Article Sidebar

Submitted
February 25, 2023
Accepted
March 28, 2023
Published
March 28, 2023
Download
Full text PDF
Statistic
Read Counter : 516 Download : 627

Downloads

Download data is not yet available.

Main Article Content

Abstract

Purpose – This study aims to identify the contribution of Islamic social finance (Zakat, Infaq, and Shadaqah or ZIS) to economic growth in Indonesia, both in the long-term and short-term models. Based on previous studies, government expenditure; investment; and trade openness are also included in the model as control variables.
Methodology – Annual time series data for 21 years from 2002 to 2022 were analyzed using the Error Correction Model (ECM) approach to determine the long-term and short-term effects of independent variables on economic growth.
Findings – The main findings of this study confirm that Islamic social finance (ZIS) is a financial instrument that benefits the economy. ZIS can be an alternative fund for overcoming various problems of the Muslim Ummah and revitalizing the economy, even more so in a country with a majority Muslim population like Indonesia where ZIS instruments such as Zakat are obligatory to be issued to able-bodied Muslims. The study results show that the effect of ZIS on economic growth in Indonesia is felt in the long term, while in the short term, it has no significant impact.
Implication – This research provides insight for related parties (especially National Board of Zakat/Badan Amil Zakat Nasional, BAZNAS) further to optimize the potential of ZIS into productive sectors to improve the economy.
Originality – Most previous studies used panel data with a limited period to estimate the effect of Islamic social finance on economic growth, while this research utilized time series data with the ECM approach for a longer period.

Keywords

Economic growth government expenditure Islamic social finance nvestment trade openness

Article Details

License

Copyright (c) 2023 Siswantoro Siswantoro, Ihsanul Ikhwan

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-ShareAlike 4.0 International License that allows others to share the work with an acknowledgement 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 acknowledgement 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
Siswantoro, S., & Ikhwan, I. . (2023). The contribution of Islamic social finance to economic growth in Indonesia. Review of Islamic Social Finance and Entrepreneurship, 2(1), 1–12. https://doi.org/10.20885/RISFE.vol2.iss1.art1
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX

References

  1. Alghina, N. M., Permata, P., & Aryo, B. (2019). The impact of zakat, infaq, shodaqoh (ZIS), unemployment and poverty on the economic growth in Indonesia (2011-2017). In 2018 International Conference on Islamic Economics and Business (ICONIES 2018), 101, 210–214. https://doi.org/10.2991/iconies-18.2019.40
  2. Arwani, A., & Wahdati, A. (2020). The effect of zakat, infak, sedekah (ZIS), human development index and unemployment on Indonesia’s economic growth. Al-Tijary: Jurnal Ekonomi Dan Bisnis Islam, 5(2), 159–173. https://doi.org/http://dx.doi.org/10.21093/at.v5i2.2220
  3. Athoillah, M. A. (2018). The zakat effect on economic growth, unemployment, and poverty in the island of Java: Panel data analysis 2001-2012. Ekspansi: Jurnal Ekonomi, Keuangan, Perbankan, dan Akuntansi, 10(2), 205–230. https://doi.org/https://doi.org/10.35313/ekspansi.v10i2.1211
  4. Azam, M., Iqbal, N., & Tayyab, M. (2014). Zakat and economic development: Micro and macro level evidence from Pakistan. Bulletin of Business and Economics (BBE), 3(2), 85–95. https://bbejournal.com/index.php/BBE/article/view/207
  5. Beik, I. S., & Arsyianti, L. D. (2016). Ekonomi Pembangunan Syariah. PT. Raja Grafindo Persada.
  6. Central Bureau of Statistics, BPS. (2022). Laju pertumbuhan PDB Indonesia menurut pengeluaran (Persen) 2002-2022. https://www.bps.go.id/indicator/169/108/1/-seri-2010-4-laju-pertumbuhan-pdb-menurut-pengeluaran.html
  7. Choudhury, M. A., & Harahap, S. . (2008). Interrelationship between zakat, Islamic bank and the economy: A theoretical exploration. Managerial Finance, 34(9), 610–617. https://doi.org/https://doi.org/10.1108/03074350810890967
  8. Chu, T. T., Hölscher, J., & McCarthy, D. (2020). The impact of productive and non-productive government expenditure on economic growth: an empirical analysis in high-income versus low-to middle-income economies. Empirical Economics, 58, 2403–2430. https://doi.org/https://doi.org/10.1007/s00181-018-1616-3
  9. Dinh, T. T. H., Vo, D. H., The Vo, A., & Nguyen, T. C. (2019). Foreign direct investment and economic growth in the short run and long run: Empirical evidence from developing countries. Journal of Risk and Financial Management, 12(4), 176. https://doi.org/https://doi.org/10.3390/jrfm12040176
  10. Hamed, M. M. (2020). The role of Islamic social finance in mitigating humanitarian crises. European Journal of Islamic Finance, 16. https://doi.org/https://doi.org/10.13135/2421-2172/4937
  11. Ibrahim, S. M., & Shaharuddin, A. (2015). In search of an effective zakat institution management in Kano state Nigeria. Journal for Studies in Management and Planning, 1(7), 242–258. http://internationaljournalofresearch.org/index.php/JSMaP
  12. Jedidia, K. Ben, & Guerbouj, K. (2020). Effects of zakat on the economic growth in selected Islamic countries: empirical evidence. International Journal of Development Issues, 1446–8956. https://doi.org/10.1108/IJDI-05-2020-0100
  13. Jouini, J. (2015). Linkage between international trade and economic growth in GCC countries: empirical evidence from PMG estimation approach. The Journal of International Trade and Economic Development, 24(3), 341–372. https://doi.org/https://doi.org/10.1080/09638199.2014.904394
  14. Kassi, D. F., Sun, G., Gnangoin, Y. T., Edjoukou, A. J. R., & Assamoi, G. R. (2019). Dynamics between financial development, energy consumption and economic growth in Sub-Saharan African countries: Evidence from an asymmetrical and nonlinear analysis. Munich Personal RePEc Archive (MPRA). https://core.ac.uk/download/pdf/211630612.pdf
  15. Khasandy, E. A., & Badrudin, R. (2019). The influence of zakat on economic growth and welfare society in Indonesia. Munich Personal RePEc Archive, 91574. https://mpra.ub.uni-muenchen.de/91574/
  16. Lewis, W. A. (2013). Theory of economic growth. Routledge.
  17. Manwa, F., Wijeweera, A., & Kortt, M. . (2019). Trade and growth in SACU countries: a panel data analysis. Economic Analysis and Policy, 63, 107–118. https://doi.org/https://doi.org/10.1016/j.eap.2019.05.003
  18. Meyer, D. F., & Sanusi, K. A. (2019). A causality analysis of the relationships between gross fixed capital formation, economic growth and employment in South Africa. Studia Universitatis Babes-Bolyai Oeconomica, 64(1), 33–44. https://doi.org/https://doi.org/10.2478/subboec-2019-0003
  19. Munfaati, A., & Noviarita, H. (2023). Effects of zakat and government debt on the Indonesian economy. Al-Kharaj : Jurnal Ekonomi , Keuangan & Bisnis Syariah, 5(2), 772–788. https://doi.org/10.47467/alkharaj.v5i2.1327
  20. National Zakat Agency, BAZNAS. (2022). Statistik zakat nasional. https://baznas.go.id/index.php/szn/statistik-zakat-nasional
  21. Olaoye, O., & Afolabi, O. (2020). Government spending and economic growth: A trivariate causality testing. African Journal of Economic and Management Studies, 12(2), 250–268. https://doi.org/https://doi.org/10.1108/AJEMS-07-2020-0334
  22. Onifade, S. T., Çevik, S., Erdoğan, S., Asongu, S., & Bekun, F. V. (2020). An empirical retrospect of the impacts of government expenditures on economic growth: new evidence from the Nigerian economy. Journal of Economic Structures, 9(1), 1–13. https://doi.org/doi.org/10.1186/s40008-020-0186-7
  23. Putriani, D., Ghani, G. M., & Kartiwi, M. (2020). Exploration of agent-based simulation: The multiplier effect of zakah on economic growth. Journal of Islamic Monetary Economics and Finance, 6(3), 667–688. https://doi.org/https://doi.org/10.21098/jimf.v6i3.1110
  24. Raghutla, C. (2020). The effect of trade openness on economic growth: Some empirical evidence from emerging market economies. Journal of Public Affairs, 20(3), 2081. https://doi.org/https://doi.org/10.1002/pa.2081
  25. Ridlo, M., Muthohar, A. M., & Masruhan, M. (2021). The impact of zakah, islamic financing, sukuk and inflation on national economic growth with poverty as a moderation variable. Falah: Jurnal Ekonomi Syariah, 6(1), 17–29. https://doi.org/https://doi.org/10.22219/jes.v6i
  26. Ridlo, M., & Wardani, L. D. (2020). The effects of investment, monetary policy, and ZIS on economic growth in Indonesia. Indonesian Journal of Islamic Economics Research, 2(2), 95–103. http://e-journal.iainsalatiga.ac.id/index.php/ijier
  27. Ridwan, M., & Pimada, L. M. (2019). Zakat distribution and macroeconomic performance: Empirical evidence of Indonesia. IJSCM: International Journal of Supply Chain Management, 8(3), 952–957. http://excelingtech.co.uk/
  28. Rosser, J. B. (2013). From catastrophe to chaos: a general theory of economic discontinuities. Springer Science & Business Media.
  29. Shirazi, N. S. (2014). Integrating Zak_at and Waqf into the poverty reduction strategy of the IDB member countries. Islamic Economic Studies, 22(1), 79–108. https://platform.almanhal.com/Files/Articles/46356
  30. Suhendar, M. I., Setyowat, E., & Rosyadi, I. (2022). Influence of distribution of zakat, infaq and shadaqah (ZIS), inflation and human capital on economic growth in Indonesia 2002-2021. Fair Value: Jurnal Ilmiah Akuntansi dan Keuangan, 4(9), 4130–4140. https://journal.ikopin.ac.id/index.php/fairvalue
  31. Supratman, I., & Asih, V. S. (2022). The effect of zakat and poverty on economic growth in West Java. Indonesian Journal of Economics and Management, 3(1), 87–98. https://doi.org/https://doi.org/10.35313/ijem.v3i1.4645
  32. Suprayitno, E. (2020). The impact of zakat on economic growth in 5 states in Indonesia. International Journal of Islamic Banking and Finance Research, 4(1), 1–7. http://www.cribfb.com/journal/index.php/ijibfr
  33. Terra, F. H., Ferrari Filho, F., & Fonseca, P. C. (2021). Keynes on state and economic development. Review of Political Economy, 33(1), 88–102. https://doi.org/10.1080/09538259.2020.1823072
  34. Triyawan, A., Arie, S., Ahmad, N., Haris, A., & Abdul, N. (2022). Does investment, zakat, infak and shadaqah and inflation influence the economic growth ?: Evidence from Indonesia. Iqtishodia : Jurnal Ekonomi Syariah, 7(1), 8–19. https://doi.org/https://doi.org/10.35897/iqtishodia.v7i1.731
  35. Wardani, I. I., & Al Arif, M. N. R. (2021). The effect of sharia bank financing, zakat, and education expense, on economic growth and human development index in Indonesia 2015-2019. Ekonomika Syariah: Journal of Economic Studies, 5(1), 1–10. https://doi.org/http://dx.doi.org/10.30983/es.v4i2.3716