The Role of Islamic Financial Institutions in Encouraging Sustainable Economic Growth in Indonesia

Zulfahmi Syahputra Nasution, Irsad Lubis

Abstract


Abstract: This research focuses on the role of Islamic financial institutions in promoting sustainable economic growth in Indonesia. In recent years, the Islamic economy has shown significant growth alongside increasing public awareness of Sharia-compliant financial principles. Islamic financial institutions, such as Islamic banks and financing institutions, are expected to contribute to inclusive and sustainable economic development. This study aims to analyze the contribution of Islamic financial institutions to sustainable economic growth in Indonesia and to identify the challenges they face. A quantitative method with a case study approach is used. Secondary data is gathered from annual reports of Islamic financial institutions, Statistics Indonesia, and Bank Indonesia, focusing on the period from 2015 to 2024. A regression model is applied to examine the relationship between the growth of Islamic finance and economic indicators such as GDP, investment rates, and poverty reduction.The findings show that Islamic financial institutions play a significant role in driving sustainable growth. They not only expand financial access but also support the development of sustainable sectors such as agriculture, renewable energy, and micro-enterprises. However, challenges like low financial literacy and incomplete regulatory support remain obstacles.


Keywords


Sharia, Growth, Sustainability.

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References


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