The Impact of Islamic Financial Deepening on Economic Growth in Indonesia
Downloads
Indonesia is starting to pay attention to this trending issue to boost national economic growth because Indonesia is still below other countries regarding the development of its financial sector, especially in Islamic finance. This study employs a quantitative research approach, utilizing multiple linear regression analysis, to investigate the influence of various aspects of Islamic finance on Gross Domestic Product (GDP) as an indicator of economic growth in Indonesia. This research is expected to be able to examine in more detail the role model of Islamic financial deepening in Indonesia and how it affects economic growth. Through a comprehensive discussion, we examine the potential impact of Islamic financial instruments, including Murabahah, Mudharabah (Islamic deposit), total assets of Islamic banking, Islamic stock market capitalization, and Islamic stock transaction volume, on economic growth. Findings suggest that while certain components, such as government bonds (sukuk), have a significant positive influence on GDP through infrastructure financing and investor confidence, others, like corporate bonds (sukuk), may have limited direct impact due to their focus on specific corporations rather than broad-based economic growth. This research contributes to the understanding of the role of Islamic finance in Indonesia's economic development and informs policymakers, practitioners, and academics on optimizing its contributions while ensuring financial stability and inclusion.
Alam, A., Ratnasari, R. T., Mua'awanah, C., & Hamidah, R. A. (2022). Generation Z perceptions in paying Zakat, Infaq, and Sadaqah using Fintech: A comparative study of Indonesia and Malaysia. Investment Management and Financial Innovations, 19(2), 320–330.
Alam, N., Duygun, M., & Ariss, R. T. (2016). Green sukuk: An innovation in Islamic capital markets. In Energy and finance: Sustainability in the energy industry (pp. 167–185). Springer.
Amrullah, A. (2023). Determinants of Consumer Purchase Intentions on Halal Products. Airlangga Journal of Innovation Management, 4(1) 31-40 https://doi.org/10.20473/ajim.v4i1.46825
Ari, I., & Koc, M. (2018). Sustainable financing for sustainable development: Understanding the interrelations between public investment and sovereign debt. Sustainability (Switzerland), 10(11). https://doi.org/10.3390/su10113901
Fauziana, H., Wardhana, A. K., & Rusgianto, S. (2022). The Effect of Education, Income, Unemployment, and Poverty toward the Gini Ratio in Member of OIC Countries. Daengku: Journal of Humanities and Social Sciences Innovation, 2(2), 181–191.
Febriyanti, A. R., Ratnasari, R. T., & Wardhana, A. K. (2022). The Effect of Economic Growth, Agricultural Land, and Trade Openness Moderated By Population Density on Deforestation in OIC Countries. Quantitative Economics and Management Studies, 3(2).
Ghifara, A. S., Iman, A. N., Wardhana, A. K., Rusgianto, S., & Ratnasari, R. T. (2022). The Effect of Economic Growth, Government Spending, and Human Development Index toward Inequality of Income Distribution in the Metropolitan Cities in Indonesia. Daengku: Journal of Humanities and Social Sciences Innovation, 2(4), 529–536.
Hariz, F., Mezghani, T., & Abbes, M. B. (2023). Modeling dependence structure between green sukuk spread in Malaysia and the uncertainty factors before and during the COVID-19 pandemic. Journal of Islamic Accounting and Business Research.
Hirsanuddin, Rodliyah, & Minollah. (2021). Hybrid contract design in sharia banking product development. Journal of Legal, Ethical and Regulatory Issues, 24(Special Issue 1), 1–13. https://www.scopus.com/inward/record.uri?eid=2-s2.0-85112790597&partnerID=40&md5=e8965732431c783bac198e400893b363
Iman, A. N., Sukmana, R., Ghifara, A. S., & Wardhana, A. K. (2022). The Effect of Zakat Collection, Company Age, and Company's Total Assets on Financial Performance of Sharia Banking in Indonesia 2019-2020. Economic Education and Entrepreneurship Journal, 5(2), 217–224.
Islam, S., & Sultana, T. (2019). Practice of islamic financial management in Bangladesh: Evidence from islamic banks. International Journal of Islamic Banking and Finance Research, 3(1), 1–12.
Mendo, A. Y., Singh, S. K., Yantu, I., Hinelo, R., Bokingo, A. H., Dungga, E. F., Juanna, A., Wardhana, A. K., Niroula, B., & Win, T. (2023). Entrepreneurial leadership and global management of COVID-19: A bibliometric study. F1000Research, 12(31), 31.
Naeem, M. A., Raza Rabbani, M., Karim, S., Billah, S. M., Rabbani, M. R., Karim, S., & Billah, S. M. (2023). Religion vs ethics: hedge and safe haven properties of Sukuk and green bonds for stock markets pre-and during COVID-19. International Journal of Islamic and Middle Eastern Finance and Management, 16(2), 234–252.
Pratiwi, A. C., Wardhana, A. K., & Rusgianto, S. (2022). Application of Vector Error Correction Model on Macroeconomic Variables toward Changes in the Composite Stock Price Index. Daengku: Journal of Humanities and Social Sciences Innovation, 2(2), 219–229.
Qosim, N., Ratnasari, R. T., Wardhana, A. K., Fauziana, H., & Barkah, T. T. (2023). Eight Years of Research Related to the Green Sukuk in the Global Stock Exchange Market to Support the Implementation of SDG: A Bibliometric Review. Journal of Islamic Economic and Business Research, 3(2), 161–180.
Rahman, A., Ahmad, A. U. F., Bin-Nashwan, S. A., Muneeza, A., Abdul Halim, A. H., & Markom, R. (2023). Policy approach adopted for issuance of Green Sukuk: is priority given to priority needed areas? Journal of Islamic Accounting and Business Research.
Rahman, I., Ratnasari, R. T., & Wardhana, A. K. (2022). Effect of Certificate of Bank Indonesia Sharia and Indonesian Bank Seven Days Repository Rate to Inflation Ratio in Indonesia During Covid-19 Pandemic. Economic Education and Entrepreneurship Journal, 5(1), 157–174.
Amijaya, R. N. F., Prassetyo, A. E., Pratama, R. Y. and Kharisma, I. W. (2023). Does Islamic Finance Matter for Poverty Development in Indonesia? Airlangga Journal of Innovation Management, 4(2), 185-197. https://doi.org/10.20473/ajim.v4i2.49756
Ryandono, M. N. H., Permatasari, S. A., & Wijayanti, I. (2019). Business behavior in an islamic perspective: Case study of muslim woman entrepreneurs in Ikatan Wanita Pengusaha Indonesia (IWAPI). 12th International Conference on Business and Management Research (ICBMR 2018), 154–159.
Ryandono, M. N. H., Wijayanti, I., & Kusuma, K. A. (2020). Determinants of Investment In Islamic Crowdfunding. Muqtasid: Jurnal Ekonomi Dan Perbankan Syariah, 11(1), 70–87.
Syarofi, M., Putri, L. 2023. The Importance of Sharia Supervisory Board on Islamic Financial Institution. Airlangga Journal of Innovation Management, 4(1) 74-83. https://doi.org/10.20473/ajim.v4i1.45357
Wardhana, A. K., & Ratnasari, R. T. (2022). Impact of Agricultural Land and the Output of Agricultural Products Moderated with Internet Users toward the Total export of Agricultural Product in Three Islamic South East Asian Countries. Iqtishodia: Jurnal Ekonomi Syariah, 7(2), 11–20.
Wijayanti, I., Herianingrum, S., & Ryandono, M. N. H. (2020). Islamic Crowdfunding Mechanism to Answer Renewable Energy Investment Challenge in Indonesia. Test Engineering and Management, 83, 3596–3605.
Wijayanti, I., & Ryandono, M. N. H. (2020). Zakat institutions' mustahiq transformation in developing countries: Comparison study. Opcion, 36(S26), 350–366.
Wijayanti, I., Ryandono, M. N. H., & Petra, D. H. S. P. H. (2021). Financial Inclusion through Zakat Institution: Case Study in Indonesia and Brunei Darussalam. International Journal of Islamic Business and Economics (IJIBEC), 5(2), 128–140.
Zakik, Z., Kamil, A., Prasetyo, A. S., Ryandono, M. N. H., & Wijayanti, I. (2022). Economic development on Madura Island through halal tourism: A business feasibility study. Al-Uqud: Journal of Islamic Economics, 6(2), 289–303.
Copyright (c) 2024 Airlangga Journal of Innovation Management
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
1. Copyright of this journal is possession of Editorial Board and Journal Manager, by the knowledge of author, whilst the moral right of the publication belongs to the author.
2. Legal formal aspect of journal publication accessibility refers to Creative Commons Atribusi-Non Commercial-No ShareAlike (CC BY-NC-SA),implies that publication can be used for non-commercial purposes in its original form (cannot be modified).
3. Every publications are open access for educational purposes, research, and library. Other that the aims mentioned above, editorial board is not responsible for copyright violation.
AJIM by Unair is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
