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
Article Details
Copyright (c) 2023 Siswantoro Siswantoro, Ihsanul Ikhwan
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References
- 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
- 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
- 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
- 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
- Beik, I. S., & Arsyianti, L. D. (2016). Ekonomi Pembangunan Syariah. PT. Raja Grafindo Persada.
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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/
- Lewis, W. A. (2013). Theory of economic growth. Routledge.
- 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
- 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
- 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
- National Zakat Agency, BAZNAS. (2022). Statistik zakat nasional. https://baznas.go.id/index.php/szn/statistik-zakat-nasional
- 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
- 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
- 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
- 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
- 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
- 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
- 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/
- Rosser, J. B. (2013). From catastrophe to chaos: a general theory of economic discontinuities. Springer Science & Business Media.
- 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
- 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
- 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
- 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
- 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
- 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
- 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
References
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
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
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
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
Beik, I. S., & Arsyianti, L. D. (2016). Ekonomi Pembangunan Syariah. PT. Raja Grafindo Persada.
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
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
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
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
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
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
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
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
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
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/
Lewis, W. A. (2013). Theory of economic growth. Routledge.
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
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
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
National Zakat Agency, BAZNAS. (2022). Statistik zakat nasional. https://baznas.go.id/index.php/szn/statistik-zakat-nasional
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
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
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
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
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
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
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/
Rosser, J. B. (2013). From catastrophe to chaos: a general theory of economic discontinuities. Springer Science & Business Media.
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
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
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
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
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
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
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