Encouraging Sharia Financing Banks to Achieve The SDGs through Poverty Alleviation
Putri Ayu (a*), Listiono (b), Achmad Rifai (c)
1) Faculty of Economics, Andalas University, Jalan Rangkao Said, Kota Payakumbuh, Sumatera Barat 26218, Indonesia
*putriayu.payakumbuh[at]gmail.com
2) Faculty of Islamic Studies, Muhammadiyah University of Yogyakarta, Jalan Brawijaya, Kasihan, Bantul, Yogyakarta 55183, Indonesia
3) Ministry of National Development Planning, Jalan Taman Suropati 2, Menteng, Jakarta Pusat 10310, Indonesia
Abstract
Poverty is a challenge that must be encountered by every country in the world. Therefore, it is not surprising that the poverty issue occupies the first goal out of the 17 Goals in the SDGs framework. Although, in general, the trend of poverty in Indonesia continues to decline, it turns out that the indication of a more acute poverty level is still difficult to alleviate. The index is reflected in the poverty severity index and poverty gap index. In this case, Islamic financing provides a more inclusive concept of poverty alleviation. The results of estimation using panel data from 32 provinces during 2014-2018 in Indonesia reveal empirically that Islamic financing contributes to poverty alleviation programs through the financing of productive working capital. Hence, the financing made by Islamic banking has supported greatly to achieve the SDGs Goal 1: No Poverty. However, the achievement of Islamic banking needs to be expanded to reach the lowest point of people suffering from poverty through financing and assisting productive economic activities.
Keywords: Financing, Islamic Banking, SDGs, Poverty, Data Panel
Topic: Islamic Finance and Banking