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2021-10-27

The Nexus of Islamic Finance and Poverty

This paper analyzes the short and long-run asymmetrical relationship between Islamic financing and poverty. We apply Autoregressive Distributed Lag on Indonesia data during 2003 to 2017 and provide interesting result: first, Islamic financing significantly helps to reduce the poverty both in the short run and also in the long run. Second, the role of GDP per capita on poverty reduction is inconclusive. Third, the structural break in 2006 significantly affects the short run dynamics of poverty, while the impact of structural break in 2010 is mixed. Fourth, there is evident that Islamic financing respond to the poverty condition in Indonesia.

Author - Andi M. Alfian Parewangi and Azwar Iskandar
Journal - Hitotsubashi Journal of Economics

Source - https://www.jstor.org/stable/26957517