ROLE OF ISLAMIC BANKING AND CONVENTIONAL AGAINST POVERTY WITH THE DUAL BANKING SYSTEM
Abstract: Islamic banking in
Indonesia is present in a dual banking system. Islamic banking is expected to
contribute more in the process of economic development and improving people’s
welfare. The main objective of
this study is to
analyze the role of
financing Islamic banking and conventional banking credit to the
improvement of people’s welfare as measured by reductions in poverty. The study
was conducted using the explanatory
method, applying the panel regression estimation techniques
simultaneously with the Two Stage Least
Square method (TSLS) using
data from the period 1992-2012. Results
of the study reveals that the increased of financing Islamic banking and conventional
banking credit assign roles to poverty
reduction in Indonesia. The role of Islamic banking financing is lower than conventional bank credit role
in reducing poverty. In addition to improve financing and credit,
changes should be applied in the value
of the instruments of monetary policy, economic growth, unequal
distribution of income and the depreciation of the local
currency that contribute towards poverty conditions.
Author: Iwan Setiawan
Journal Code: jpsosiologigg160041
