Aligning Indonesia's economic goals with SDGS: Strengthening Qur'anic principles in Islamic finance
Purpose – This research examines the relationship between Islamic bank financing aligned with the Sustainable Development Goals (SDGs) and economic growth, incorporating Qur'anic principles in Islamic finance. Methodology – Quarterly time-series data from Q1 2014 to Q1 2022 were analyzed using...
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| Format: | Article |
| Language: | English |
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Center for Islamic Economics Studies and Development
2025-01-01
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| Series: | Jurnal Ekonomi dan Keuangan Islam |
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| Online Access: | https://journal.uii.ac.id/JEKI/article/view/35094 |
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| _version_ | 1832589721159598080 |
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| author | Azwar Azwar Abur Hamdi Usman |
| author_facet | Azwar Azwar Abur Hamdi Usman |
| author_sort | Azwar Azwar |
| collection | DOAJ |
| description |
Purpose – This research examines the relationship between Islamic bank financing aligned with the Sustainable Development Goals (SDGs) and economic growth, incorporating Qur'anic principles in Islamic finance.
Methodology – Quarterly time-series data from Q1 2014 to Q1 2022 were analyzed using the cointegration and ARDL approaches. Data sources include the PSIFIs for Islamic Banks (IFSB Database), Indonesia's GDP (BPS), and the Financial Services Authority (OJK).
Findings – Long-term analysis reveals that Islamic financing in SDG sectors such as SDG1 (No Poverty), SDG2 (Zero Hunger), SDG3 (Good Health and Well-being), SDG4 (Quality Education), and SDG11 (Sustainable Cities and Communities) positively correlate with economic growth, while SDG8 (Decent Work and Economic Growth) shows an inverse relationship. In the short term, financing in SDG2, SDG3, SDG8, and SDG9 (Industry, Innovation, and Infrastructure) positively impacts economic growth, whereas SDG6 (Clean Water and Sanitation) exhibits a negative association. These findings highlight Islamic finance's potential to address socio-economic challenges rooted in Qur'anic values, such as Surah al-Nisā’ [4]: 29 and al-Baqarah [2]: 261.
Implications – Policymakers are encouraged to promote Islamic microfinance for SMEs and invest in rural sanitation infrastructure (SDG6). Furthermore, financing renewable energy projects (SDG7) aligns with sustainable development goals.
Originality – This study bridges Islamic finance and sustainable development by integrating a Qur'anic perspective into the SDG framework, offering insights into leveraging Islamic finance to achieve sustainability and economic growth, while adhering to Islamic ethical principles.
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| format | Article |
| id | doaj-art-acc7db8694114ec39dc3c28ac02787e7 |
| institution | Kabale University |
| issn | 2088-9968 2614-6908 |
| language | English |
| publishDate | 2025-01-01 |
| publisher | Center for Islamic Economics Studies and Development |
| record_format | Article |
| series | Jurnal Ekonomi dan Keuangan Islam |
| spelling | doaj-art-acc7db8694114ec39dc3c28ac02787e72025-01-24T08:56:28ZengCenter for Islamic Economics Studies and DevelopmentJurnal Ekonomi dan Keuangan Islam2088-99682614-69082025-01-0111110.20885/JEKI.vol11.iss1.art6Aligning Indonesia's economic goals with SDGS: Strengthening Qur'anic principles in Islamic financeAzwar Azwar0Abur Hamdi Usman1Pusat Penelitian dan Pengabdian Masyarakat (P3M), Sekolah Tinggi Ilmu Islam dan Bahasa Arab (STIBA) Makassar, Indonesia Faculty of Islamic Civilization Studies, Universiti Islam Selangor (UIS), Selangor, Malaysia Purpose – This research examines the relationship between Islamic bank financing aligned with the Sustainable Development Goals (SDGs) and economic growth, incorporating Qur'anic principles in Islamic finance. Methodology – Quarterly time-series data from Q1 2014 to Q1 2022 were analyzed using the cointegration and ARDL approaches. Data sources include the PSIFIs for Islamic Banks (IFSB Database), Indonesia's GDP (BPS), and the Financial Services Authority (OJK). Findings – Long-term analysis reveals that Islamic financing in SDG sectors such as SDG1 (No Poverty), SDG2 (Zero Hunger), SDG3 (Good Health and Well-being), SDG4 (Quality Education), and SDG11 (Sustainable Cities and Communities) positively correlate with economic growth, while SDG8 (Decent Work and Economic Growth) shows an inverse relationship. In the short term, financing in SDG2, SDG3, SDG8, and SDG9 (Industry, Innovation, and Infrastructure) positively impacts economic growth, whereas SDG6 (Clean Water and Sanitation) exhibits a negative association. These findings highlight Islamic finance's potential to address socio-economic challenges rooted in Qur'anic values, such as Surah al-Nisā’ [4]: 29 and al-Baqarah [2]: 261. Implications – Policymakers are encouraged to promote Islamic microfinance for SMEs and invest in rural sanitation infrastructure (SDG6). Furthermore, financing renewable energy projects (SDG7) aligns with sustainable development goals. Originality – This study bridges Islamic finance and sustainable development by integrating a Qur'anic perspective into the SDG framework, offering insights into leveraging Islamic finance to achieve sustainability and economic growth, while adhering to Islamic ethical principles. https://journal.uii.ac.id/JEKI/article/view/35094SDGsislamic bankingeconomic growthARDLIndonesia |
| spellingShingle | Azwar Azwar Abur Hamdi Usman Aligning Indonesia's economic goals with SDGS: Strengthening Qur'anic principles in Islamic finance Jurnal Ekonomi dan Keuangan Islam SDGs islamic banking economic growth ARDL Indonesia |
| title | Aligning Indonesia's economic goals with SDGS: Strengthening Qur'anic principles in Islamic finance |
| title_full | Aligning Indonesia's economic goals with SDGS: Strengthening Qur'anic principles in Islamic finance |
| title_fullStr | Aligning Indonesia's economic goals with SDGS: Strengthening Qur'anic principles in Islamic finance |
| title_full_unstemmed | Aligning Indonesia's economic goals with SDGS: Strengthening Qur'anic principles in Islamic finance |
| title_short | Aligning Indonesia's economic goals with SDGS: Strengthening Qur'anic principles in Islamic finance |
| title_sort | aligning indonesia s economic goals with sdgs strengthening qur anic principles in islamic finance |
| topic | SDGs islamic banking economic growth ARDL Indonesia |
| url | https://journal.uii.ac.id/JEKI/article/view/35094 |
| work_keys_str_mv | AT azwarazwar aligningindonesiaseconomicgoalswithsdgsstrengtheningquranicprinciplesinislamicfinance AT aburhamdiusman aligningindonesiaseconomicgoalswithsdgsstrengtheningquranicprinciplesinislamicfinance |