Encouraging Islamic Financing to Achieve SDGs through Poverty Alleviation
Keywords:Financing, Islamic banking, SDGs, Poverty, Panel data
Poverty is a challenge that must be encountered by every country in the world. Therefore, it is not surprising that poverty issues occupy the first goal out of the seventeen (17) goals in the Sustainable Development Goals or 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 be alleviated. The poverty index is reflected by 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 by using panel data from 32 provinces from 2014 to 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 banks are greatly supporting in achieving the SDGsâ€™ Goal 1 i.e. towards having no poverty. However, the achievement of Islamic banks needs to be expanded to reach the lowest point of people that are experiencing poverty through financing and productive economic activities.
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