The Impact of Islamic Bank Financing, Government Spending, and Investment on Economic Growth in Indonesia

Abstract

This study aims to analyze the effect of Islamic bank financing, government spending, and investment on economic growth in Indonesia from 2003 to 2019. A quantitative descriptive methodusing the Vector Error Correction Model (VECM) analysis was applied. The results showed that in the short term, the variables of Islamic bank financing, government spending, and investment did not have a significant effect on economic growth. This shows that these variables require enough time to affect the economic growth. However in the long term, the results showed that Islamic bank financing and investment respectively have a significant, negative effect on economic growth, while government spending has a positive and significant effect on economic growth in Indonesia.JEL Classification: F22, F24, I32, J01, O15How to Cite:Nofrianto, Muliana, Y., & Cahyadi, A. (2021). The Impact of Islamic Bank Financing, Government Spending, and Investment on Economic Growth in Indonesia. Signifikan: Jurnal Ilmu Ekonomi, 10(2), 299-310. https://doi.org/10.15408/sjie.v10i2.20469.

Relationship between Islamic bank consumptive financing and gross regional domestic product in Indonesia, 2016-2020

“…However, it should be noted that although consumptive financing in Islamic banking has a negative impact on GRDP, the effect is not significant. Nofrianto et al (2021) stated that the market share of Islamic banks is still relatively small compared to pre-existing conventional banks. Data from Otoritas Jasa Keuangan (2021) reveal that consumer financing for Islamic banks in Indonesia is only approximately IDR 181 billion.…”

Investasi dan Inflasi Sebagai Instrumen Pertumbuhan Ekonomi di Indonesia dalam Perspektif Ekonomi Islam

“…(Hellen et al, 2018)menyatakan bahwa variabel investasi berpangaruh tidak signifikan terhadap pertumbuhan ekonomi di Kabupaten Malinau, artinya kondisi ini mengindikasikan bahwa investasi belum mampu mendorong atau meningkatkan pertumbuhan ekonomi secara maksimal. Investasi tidak langsung menunjukkan pengaruh yang signifikan terhadap pertumbuhan ekonomi Indonesia, akan tetapi dalam jangka panjang berdampak negatif terhadap pertumbuhan ekonomi, hal ini disebabkan oleh krisis ekonomi global, kurang kondusifnya iklim investasi akibat dari rendahnya pelayanan publik, rendahnya pelayanan publik seperti lamanya waktu yang dibutuhkan untuk perizinan dan birokrasi, dan lemahnya kepastian hukum (Nofrianto et al, 2021).…”