Muqtasid: Jurnal Ekonomi dan Perbankan Syariah

Islamic finance and economic growth in Indonesia: Analyzing short-and long-term effects

Muhamad Nisar, Gustriani, Ichsan Hamidi — Thu, 28 May 2026 00:00:00 +0000

This research examines the impact of Islamic finance on Indonesia’s economic growth. Using quarterly time series data on Islamic banking, Islamic mutual funds, Islamic pawnshops, Zakat, Infaq, and Shadaqah (ZIS) from 2014 to 2022 (36 observations), and applying the Error Correction Model (ECM), the study evaluates both short- and long-term effects. The results show that, in the short term, only Islamic banking financing has a significant positive effect, while Islamic mutual funds, Islamic pawnshops, and ZIS are not significant. In the long term, Islamic banking, Islamic pawnshops, and ZIS contribute positively and significantly to economic growth. These findings support financial intermediation and Islamic social finance theory, indicating that Islamic financial institutions channel funds into the economy, with effects that vary over time. They also highlight the role of Islamic finance in promoting financial inclusion, supporting micro and small enterprises, and improving welfare through income redistribution. This study suggests that policymakers should reinforce the regulatory framework for Islamic finance. Despite its lack of short-term significance, their long-term benefits underscore the necessity for policies to facilitate their growth and integration into the broader financial system.

Integrating Islamic values in geopolitical economy of development finance: Empirical evidence from OIC selected countries in the Asia-Pacific region

Syafrina Machfud, Imron Mawardi, Dahlia Bonang — Thu, 28 May 2026 00:00:00 +0000

Despite extensive literature on external debt and economic growth, the fiscal burden of multilateral debt service and its interaction with Islamic governance principles and multilateral development bank alignment remain empirically underexplored among Organization of Islamic Cooperation member states. This study examines the impact of multilateral debt service on GDP per capita growth across twelve OIC Asia-Pacific member states over 1996 to 2022, focusing on the moderating roles of governance quality, infrastructure investment, technological advancement, and Islamicity Index adherence. Applying System Generalised Method of Moments on an unbalanced panel of 312 country-year observations, results confirm a marginally significant negative short-run effect on growth through productive investment crowding out, with the long-run effect remaining negative and persistent. Infrastructure investment and technological advancement significantly mitigate these effects, while the Islamicity Index produces a marginally significant negative moderating
effect in both horizons, reflecting structural constraints imposed by the prohibition of riba on conventional debt financing. New Asian Model banks demonstrate the most consistently positive growth outcomes, whereas Islamic-principled banks face persistent challenges reconciling debt obligations with Shariah requirements. These findings call for strategic integration of Shariah-compliant financing instruments, differentiated multilateral development bank engagement, and governance capacity investment across OIC member states

Islamic financial inclusion and human development nexus: Evidence from Sumatra Island, Indonesia

Ruslan Husein Marasabessy, Evan Hamzah Muchtar — Sun, 14 Jun 2026 00:00:00 +0000

Sumatra Island is one of the main targets in the development of Islamic economics and finance. This development is expected to bring significant impacts on socio-economy. Therefore, this study aims to examine the relationship between Islamic financial inclusion and human development index (HDI) in Sumatra Island, Indonesia. The study procedures were carried out using panel data on Islamic financial inclusion from 10 provinces from 2015 - 2022. Data was then analyzed using regression analysis and processed with Stata software. The results showed that there was a positive and significant relationship between financial inclusion index and HDI. To provide a broader impact on human development, it was necessary to increase Islamic financial inclusion in Sumatra Island. Therefore, bank managers must provide access to the unbanked community by opening wider and easier banking services for the unbanked. This study also provided recommendations for strategies to accelerate formal Islamic financial inclusion in Sumatra Island.

Risk rationality and risk sharing in financial institutions: An analysis and criticism of Islamic economics

Wed, 17 Jun 2026 00:00:00 +0000

This study aimed to establish a philosophical foundation for the conventional financial system from an Islamic perspective, with particular emphasis on usury and risk rationality in the global finance landscape. Using a qualitative library investigative approach, primary data were obtained from articles and books, while secondary data were sourced from financial reports published by various institutions, particularly the Financial Services Authority (OJK). The results showed a positive correlation between the expansion of the interest-based financial sector and rising economic inequality. Conversely, risk-sharing instruments, such as profit-sharing, in Islamic financial institutions presented greater stability in the face of economic shocks and crises. The analysis also identified gaps between philosophical criticism and the practical implementation of contemporary Islamic finance, as well as between the returns on Islamic products and conventional interest rates. In conclusion, ethical and spiritual dimensions should be included in economic theory, as outlined in the Maqâsid al-Sharî’ah. A limitation of this study was the lack of in-depth philosophical analysis grounded in authoritative sources