Economica: Jurnal Ekonomi Islam
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Transforming Mosque Sustainability: Leveraging Islamic Economics and Finance for Community Empowerment
Full text linkThis research focuses on the shift in mosque empowerment models, particularly in terms of financial sustainability, rooted in Islamic economics and finance. By exploring the correlation of Islamic economics (Y), Islamic finance (Y), and mosque sustainability (Z), this research can utilize the mixed method approach of quantitative analysis to survey 200 congregation members, conduct in-depth interviews with five key informants, and employ PLS-SEM. This is the first mosque sustainability performance study to provide a quantitative analysis, along with PLS-SEM, and to correlate finance and economics in the Islamic context. Findings indicate that Islamic finance intermediates the influence of Islamic economics on mosque sustainability (indirect β=0.527; p<0.001). Islamic economics is explained to have a considerable direct influence on Islamic finance (β=0.782; p<0.001) as well as Islamic finance being the greatest contributor to mosque sustainability (β=0.673; p<0.001). This research affirms the four-dimensional sustainability pillar and the anticipation of mosque management to respond to the SDGs. This provided strong financial governance, partnership with Islamic banking, trained financial governance, and Islamic financial literacy courses
Economic Vulnerability and Operational Efficiency in Indonesia’s Islamic Banking: A Vector Error-Correction Approach
Full text linkAmid Indonesia’s fast-growing Sharia-compliant finance sector and heightened global volatility, a clear assessment of how systemic shocks affect bank performance is increasingly urgent. This research analyzes economic vulnerability and its implications for the efficiency of Islamic banking in Indonesia. Using monthly time-series data from 2007 to 2024, it employs a Vector Error Correction Model (VECM). The findings reveal that both disbursed financing (FIN) and non-performing financing (NPF) significantly influence operational efficiency—measured by the BOPO ratio—in both the short and long run. Specifically, higher levels of FIN and NPF diminish efficiency by raising operational costs or reducing income. By contrast, the crisis indicator (CRS) gains significance only in the long run, implying that Islamic banks require time to adjust to macroeconomic shocks. Impulse-Response Function analysis shows mixed efficiency reactions to macroeconomic shocks, while Forecast Error Variance Decomposition highlights BOPO’s own shocks as the largest source of its variance and underscores NPF as the most powerful exogenous driver. These insights equip Islamic-bank managers and policymakers to craft strategies that mitigate economic vulnerability and enhance operational performance
Toward Sustainable Islamic Banking: The Role of FinTech, Knowledge Management, Green Banking, and Sharia Compliance
Full text linkIslamic banking is facing increasing pressure to adopt sustainable business practices while maintaining compliance with sharia principles. In this context, Financial Technology (Fintech), Knowledge Management, Green Banking, and Sharia Compliance have emerged as critical factors influencing sustainability. This research aims to examine sustainable business models in Islamic banking in Central Java by analyzing the interrelations among these factors. A quantitative approach using Structural Equation Modeling Partial Least Squares (SEM-PLS) was applied to data from 515 sharia bank employees. The findings indicate that Fintech significantly influences Green Banking, Knowledge Management, and business sustainability, but does not directly affect Sharia Compliance. Green Banking significantly impacts both Sharia Compliance and business sustainability, while Sharia Compliance mediates the relationship between Green Banking and sustainability. These results highlight the need for deeper integration between Fintech and Islamic principles. Islamic banks are encouraged to develop strategies that synergize technological innovation, environmental responsibility, and religious compliance to achieve long-term, sustainable growth
The Nexus between The Islamic Human Development Index (I-HDI), Unemployment, and Population Growth in Influencing Poverty
Full text linkThis research investigates the relationship between the Islamic Human Development Index (I-HDI), Unemployment, Population Growth, and their impact on Poverty in G20 countries from 2010 to 2021. A purposive sampling method was used to select eight countries: the United States, Indonesia, the United Kingdom, Italy, Germany, Canada, France, and Turkey. The I-HDI was calculated using five Maqasid Shariah indicators. Unemployment was measured by the national unemployment rate, and Population Growth was represented by the annual population growth rate. A total of 384 panel data points were analyzed using the Fixed Effect Model (FEM) regression technique. The findings reveal a robust negative relationship between I-HDI and the Poverty Rate, indicating that improvements in human development are key drivers in alleviating poverty. In contrast, Unemployment shows a significant positive association with the Poverty Rate, meaning that an increase in unemployment leads to a rise in poverty levels. However, Population Growth does not exhibit a significant effect on the Poverty Rate, suggesting that demographic changes alone are not adequate to explain fluctuations in poverty across the G20 countries. These results offer valuable insights for policymakers focused on enhancing human development and addressing unemployment to effectively combat poverty
Nexus Islamic Finance Development and Income Inequality in Indonesia: Testing Kuznets Curve Hypothesis
Full text linkThis study analyzes the applicability of the Kuznets curve hypothesis within the specific context of Islamic finance development in Indonesia and its resultant implications for income inequality. The novelty of this research lies in integrating Islamic finance, specifically from the banking sector, with Islamic social finance instruments, namely zakat, infaq, and sadaqah. Crucially, it interrogates whether the Kuznets curve hypothesis remains pertinent within this expanded framework. Utilizing secondary panel data encompassing 25 Indonesian provinces over the 2019–2020 period, the study employs panel data regression techniques, specifically common effect, fixed effect, and random effect models, which were systematically selected via the Chow, Hausman, and Lagrange multiplier tests. The empirical findings demonstrate unequivocally that the development of Islamic finance, spanning both the financial and social sectors, significantly influences income inequality. This substantiates the Kuznets curve hypothesis: inequality initially escalates but subsequently diminishes as development matures. Furthermore, the results underscore the role of the Human Development Index (HDI) and the prevalence of mosques in mitigating inequality, while population density exhibits a positive association with inequality. This study conclusively argues that strengthening financial inclusion and professionalizing the management of Islamic social finance constitute strategic approaches for mitigating income inequality in Indonesia
Exploring Banking Reforms in Nigeria: Economic Impacts and Future Implications
Full text linkIn the growing global economy, establishing a robust banking sector has become an essential concern for governments worldwide. Nigeria, like many other nations, has witnessed successive governments implementing economic reforms to navigate the challenges of the global market. Given the indispensable role of the financial sector, particularly banking industry, numerous reforms have been legislated over the past three decades. This paper examines these banking reforms and their profound impacts on the Nigerian economy. The primary objective of this study is to consolidate and synthesize the findings of previous empirical research regarding banking reforms and their effects on Nigeria's economy, as measured by Gross Domestic Product (GDP). This paper employed the Preferred Reporting Items for Systematic Reviews and Meta-Analysis (PRISMA). The analysis reveals that the banking reforms undertaken by successive Nigerian governments have significantly influenced the nation's economic growth. However, the persistent issue of high interest rates poses a deterrent to investors seeking loans and advances. Consequently, the study advocates for a strategic shift in lending practices within the real sector towards Islamic banks, where loans are structured based on profit and loss sharing rather than conventional interest-based mechanisms. Furthermore, the paper emphasizes the need for future banking reforms to address recurring inflationary pressures and foreign exchange market volatility in Nigeria
Islamic Sociopreneurship: Prophetic Principles and BAZNAS’s Approach in Empowering Mustahik
Full text linkThe increasing unemployment and social inequality in Indonesia have prompted the investigation of creative strategies to improve welfare and social fairness. This study examines Islamic sociopreneurship—a business model derived on the ideas of the Prophet Muhammad—as a viable approach to tackle these difficulties by promoting self-sufficiency and generating social benefit. The research employs thematic and historical methodologies to analyze essential sociopreneurial principles drawn from the Prophet’s activities, encompassing capital management, resource usage, opportunity recognition, ethical decision-making, and innovation. These principles are used in effective zakat programs administered by BAZNAS, an Indonesian organization dedicated to poverty alleviation. The research indicates that BAZNAS’s initiatives substantially boost the livelihoods of mustahik (zakat recipients) by improving housing, augmenting income, and fostering the development of micro, small, and medium-sized enterprises (MSMEs). This research distinctly emphasizes the congruence of prophetic concepts with contemporary zakat practices, illustrating Islamic sociopreneurship as a viable framework for social empowerment and communal advancement
The Relationship Between Donations and Individual Happiness: An Analysis of Prosocial Spending Effects Among Muslims in Indonesia
Full text linkIndonesia is renowned for its cultural diversity, with the tradition of gotong royong—symbolizing solidarity and mutual assistance—deeply embedded in its society. This tradition is mirrored in the country's high level of philanthropic activity, making Indonesia the most generous nation globally. This study investigates the relationship between charitable donations and the happiness of Indonesia’s Muslim population, using data from the 2014 Indonesian Family Life Survey (IFLS) wave 5, which represents about 83% of individuals living in 13 out of 33 provinces. The focus on the Muslim population reflects their substantial contribution to Indonesia’s global ranking in generosity. Four control variables—health, education, consumption (food and non-food), and social participation—are included in the analysis, which is conducted using binary logistic regression. The findings indicate that donations have a significant positive impact on the happiness of Muslims in Indonesia. Moreover, three control variables—health, education, and food consumption—also show positive and significant effects, while social participation, despite its theoretical relevance, does not exhibit a significant impact. Although non-food consumption is statistically significant, it presents an odds ratio of 1, suggesting no meaningful influence on happiness
The Role of Fraud Pentagon Elements in Financial Statement Fraud: Evidence from Islamic Commercial Banks in Indonesia
Full text linkIslamic banks in Indonesia have experienced rapid growth relative to their conventional counterparts. However, this expansion is accompanied by challenges, notably the prevalence of fraudulent practices. This study aims to analyze the influence of the fraud pentagon on Financial Statement Fraud (FFR) in Islamic Commercial Banks in Indonesia from 2018 to 2023, both collectively and individually. The study population comprises all Islamic Commercial Banks in Indonesia registered with the Financial Services Authority (OJK) as of December 2023. Using a purposive sampling method, ten Islamic commercial banks were selected for analysis. The research employs a Multiple Linear Regression Analysis model, executed in EViews 13. The findings reveal that, collectively, the elements of Pressure (ROA), Opportunity (BDOUT), Rationalization (TACC), Capability (DCHANGE), and Arrogance (CEO PICTURE) significantly impact FFR. Individually, Pressure (ROA), Opportunity (BDOUT), and Rationalization (TACC) have a positive and significant effect on FFR, while Capability (DCHANGE) and Arrogance (CEO PICTURE) exhibit a positive but non-significant effect
Aligning Sharia-Based Empowerment with SDGs: Addressing Poverty and Inequality in Coastal Regions
Full text linkA significant portion of coastal communities in Indonesia continues to experience extreme poverty. Addressing poverty is a key priority of the Sustainable Development Goals (SDGs), yet achieving equality and social justice remains challenging due to various obstacles. This study employs a literature review to explore the relationship between the SDGs and efforts to achieve equality and social justice, focusing on approaches to alleviate extreme poverty in coastal communities through Sharia-based community empowerment. The first finding highlights that the SDGs can serve as a tool to secure equality and social justice for coastal communities. The second finding suggests that a Sharia entrepreneurship approach, emphasizing the potential of these communities, can be implemented through government support, Sharia banking, and Sharia social financial institutions. The study concludes that the SDGs play an important role in achieving equality and social justice, supported by Sharia-based community empowerment initiatives. These findings are intended to provide guidance for stakeholders in developing community-centered empowerment strategies. This requires not only focusing on funding programs and policies but also on enhancing the capacity of human resources, particularly in Islamic business ethics, technology, and institutional development