Determinants of Poverty Reduction in Indonesia: Evidence from Islamic Social Finance, Islamic Microfinance Institutions, and Government Interventions

Tita Novita Sari, Fitriani Fitriani, Nurherlina Nurherlina, Sulistya Rusgianto

Abstract


Purpose – This study aims to examine the effects of the distribution of Islamic social finance (Zakat, Infaq Sadaqah, and Other Religious Social Funds (ZIS-DSKL funds)), Islamic Microfinance (IMFIs) financing, social assistance (Bansos), and subsidies on poverty reduction in Indonesia, both individually and collectively. The study explores how each variable influence poverty levels in Indonesia and the combined impact of these factors on alleviating poverty across various provinces.

Methodology - A quantitative approach is employed in this research, utilizing secondary data collected from 20 provinces in Indonesia between 2019- 2023. Data analysis is performed using panel data regression techniques with the EViews 12 application. Purposive sampling is used to select the sample, ensuring that provinces with active Islamic microfinance institutions and relevant data on social assistance and subsidies are included in the study.

Findings - The distribution of ZIS-DSKL funds significantly reduces poverty in Indonesia, while MFIS financing, social assistance, and subsidies have no significant impact when considered individually. However, together, these variables have a collective effect on poverty alleviation. Based on these findings, the study recommends optimizing the ZIS-DSKL distribution, enhancing MFIS financing with better business support, reevaluating social assistance programs to focus on long-term self-sufficiency, and improving subsidy distribution to ensure better targeting and efficiency. These actions aim to create a more effective integrated policy model for poverty reduction.

Keywords: Poverty; Islamic Social Finance; ZIS-DSKL; Islamic Microfinance; Social Assistance; Subsidies; Indonesia.

Keywords


Poverty in Indonesia; Islamic Social Finance; Zakat Infaq, Sadaqah (ZIS-DSKL); Islamic Microfinance Institutions (LKMS); Social Assistance and Subsidies

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References


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DOI: https://doi.org/10.17509/rief.v8i1.80331

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