2020). Sustainable agriculture, poverty, food security and improved nutrition. Sustainable Development Goals: An Indian Perspective, 13–39. https://doi.org/10.1007/978-3-030-42488-6_2.
  55. Saxena, A., Ramaswamy, M., Beale, J., Marciniuk, D., & Smith, P. (2021). Striving for the United Nations (UN) sustainable development goals (SDGs): what will it take? Discover Sustainability, 2, 1–14. https://doi.org/10.1007/s43621-021-00029-8
  56. Sehrawat, M., & Giri, A. K. (2015). Financial development and income inequality in India: An application of ARDL approach. International Journal of Social Economics, 42(1), 64-81. https://doi.org/10.1108/IJSE-09-2013-0208
  57. Shaikh, S. A., & Hassan, M. K. (2020). Progress on sustainable development goals in muslim majority countries. Islamic Perspective for Sustainable Financial System, 71. https://doi/org/10.26650/B/SS10.2020.017.04
  58. Siddique, M. A., Haq, M., & Rahim, M. (2020). The Impact of the Islamic banking industry on economic growth and poverty reduction in Pakistan. In Enhancing Financial Inclusion through Islamic Finance, Volume II (pp. 259–279). Springer. https://ideas.repec.org/h/pal/psibcp/978-3-030-39939-9_11.html
  59. Stevens, J. P. (2012). Applied multivariate statistics for the social sciences. Routledge. https://www.routledge.com/Applied-Multivariate-Statistics-for-the-Social-Sciences-Analyses-with-SAS/Pituch-Stevens/p/book/9780415836661
  60. Stiglitz, J. E., Sen, A., & Fitoussi, J.-P. (2009). Report by the commission on the measurement of economic performance and social progress. Commission on the measurement of economic performance and social progress Paris. https://www.economie.gouv.fr/files/finances/presse/dossiers_de_presse/090914mesure_perf_eco_progres_social/synthese_ang.pdf
  61. Supriani, I., Fianto, B. A., Fauziah, N. N., & Maulayati, R. R. (2021). Revisiting the contribution of Islamic banks’ financing to economic growth: The Indonesian experience. Shirkah: Journal of Economics and Business, 6(1), 18–37. https://doi.org/10.22515/shirkah.v6i1.383.
  62. Tarantang, J., & Astiti, N. N. A. (2023). The legal argumentation regulatory framework for management of sharia funding and risk loans in Indonesia. Jurnal Ilmiah Al-Syir’ah, 21(1), 72–85. http://dx.doi.org/10.30984/jis.v21i1.2268.
  63. Wartoyo, W., & Haida, N. (2023). The actualization of sustainable development goals (SDGs) in Indonesia economic growth an Islamic economic perspective. IQTISHADUNA, 14(1), 107–124. https://doi.org/10.20414/iqtishaduna.v14i1.6706.
  64. Yusof, N. A. M., & Loong, L. C. (2020). Islamic banking and economic growth in Malaysia: Evidence of a causal relationship pre and post regulatory reform. Journal of Entrepreneurship and Business, 8(1), 1–14. https://doi.org/10.17687/jeb.v8i1.446