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The Nexus of Islamic Finance and Poverty

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  • Parewangi, Andi M. Alfian
  • Iskandar, Azwar

Abstract

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.

Suggested Citation

  • Parewangi, Andi M. Alfian & Iskandar, Azwar, 2020. "The Nexus of Islamic Finance and Poverty," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 61(2), pages 111-139, December.
    • Handle: RePEc:hit:hitjec:v:61:y:2020:i:2:p:111-139
    DOI: 10.15057/hje.2020006
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    Cited by:

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    More about this item

    Keywords

    Islamic financing; poverty; asymmetric cointegration; bound test; ARDL;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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