Examining the impact of zakah and Islamic finance on national economic growth
Purpose – This study aims to analyze the effect of Islamic financial instruments, including social funds zakah, infak, and sadaqah (ZIS), Islamic financing, Sharia stocks, and corporate sukuk, on economic growth. Methodology – This study uses monthly data from 2013 to 2022 to examine the relationsh...
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| Format: | Article |
| Language: | English |
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Center for Islamic Economics Studies and Development
2024-02-01
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| Series: | Jurnal Ekonomi dan Keuangan Islam |
| Subjects: | |
| Online Access: | http://journal.uii.ac.id/JEKI/article/view/31135 |
| _version_ | 1797305151129649152 |
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| author | Silviana Pebruary Isnaini Hani'ah |
| author_facet | Silviana Pebruary Isnaini Hani'ah |
| author_sort | Silviana Pebruary |
| collection | DOAJ |
| description |
Purpose – This study aims to analyze the effect of Islamic financial instruments, including social funds zakah, infak, and sadaqah (ZIS), Islamic financing, Sharia stocks, and corporate sukuk, on economic growth.
Methodology – This study uses monthly data from 2013 to 2022 to examine the relationship between ZIS distribution, Islamic bank financing, Islamic stock capitalization, corporate sukuk issuance, and economic growth proxied by the production industry index (IPI). The Vector Error Correction Model (VECM) was utilized.
Findings – According to the short-term estimation results, sukuk significantly hinders economic growth, whereas only the ZIS variable has a positive and significant impact. Long-term economic growth is positively impacted by the ZIS and Islamic financing variables, negatively impacted by sukuk, and not significantly impacted by Sharia stock. The Impulse Response Function and Variance Decomposition analysis results also demonstrate that the variables of the Islamic financial sector have a shock effect on Indonesia's economic growth, with ZIS funds making up the majority of the contribution and Sharia stocks the least.
Implications – This study will help policymakers, industry, and academia accelerate the Islamic finance sector in Indonesia and strengthen its role in supporting and advancing Indonesia's economic recovery.
Originality – Islamic finance, commonly known as Islamic banking–extends beyond Indonesian banks. Non-bank Islamic institutions, including capital markets and social finance, play a vital role in optimizing Islamic financial instruments for national economic growth.
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| first_indexed | 2024-03-08T00:21:48Z |
| format | Article |
| id | doaj.art-448ff1da14c2491e9c14ba0bcb197f23 |
| institution | Directory Open Access Journal |
| issn | 2088-9968 2614-6908 |
| language | English |
| last_indexed | 2024-03-08T00:21:48Z |
| publishDate | 2024-02-01 |
| publisher | Center for Islamic Economics Studies and Development |
| record_format | Article |
| series | Jurnal Ekonomi dan Keuangan Islam |
| spelling | doaj.art-448ff1da14c2491e9c14ba0bcb197f232024-02-16T06:58:57ZengCenter for Islamic Economics Studies and DevelopmentJurnal Ekonomi dan Keuangan Islam2088-99682614-69082024-02-0110110.20885/JEKI.vol10.iss1.art9Examining the impact of zakah and Islamic finance on national economic growthSilviana Pebruary0Isnaini Hani'ah1Islamic Economic Department, Faculty of Economics and Business, Universitas Islam Nahdlatul Ulama Jepara, Jepara, IndonesiaIslamic Economic Department, Faculty of Economics and Business, Universitas Islam Nahdlatul Ulama Jepara, Jepara, Indonesia Purpose – This study aims to analyze the effect of Islamic financial instruments, including social funds zakah, infak, and sadaqah (ZIS), Islamic financing, Sharia stocks, and corporate sukuk, on economic growth. Methodology – This study uses monthly data from 2013 to 2022 to examine the relationship between ZIS distribution, Islamic bank financing, Islamic stock capitalization, corporate sukuk issuance, and economic growth proxied by the production industry index (IPI). The Vector Error Correction Model (VECM) was utilized. Findings – According to the short-term estimation results, sukuk significantly hinders economic growth, whereas only the ZIS variable has a positive and significant impact. Long-term economic growth is positively impacted by the ZIS and Islamic financing variables, negatively impacted by sukuk, and not significantly impacted by Sharia stock. The Impulse Response Function and Variance Decomposition analysis results also demonstrate that the variables of the Islamic financial sector have a shock effect on Indonesia's economic growth, with ZIS funds making up the majority of the contribution and Sharia stocks the least. Implications – This study will help policymakers, industry, and academia accelerate the Islamic finance sector in Indonesia and strengthen its role in supporting and advancing Indonesia's economic recovery. Originality – Islamic finance, commonly known as Islamic banking–extends beyond Indonesian banks. Non-bank Islamic institutions, including capital markets and social finance, play a vital role in optimizing Islamic financial instruments for national economic growth. http://journal.uii.ac.id/JEKI/article/view/31135Economic growthIslamic macroeconomicsIslamic financeZakahInfaqShodaqoh |
| spellingShingle | Silviana Pebruary Isnaini Hani'ah Examining the impact of zakah and Islamic finance on national economic growth Jurnal Ekonomi dan Keuangan Islam Economic growth Islamic macroeconomics Islamic finance Zakah Infaq Shodaqoh |
| title | Examining the impact of zakah and Islamic finance on national economic growth |
| title_full | Examining the impact of zakah and Islamic finance on national economic growth |
| title_fullStr | Examining the impact of zakah and Islamic finance on national economic growth |
| title_full_unstemmed | Examining the impact of zakah and Islamic finance on national economic growth |
| title_short | Examining the impact of zakah and Islamic finance on national economic growth |
| title_sort | examining the impact of zakah and islamic finance on national economic growth |
| topic | Economic growth Islamic macroeconomics Islamic finance Zakah Infaq Shodaqoh |
| url | http://journal.uii.ac.id/JEKI/article/view/31135 |
| work_keys_str_mv | AT silvianapebruary examiningtheimpactofzakahandislamicfinanceonnationaleconomicgrowth AT isnainihaniah examiningtheimpactofzakahandislamicfinanceonnationaleconomicgrowth |