The Muslim Business and Economics Review (MBER) is an open access and double blinded peer-reviewed journal published by UIII Press, managed by the Faculty of Economics and Business, Universitas Islam Internasional Indonesia. MBER bridges the gap between theory and practice, exploring how Islamic economic principles can contribute to real-world solutions for economic challenges in Muslim societies. The journal emphasizes research falling in applied economics—empirical studies and results-focused case studies—on Islamic economics, or the intersection between economics, development, and area studies in Muslim societies, including Islamic economics, digital economy, political economy, trends and opportunities in Islamic finance, Islamic banking and financial markets, Islamic social finance (ZISWAF), governance, circular economy, Sustainable Development Goals (SGDs), halal and creative industry. Submissions undergo a blind review. MBER has become a CrossRef member since year 2022. Therefore, all articles published by MBER will have unique DOI number. P-ISSN: 2829-2499 E-ISSN: 2962-6471
Universitas Islam Internasional Indonesia
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Beyond Informality: Housing Quality and Tenure Insecurity in Tanzania’s Secondary Cities
Sub-Saharan Africa is experiencing high rates of urbanisation that have driven the housing deprivation problem into dense informal settlements, but the link between tenure status and housing quality is yet to be fully examined in secondary cities in Tanzania. This study examines the impact of tenure on housing quality and examines whether household wealth, education, and migration status mediate the relationship between tenure and housing quality. The analytical sample consists of 2,411 households from the Tanzania National Panel Survey (NPS) Wave 5 (2020–2022) in secondary cities. A standardised Housing Quality Index (HQI) was built using the seven structural and service indicators and ordinary least squares regression with cluster-robust standard errors and interaction terms. The results show that there is a significant difference between informal and formal owners in terms of the reduction in HQI (β = −0.42, p = 0.003), which supports the tenure penalty hypothesis. On the other hand, the housing quality of households in other tenure arrangements (employer-provided or free accommodation) shows a significant positive value (β = +0.25, p = 0.027). Wealth and education have independent positive effects on housing quality, but there are interaction effects between wealth and informal tenure (β = 0.286, p = 0.008), and between education and informal tenure (β = 0.036, p = 0.058). Migration status does not have any significant interaction effects. Robustness checks (Ramsey RESET test, Cook's distance, and VIFs) validate the model and confirm its reliability. The study concludes that tenure insecurity is a 'structural constraint' not easily mitigated by household resources, and calls for enhancing informal tenure recognition, increasing hybrid housing forms, and including the poor in terms of their wealth in informal housing in policy agendas at the secondary city level.
Copyright (c) 2026 Asia Khamis Nyange https://creativecommons.org/licenses/by-sa/4.0
Artificial Intelligence, Firm Heterogeneity, and Labor Market Adjustment: Evidence from Service and Industrial Tech Sectors in Italy
<span lang="EN-US" style="font-size: 11.0pt; line-height: 115%; font-family: 'Calibri',sans-serif; mso-ascii-theme-font: minor-latin; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-theme-font: minor-bidi; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA; font-style: normal; mso-bidi-font-style: italic;">This study assesses how changes in AI patent stock affect employment, wages, productivity, and labor cost shares. It compares pooled estimates with firm-specific effects for UniCredit and Zerynth in Italy, representing the banking services and industrial tech sectors, respectively. Using a firm-level panel dataset from 2005 to 2024, the study applies task-based and skill-biased technological change frameworks to analyze how exposure to Artificial Intelligence (AI), proxied by AI patent stock, affects labor-market dynamics in the Italian economy. Our empirical strategy used fixed-effects regressions. The results show a dual pattern of technological adjustment. In pooled models, AI-related innovation has a positive and statistically significant effect on labor-market outcomes. However, when firms are analyzed separately, the effects diverge. For UniCredit, AI patent stock reduces employment and labor cost shares while raising productivity growth, with wage effects remaining small or insignificant. On the other hand, for Zerynth, AI patent stock produces consistently negative and significant effects on employment, wages, and labor cost shares. Overall, the findings highlight strong task-level substitution but heterogeneous firm-level outcomes, underscoring the need for targeted reskilling and labor-augmenting innovation policies in Italy’s digital transition.
Copyright (c) 2026 Ebrima K. Ceesay, Mamadou Salieu Jallow, Cosimo Magazzino, Alasana Gitteh, Baseedy Bojang https://creativecommons.org/licenses/by-sa/4.0
Economic Growth and Environmental Sustainability: Empirical Investigation of Bangladesh, India, and Pakistan
This paper examines the long- and short-term relationships between economic growth, trade, industrialization, renewable energy consumption, and environmental degradation in Bangladesh, India, and Pakistan from 1990 to 2022. It uses a panel autoregressive distributed lag (ARDL) approach and employs correlation analysis, panel cointegration tests, and pooled ARDL to capture the dynamic interactions among variables. The results indicate a positive long-term relationship between gross domestic product growth and carbon dioxide emissions, supporting the Environmental Kuznets Curve hypothesis. Trade and industrial growth also have a significant positive impact on emissions in the long run. Conversely, renewable energy consumption consistently shows a negative relationship with carbon dioxide emissions in both the short and long term, highlighting its importance in reducing environmental degradation. The agriculture sector displays a mixed impact, contributing to emissions primarily through land-use changes. The error correction term from the panel ARDL model is statistically significant, confirming long-run equilibrium relationships. The study finds robust evidence of cointegration among the variables, suggesting that the countries are on a convergent path in terms of balancing economic growth and environmental sustainability. Policy recommendations include the enforcement of stricter environmental regulations, promotion of renewable energy, and sustainable trade practices to mitigate environmental harm while fostering economic growth.
Copyright (c) 2026 Ajibu Jonas, Imran Ali https://creativecommons.org/licenses/by-sa/4.0
Educational Reforms and Economic Growth in Bangladesh: Insights for OIC Nations
Educational reforms are essential for influencing a nation's economic development by augmenting human capital, increasing labor productivity, and promoting innovation. This research examines the impact of education system changes on the economic development of Bangladesh, with the potential to provide other members of the Organisation of Islamic Cooperation (OIC) with valuable insights. This research utilizes a mixed-method approach, incorporating qualitative insights from policy studies and expert interviews alongside quantitative data. A quantitative cross-sectional survey with a standardized questionnaire was undertaken in multiple locations across Bangladesh, yielding 335 responses. To measure the validity of the predicted relationships and mediation effects, researchers employed structural equation modelling. Quantitative analysis shows that changes such as updating the curriculum and expanding technical and vocational education and training (TVET) have led to higher literacy rates, an increase in employment, and a reduction in poverty. Consequently, statistical analysis indicates that skill development significantly impacts economic growth, emphasizing the importance of targeted workforce training. Although literacy had a positive effect, it is not statistically significant, and quality and relevance are more crucial than availability. Science, technology, engineering, and mathematics (STEM) education was found to not directly affect growth, suggesting gaps in implementation. However, it aligns with the labor market, preparing workers. Labor market alignment is the best predictor of economic development, highlighting the need for education policies based on demand. Overall, the study finds it is important to keep the economy growing by ensuring that education matches the needs of the job market through skill development, literacy improvement, and integrated STEM education. These findings underscore the importance of holistic education policy in driving sustainable economic development, particularly for developing countries in the OIC.
Copyright (c) 2026 Tarekol Islam Maruf, Motia Mannan https://creativecommons.org/licenses/by-sa/4.0
Hybrid Financial Innovation: A Sustainable Economic Recovery Model for OIC Nations
ABSTRACT Global financial shocks, such as COVID-19 and other systematic vulnerabilities, dramatically threaten the world's economic resilience. These recessional events have revealed economic weakness, especially in OIC and other developing nations. resulting in a massive amount of job losses, disturbance in manufacturing, fiscal imbalances, recessions, and deflationary issues. Existing economic recovery strategies fail to ensure long-term financial sustainability and equitable development. This study examines a comprehensive framework to disclose a resilient economic recovery model that mitigates shocks and leads to sustainability in OIC countries. This study proposes a hybrid financial innovation model that ascertains government-backed crisis funds with Islamic financing mechanisms. Which can ensure sustainable agricultural funding and promote long-term economic resilience. It will save a shocked economy from recessions by its model mechanism. Observing Pakistan, Indonesia, Saudi Arabia, Turkey, Bangladesh, Egypt, Iran, and Malaysia, this finding acknowledged why fund liquidity is the origin of origins. This qualitative research approach will combine sustainable economic modeling and a consistent funding framework which adaptable to OIC nations. These findings will work as a practical roadmap for policymakers, ensuring that agricultural financing remains stable during economic shocks and recessional periods by the support of universal financial strategies. Additionally, this research offers a model that contributes to long-term resilience and economic stability. The findings provide policymakers with a definitive framework for alleviating future crises, guaranteeing fiscal sustainability, and enabling OIC states to convert economic weaknesses into strategic advantages. Keywords: Hybrid financial model, sustainable funding, Islamic Finance, OIC Nations, Universal Shock Fund.
Halal Fashion E-Commerce: Driving Social Inclusion in Peureulak
This study investigated the effectiveness of e-commerce in boosting halal fashion sales in Peureulak, Aceh, Indonesia, exploring its potential to enhance economic opportunities in the region. Employing a qualitative field research approach, data was gathered through interviews with key informants, including owners, employees, and buyers of halal fashion businesses in Peureulak. The research examined online strategies and their impact on sales. The findings revealed that e-commerce significantly increased halal fashion sales in Peureulak by expanding market reach beyond local boundaries and facilitating effective promotion and clear product information dissemination. Key success factors included ease of online access, high-quality product presentation, competitive pricing, trustworthy customer service, diverse payment options like Cash on Delivery (COD), and positive customer reviews. While local sales remained primarily conventional, e-commerce successfully attracted external customers, substantially supporting business growth. The study suggests that optimizing digital platforms like TikTok, Shoppe, and Instagram, alongside prioritizing rapid customer service, attractive promotions, and reliable product quality, are crucial strategies for enhancing e-commerce effectiveness in the halal fashion sector. These findings highlight the potential of e-commerce to drive economic growth and broader social inclusion within similar contexts in OIC countries by leveraging local strengths and expanding market access.
Trump 2.0: Unpacking the Potential Economic Impacts on OIC Economies
Donald Trump's trade policies during his presidency were characterized by protectionist measures, including tariff increases and trade disputes with major economies. Following his re-election, similar policies could resurface, impacting global trade dynamics. This paper aims to analyze the potential economic consequences of Trump's second leadership on OIC (Organization of Islamic Cooperation) economies, focusing on three key policies: (1) a tariff on steel and aluminum, (2) a trade war with China, and (3) geopolitical tensions with BRICS nations. The GTAP (Global Trade Analysis Project) model is employed to simulate the short-run effects of these policies on GDP, trade balance, and welfare in OIC countries. The results suggest that increased tariffs and trade conflicts may lead to shifts in global trade patterns, with potential negative spillover effects on OIC economies, particularly those with strong trade ties to the US, China, and BRICS. Trade diversion effects are also observed, indicating possible shifts in export flows. The findings provide insights into how OIC nations might navigate the uncertainties of a renewed Trump administration's economic policies. Keywords: Donald Trump, OIC economies, Tariff, GTAP.
State Religion and Corruption in Islamic Countries: An Empirical Examination
Corruption remains pervasive in many Islamic countries, despite the ethical values and integrity often associated with religious norms. This study investigates the state religion's impact on corruption levels in member countries of the Organisation of Islamic Cooperation (OIC). Utilizing cross-sectional data from 53 OIC countries and employing the Ordinary Least Squares (OLS) regression method, the study finds that the percentage of the Muslim population has a negative but statistically weak effect on the Corruption Perceptions Index (CPI). Conversely, the adoption of Islam as a state religion significantly increases corruption, suggesting that religious institutionalization may undermine governance quality. These results challenge prior assumptions that religiosity inherently reduces corruption. Instead, the study highlights that institutional framework, rather than religious adherence, shape governance outcomes. The findings underscore the need for anti-corruption efforts in Islamic countries to prioritize institutional reforms and economic policies that enhance transparency and accountability, rather than relying solely on religious values. Keywords: Corruption, Islam, State Religion, OIC
ESG on Stability and Bank Performance: The Moderating Role of Diversity and Inclusion in OIC Countries
This study analyses the impact of environmental, social and governance (ESG) performance on the stability and performance of Islamic banks, considering the moderating role of diversity and inclusion. Using panel data from 60 Islamic banks in 11 Organisation of Islamic Cooperation (OIC) countries during the period 2014-2023, the research finds that ESG performance positively affects the stability and performance of Islamic banks, confirming the role of sustainability in enhancing the financial resilience of the Islamic banking sector. However, this study also finds that diversity and inclusion weakens the positive impact of ESG performance on the stability and performance of Islamic banks. Additional analysis shows that these results are consistent only in the environmental and social pillars. These findings highlight the importance of managing diversity and inclusion to enhance ESG implementation in Islamic banks. Poorly managed diversity and inclusion efforts may weaken ESG effectiveness, hindering performance and stability. For stakeholders, including investors and regulators, fostering inclusion is essential to support sustainability and long-term stability.
Copyright (c) 2025 Muhammad Irsyad, Fauziah Chairiyati
Islamic Financial Development, Country Risk, and Human Development: Do They Shape Income Inequality in OIC Countries?
Income inequality remains a persistent development issue across member countries of the Organization of Islamic Cooperation (OIC), irrespective of their income level. The Islamic financial system, built upon Shariah principles of fairness, risk-sharing, and ethical finance, offers a viable alternative to conventional systems in addressing inequality. This study investigates the long-run effects of Islamic financial development, human development, and country risk on income inequality in OIC countries and empirically tests the Islamic Financial Kuznets Curve (IFKC) hypothesis. Using balanced panel data from 13 OIC member states over the period 2013–2023, the analysis applies Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) estimators using STATA17. The results confirm that Islamic financial development significantly reduces income inequality and follows a non-linear (inverted U-shaped) relationship, validating the IFKC hypothesis. Human development exhibits a mixed effect: while DOLS and non-linear models suggest an equalizing impact, FMOLS results indicate that early gains may benefit elite groups disproportionately, reflecting institutional asymmetries. Country risk consistently exacerbates inequality across all models. Moreover, interaction effects reveal that institutional quality moderates the relationship between human development, country risk, and inequality. In some cases, even stronger institutions may fail to ensure equity when they lack inclusivity. These findings highlight the importance of aligning Islamic financial expansion with inclusive governance and social development policies. For OIC policymakers, achieving sustainable and inclusive growth requires synergy between financial deepening, human development, and institutional transformation Keywords: Islamic financial development, Income inequality, Human development, Country risk, Islamic Financial Kuznets Curve
ESG Controversies and Bank Risk-taking: Islamic vs Conventional Banks
Environmental, social, and governance (ESG) controversies have gained increasing attention due to their potential financial and reputational risks, particularly within the banking sector. As regulatory pressures and stakeholder expectations escalate, understanding the impact of ESG controversies on banks' risk-taking behavior is critical for financial stability and sustainable banking practices. This study investigates the relationship between ESG controversies and bank risk-taking, comparing Islamic and conventional banks within the Organisation of Islamic Cooperation (OIC) countries. Using a panel dataset covering 35 Islamic banks and 68 conventional banks across 11 OIC countries between 2013 and 2022, we apply a fixed-effects regression model to assess the influence of ESG controversy exposure on bank risk. The results demonstrate that Islamic banks are significantly less exposed to ESG controversies than conventional banks, reflecting the normative ethical underpinnings of Islamic finance. However, Islamic banks exhibit higher risk levels compared to their conventional counterparts. The regression analysis also reveals that, in both the full sample and the conventional bank sub-sample, fewer ESG controversies are significantly associated with lower risk-taking, thereby enhancing bank stability. However, this effect is absent in Islamic banks. These results highlight the critical role of institutional, cultural, and regulatory contexts in shaping how ESG controversies influence bank behavior. While ESG controversies may act as effective risk control signals in conventional banking systems, their impact appears attenuated in Islamic banks, where ethical principles are already embedded in financial practices.
Copyright (c) 2025 Kemala Putri Ayunda, Yunice Karina Tumewang
Two Different Approaches of Estimating Production Factor Demand: Evidence from Indonesian Large and Medium Enterprises
This study measures the elasticity of production factors of manufacturing companies in Indonesia by applying demand model for production inputs. Using survey data of large and medium-sized companies in Indonesia from 1995-2015, this study calculates the elasticity of demand for factors of production through two approaches: first, the transcendental logarithm equations applying unrestricted, homotheticity, and adjustment cost model, and second, a system of equations. We use the variation in the group of industries as a proxy for the market price of inputs. The results show that there is heterogeneity in terms of the magnitude and nature of the cross-price elasticity between production inputs for both complementary and substitute inputs. Meanwhile, the own price elasticity is negative for all production inputs and there are positive effect adjustment costs that must be borne by firms in expanding production inputs.
The Nexus of Environmental Performance and Economic Growth: A Panel Analysis from Organization of Islamic Cooperation Countries
The climate is changing and the earth is getting hotter. Cutting down rainforests, burning fossil fuels, and farming livestock all contribute to greenhouse gas emissions. Human economy and the natural world are closely connected. This study evaluates the relationship between environmental performance and economic growth using panel data for Asian member states of the Organization of Islamic Cooperation (OIC) for the years 2020 to 2022. Data on Environmental Performance Index and Gross Domestic Product growth were collected from the Yale Center for Environmental Law & Policy and the World Bank. Panel data regression was used by selecting the best parameter estimates from three panel data regression models: Common Effect Model (CEM), Fixed Effect Model (FEM), and Random Effect Model (REM). The study findings are anticipated to enhance nations' consciousness regarding environmental concerns and to enhance their focus on ecologically sustainable economic growth and development trajectories.
Copyright (c) 2025 Muhammad Khafidh, Jajang Jajang, Safiullah Junejo
Cash Waqf and Crowdfunding: A Study of Online-Based Cash Waqf in The Passive Charity of The Indonesian Waqf Education Foundation
This research examines the effectiveness of crowdfunding for online-based cash waqf by analysing the cash waqf turnover practice of the Indonesian Waqf Education Foundation's Pasif Amal (Passive Charity) website. Two topics are explored in this research. First, how the Indonesian Waqf Education Fund practices cash waqf crowdfunding strategies for passive charity. Second, the effectiveness of the cash waqf crowdfunding strategy and the implications for the legalization of cash waqf. This research uses a qualitative method with the approach of Soerjono Soekanto's legal effectiveness. This research concludes through its passive crowdfunding strategy, the Indonesian Waqf Education Foundation has changed the previously-dominant view that waqf is limited to land; instead, the Foundation’s experience illustrates that waqf can also represent goods in the form of money. The findings confirm that passive charitable institutions are effective and can even become a new approach in the world of waqf, especially in countries where cash waqf is already a legal practice.
Copyright (c) 2025 Mochammad Dzul Fahmi, Muhammad Abdul Majid, Fazlullah Ihza Qaseem
Does Halal Certification Matter? The Influence of Polarity in Religious Understanding on Attachment to Halal Certification in Indonesia
This article examines the influence of polarity in religious understanding on attachment to halal certification in Indonesia. In 2024, there were 3,237,167 products that have been certified halal, with 58.5% being self-declared as halal and the remaining 41.5% being regular halal certificates. This number has more than tripled since 2019, when there were just 963,411 halal-certified products. The high increase in the number of halal-certified products is directly proportional to the high halal awareness of Indonesian Muslims. Previous studies have not explicitly addressed the concept of halal as understood by the Indonesian Muslim community, which possesses a diverse range of religious interpretations. This article reveals the typology of Indonesian Muslim religious understanding and its influence on attachment to halal certification. This research used quantitative methods by distributing questionnaires to Indonesian Muslim respondents with conservative, moderate, and progressive religious categorizations. Respondents in this study were aged 18-60 years, and included both men and women. Data were analyzed using the ANOVA technique using SPSS 29.0.1. The results show a significant value (0.008), indicating a difference in attachment to halal certification between conservative, moderate, and progressive groups, with the highest attachment average amongst conservative Muslims (33.46).
Copyright (c) 2025 Arisy Abror Dzukroni, Raharjo Raharjo
Enhancing Muslim SME Sustainability in Malaysia: The Role of Zakat and Financial Literacy
Financial literacy issues pose significant challenges for small and medium enterprises (SMEs) in Malaysia, leading to improper financial management practices and poor performance. In response to these challenges, this study explores the potential role of zakat, an Islamic fiscal tool, in addressing financial management issues among Muslim SMEs. Specifically, the study analyses how zakat can serve as a mechanism for distributing assistance to poor Muslim entrepreneurs within the SME sector. Motivated by zakat's potential to mitigate financial management and literacy issues, this research employs semi-structured interviews to gather insights from seven Muslim entrepreneurs. Through qualitative analysis, the study examines the perceptions, experiences, and expectations surrounding zakat as a means of financial support tools for SMEs. The findings shed light on how zakat institutions can contribute to enhancing financial literacy and promoting sound financial management practices among Muslim SMEs, including the formulation of a proposed model of Non-Cash Zakat Distribution for Financial Management Services. The implications of this study extend beyond the immediate context. By effectively leveraging zakat funds, policymakers, financial institutions, and zakat administrators can play a proactive role in supporting Muslim SMEs and promoting grassroots economic development.
Copyright (c) 2025 Dasyarini Daud, Zubir Azhar, K. Kishan, Mohd Suffian Mohamed Esa
Maqasid al-Shariah and Sustainable Finance: Analyzing the Impact of Green Sukuk Allocation in Indonesia
This research paper examines the application of Maqasid al-Shariah principles in the context of sustainable finance, focusing on the impact of Green Sukuk Allocation in Indonesia. As an Islamic financial instrument, Green Sukuk aims to raise funds for environmentally friendly projects while adhering to shariah principles. This study analyzes the 2023 Green Sukuk Allocation and Impact Report from the Indonesian Ministry of Finance to assess the impact of Green Sukuk in achieving both financial and sustainable development goals. Using a qualitative approach, this paper evaluates how the allocation of green sukuk funds aligns with the objectives of Maqasid al-Shariah, particularly in the preservation of the environment and the promotion of social welfare. The analysis also considers the challenges and opportunities faced in implementing green sukuk as a sustainable financing mechanism. This research finds that the implementation of green sukuk financing in Indonesia aligns with the five essential principles of Maqasid al-Shariah, namely hifz al-deen (preservation of religion), hifz al-nafs (preservation of life), hifz al-aql (preservation of intellect), hifz al-maal (preservation of wealth), and hifz al-nasl (preservation of lineage). Moreover, the implementation of green sukuk financing has also positively impacted multiple sectors in Indonesia. The findings of this study have important implications for policymakers, financial institutions, and investors seeking to promote sustainable development through Islamic finance instruments. The study's insights can inform the design of future green finance policies and strategies, highlighting the role of Islamic finance in achieving both financial and sustainability goals.
Copyright (c) 2025 Muhammad Fakhrul Arrazi
Investigating the CO2 Emissions Convergence and its Nexus with Growth, Renewable Energy, and Energy Intensity in OIC Countries
Carbon dioxide (CO₂) emissions pose a significant climate threat, impacting all aspects of human activity and necessitating global collaboration to protect both human and nonhuman species. Transitioning from fossil fuels to renewable energy and enhancing energy efficiency are widely regarded as the most effective strategies for reducing emissions and mitigating global warming. Against this backdrop, we examine CO₂ emissions convergence among 50 Organization of Islamic Countries (OIC) member states, considering the role of economic growth, renewable energy use, and energy intensity. Our analysis employs stochastic, club, and beta convergence methods, alongside system generalized method of moments (GMM) estimation. Four key findings emerge from this analysis. First, accounting for country heterogeneity and cross-sectional dependence, we confirm stochastic convergence in CO₂ emissions among OIC members. Second, there is evidence of club convergence, where emissions cluster into distinct groups. Third, while renewable energy consumption negatively affects emissions pathway, energy intensity positively and directly affects CO₂ emissions’ growth. However, fourth, economic growth increases carbon emissions. These findings have significant policy implications. If emissions do not converge, allocating emission rights through carbon trading could lead to substantial international wealth transfers, influencing global carbon policy. Additionally, countries with similar convergence patterns could adopt common climate policies. At the same time, all nations should prioritize increasing the share of renewable energy in their energy mix to achieve sustainable emission reductions.
Copyright (c) 2025 Mansur Muhammad, Bello Audu, Sadiq Ibrahim Ahmed
Assessing Renewable Energy Project Efficiency through Green Sukuk: Evidence from Indonesia and Malaysia
Amidst global climate challenges, green sukuk has emerged as a shariah-compliant instrument to finance renewable energy projects, supporting the Sustainable Development Goals (SDGs) in Organisation of Islamic Cooperation (OIC) countries such as Indonesia and Malaysia. This study examines the impact of green sukuk structures on the efficiency of renewable energy projects. While existing literature has broadly discussed the effects of green sukuk, a significant gap remains in their quantitative assessment of efficiency, particularly in an approach that integrates both financial cost-effectiveness and operational performance. This study explicitly addresses this gap by developing a novel framework that integrates cost-effectiveness analysis (CEA) and data envelopment analysis (DEA) to evaluate four prominent green sukuk: Indonesia’s Green Sovereign Sukuk 2018 and 2019, and Malaysia’s Tadau Energy Sukuk 2017 and Quantum Solar Park Sukuk 2018, using data from official reports and prospectuses. Results show the Green Sovereign Sukuk 2018 as the most efficient (2.90 MW/USD million, 1,600-ton CO₂/USD million, DEA score 1.0000), driven by large-scale implementation and centralized governance, whereas Quantum Solar 2018 scored lowest (0.61 MW/USD million, 808.08-ton CO₂/USD million, DEA score 0.5051) due to project fragmentation. Ijarah contracts enhance governance, whereas mudharabah fosters adaptability but increases risk. The study concludes that hybrid contracts (e.g., musharakah-murabahah) and balanced regulations can optimize the efficiency of green sukuk, offering a scalable model for OIC countries to advance sustainable financing aligned with ESG and SDG objectives.
Copyright (c) 2026 Sri Ulfa, Tri Wahyuningsih, Rani Surya Resiana https://creativecommons.org/licenses/by-sa/4.0
Navigating the Digital Shift: Key Drivers of Zakat Reporting Effectiveness in Indonesia
Digital transformation in zakat reporting is essential to enhance transparency, accountability, and efficiency in managing zakat, infaq, and sadaqah in Indonesia. Indonesia’s National Zakat Board (BAZNAS) developed the Zakat Information Management System (SIMBA) system to support standardized, real-time reporting across national and regional zakat institutions. However, adoption remains limited due to challenges such as low digital literacy, insufficient technical infrastructure, and organizational readiness gaps, especially in Eastern Indonesia. This study identifies key factors influencing the implementation of SIMBA and provides a model to improve compliance in digital zakat reporting in Indonesia. Using the Analytic Hierarchy Process and Multi-Stage Weighted Index method, the study analyzes data from 207 respondents, including experts and practitioners from BAZNAS and zakat management institutions. The findings highlight six critical dimensions affecting SIMBA’s adoption: organizational readiness, ease of use, compliance and regulation, user attitudes and perceptions, external factors, and motivation and incentives. Organizational readiness emerged as the most influential factor, followed by technological usability and institutional motivation. The study concludes that effective SIMBA implementation requires strong leadership, technical support, and structured incentives. These insights can help close the digital gap in zakat reporting and ensure Indonesia’s zakat ecosystem is transparent and accountable.
Copyright (c) 2026 Aisha Putrina Sari, Syifa Aziza, Yuna Adeptia, Igres Ariresa, Ahmad Fauzi, Syukri Yandi, Iklimah Dalhudah https://creativecommons.org/licenses/by-sa/4.0
Sharia Peer to Peer Financing Innovation in Indonesia: Insights from Prospective Investors
Sharia peer-to-peer (P2P) financing offers a sharia-compliant investment alternative that addresses increasing demand in Indonesia, with substantial growth potential. This study identifies the factors influencing investors' intentions to use sharia P2P financing services in Indonesia. Drawing on the theory of reasoned action and the extended valence framework, this research examines perceived benefit, perceived risk, trust, social influence, and sharia financial knowledge. This study seeks to enrich the literature on sharia investment by focusing on the psychological aspects of investors, particularly trust, perceived benefits, and perceived risks. Using a quantitative methodology and Partial Least Squares analysis, data were gathered from 219 respondents through online surveys. The results indicate that all variables, except perceived risk, significantly influence investment intention, with trust being the most impactful factor. These findings provide valuable insights for service providers and regulators to enhance investment activities through better understanding and strategic improvements.
Copyright (c) 2026 Roisatun Kasanah, Sulistya Rusgianto https://creativecommons.org/licenses/by-sa/4.0
Assessing Fiscal Policy Impact on Economic Growth: A Comparative Analysis of Indonesia and Turkey
The study involves the application of Vector Error Correction Models (VECM) to analyze macroeconomic dimension of fiscal policy on economic growth in Indonesia and Turkey. Furthermore, it attempts to depict the paths of fiscal policy and GDP evolution in the two economies by providing data for the period 1980-2022. It uses Augmented Dickey Fuller (ADF) tests and Johansen co-integration tests to check against the stationarity and the long-run relationships between fiscal policy variables and economic growth. The result of Granger causality analysis was used to address the two-way relationship between these variables. Data discloses that the fiscal policy of Indonesia does not significantly affects economic development directly, as Turkey’s case where government expenditure does have a positive relationship with economic growth in the short term. Despite the common unstable connection between government participation, government revenue and economic growth, there exists a long-term inimical correlation in both countries. The results of the study indicate the impact of fiscal policy as non-immediate measure is not effective with regards to Indonesia economic growth. This calls attention to the role of resource reallocation in creating a lasting development rate. That is why the relationship between public spending and short-term growth shows significant effectiveness of certain fiscal policy monetary measures aimed at increasing the rates of material production and growth in the country. The research indicates that long period of government expenditure maybe unbeneficial for developing economies. Contrary to this, it is governments’ duty to determine the etymologically sound methodologies of prudent fiscal plans that will enable privatization, investments, and economic growth.
Copyright (c) 2024 Riliwan Olalekan Olanrewaju
Gaining Sustainable Performance through Risk Management System: Dealing with Uncertainty in Islamic Insurance Companies
This study investigates how the halal business process sustains company performance by examining the effect of premiums, claims, operating costs, investment income, and risk-based capital on the profitability of Islamic insurance in Indonesia. In particular, the risk management system is key to demonstating how Islamic insurance companies restrain risks to gain profits, considering that the basic concept of Islamic insurance is the risk sharing approach. Moreover, to provide research novelty and originality, the authors expand the research framework to include the interactions of the company's risk management system to test the influence of investment income and risk-based capital on profitability. The overall population comprised all Islamic insurance companies in Indonesia, but samples were restricted to life insurance businesses registered with the Indonesian Islamic Insurance Association for 2018-2022. The authors were left with a sample of 13 companies after using a non-probability approach with a purposive sampling technique. The data was analyzed by STATA 17 on four gradual statistical procedures: Panel Data Regression Analysis, Moderated Regression Analysis, Robustness Test Analysis, and Content Analysis. The results demonstrate that the premiums, claims, and investment income have no significant effect on company profitability. Meanwhile, operational costs and risk-based capital have a significant effect on profitability performance. Furthermore, enterprise risk management successfully acts as a moderating variable. Based on findings, the authors strongly recommend that Islamic insurance companies effectively implement enterprise risk management in dealing with uncertain circumstances for the real business process.
Copyright (c) 2024 Sabila Nur Addini, Izra Berakon, Nor Nabilla Muhammad
Structural and Digital Transformation of the Financial Industry: A Futuristic Approach for Sustainable and Green Digitalization
This study examines the structural and digital transformation within the financial industry, portraying the urging need for green sustainable digitalization within Industry 4.0. This study aims to explore the role of digital technologies, such as artificial intelligence (AI), big data analytics, and the Internet of Things (IoT), in promoting environmental sustainability in the financial sector. The study reviews the existing literature and the identified critical challenges and opportunities in sustainable digital transformation. It proposes pathways for leveraging digitalization to attain socio-environmental sustainability and green finance. Empirical evidence supports such analysis, finding positive impacts that digital finance brings to green technology innovation and carbon neutrality, emphasizing the synergy of digital development with sustainability goals. The study finds that policy and regulation will be critical in smoothing the transition and fostering diverse social and environmental implications of sustainable digital finance. In this context, the study brings a futuristic outlook on the way digital technologies are integrated within corporate strategies to be part of sustainable development.
Copyright (c) 2024 Shah Fahad, Mehmet BULUT
Does FDI Matter for The Economic Growth of West Sub-Saharan African Countries? A Panel Vecm Approach
This study analyzes foreign direct investment (FDI) and economic growth in fifteen West Sub-Saharan African countries’ relationship from 1990 to 2020, with secondary panel data from the World Bank (2022), at the expense of both interest rate and exchange rate effect. The main model used is Panel VECM. The results shows that FDI helps enhance economic growth in the long run, as the estimate in the long-run indicates an increase of -121.16, which can be interpreted inversely with a 1% level of significance, with t-statistics at -14.94, despite FDI’s negative impact in the short run with an estimate of -3.5 with a level of significance of -2.16. Likewise, the effect of interest rate with t-statistics of -0.1 for economic growth and 0.1 for FDI and exchange rate with t-statistics of -0.43 for economic growth and -0.12 for FDI. Thus, both parameters are deemed insignificant. Therefore, policymakers should adopt policies that will support FDI for the long term to enhance economic growth, and reduce interests rate and exchange rates by establishing usage of a single currency or flexible exchange rates. This study aims to help policymakers and analysts determine the advantages of monitoring changes in macroeconomic fundamentals and economic growth for attracting FDI. The results of the study have significant policy repercussions, particularly for fiscal and monetary policy, particularly to resolve problems of slow economic growth to a low proportion of appropriate FDI in West Sub-Saharan African countries and other developing countries.
Investigating Determinants of Intention in Cash Waqf Linked Sukuk for Sustainable Agriculture: The Moderating Role of Environmental Awareness
The role of cash waqf linked sukuk (Islamic bonds linked to endowments) should be developed to enhance the green economy, particularly in the sustainable agriculture sector. This study investigates the influence of Islamic religiosity, knowledge, and trust in nazhir (waqf managers) on the intention to engage in cash waqf linked sukuk transactions for sustainable agriculture. This study also analyzes the moderating role of environmental awareness as an important factor in the green economy. Primary data was collected through questionnaires disseminated to 150 respondents and Partial Least Squares Structural Equation Modeling (PLS SEM) was employed to analyze the data. The findings indicate that environmental awareness and trust nazhir are significant determinants of the intention to engage in cash waqf linked sukuk transactions for sustainable agriculture. Environmental awareness is also found to be significant in moderating the influence of Islamic religiosity. The implications suggest that to enhance community participation in cash waqf linked sukuk for sustainable agriculture, it is imperative to build trust in nazhir, increase environmental awareness, and target individuals who uphold Islamic values.
Copyright (c) 2024 Annisa Nur Salam, Fajar Andrian Sutisna
Technical Efficiency Performance of Halal Food and Beverages Companies in Indonesia and Malaysia
Indonesia and Malaysia are among the top most influential countries globally for halal food and beverages (HF&B). As a result, there is a perception that these nations’ HF&B companies are mature enough to have robust operational and managerial systems. This leads to a question on how HF&B companies handle unprecedented events. This paper examines the efficiency of HF&B companies, proxied by technical efficiency (TE) score in Indonesia and Malaysia over a five year period – covering the pre-COVID-19 period (2018-2019) and during the pandemic (2020-2022) –using Stochastic Frontier Analysis. The findings indicate that Indonesia's HF&B perform better over the period by showing 60% TE, whereas Malaysia's was at 50%. Interestingly, Malaysia's TE slightly increased during the COVID outbreak, whereas Indonesia showed a reverse pattern, with decreasing TE during the first year of the pandemic. Furthermore, both countries’ HF&B require further improvement, as because between 40% and 50% of the production input is inefficient, which means the production outputs are not optimal for profit. The significant factors requiring improvement from industry players are managing the cash and inventory cycle, along with adding or upgrading any necessary fixed assets such as equipment to reach productivity at an optimum level. This findings also indicate the benchmark for the HF&B industry as well as the current stage for competitiveness among the countries.
Copyright (c) 2024 Indria Ramadhani, Fatin Salwa Binti Haji Katri
Investor Sentiment and Stock Return Volatility: Implication of The Israel-Palestine Conflict on Sharia Stocks in Indonesia
The escalation of the Israel-Palestine conflict has garnered global attention. Public condemnation through mass boycotts of pro-Israel products has significantly impacted capital markets, particularly the sharia stock market in countries with Muslim majority populations. The volatility of sharia stock returns becomes a crucial focal point in this context as it serves as a sensitive indicator of geopolitical events and changes in investor sentiment. This study investigates the connection between the volatility of sharia stock returns in Indonesia and investor sentiment as a result of the Israel-Palestine conflict. Researchers use the GARCH (1,1) model to look at how investor sentiment and the conflict between Israel and Palestine affect the volatility of Sharia stock returns indexed by the Jakarta Islamic Index (JII), using monthly data from January 2012 to February 2024. The researchers hypothesized that investor sentiment and the Israeli-Palestine conflict affect Islamic stock returns in Indonesia, but the results of this study show that the two factors have no effect on Islamic stock returns. The findings of this research provide valuable insights for financial market practitioners, investors, and regulators in understanding the impact of geopolitical conflicts on the capital market, particularly in the context of sharia stocks in Indonesia. By considering investor sentiment factors and market fluctuations triggered by such geopolitical events, this study provides a stronger foundation for wise investment decision-making and effective risk management, thereby enhancing the stability and performance of sharia capital markets in the future.
Copyright (c) 2024 Hesti Eka Setianingsih, Nurul Fauziyah, Fuad Hasyim
ZISWaf Intention Through Islamic Philanthropy Organizations: Does Empathy Matter? The Role of the S-O-R Framework and TPB
This research aims to examine the variables that affect people’s intention to pay zakat, infaq, shodaqoh, and waqf (ZISWaf) through Islamic philanthropy organizations (IPOs) in Indonesia. This research uses the Stimulus-Organism-Response (S-O-R) framework and the Theory of Planned Behavior (TPB) as the model framework. This research is quantitative with primary data, obtained through online surveys by random sampling method, with 145 respondents participating in further analysis stages using SEM-PLS. From the analysis carried out, Islamic religiosity is found to be the variable that most influences ZISWaf intention. As an indirect effect, perceived credibility is significantly proven to mediate the relationship between transaction convenience and ZISWaf intention. On the other hand, empathy is not found to have a relationship with ZISWaf intention. Several arguments may explain why empathy is not proven to be influential variable in the context of ZISWaf. These findings can be used as an academic foundation for IPOs as ZISWaf fund managers, to develop the credibility issues as a strategic step in increasing intention to pay ZISWaf through IPOs. This study makes several recommendations, including the separation of donation types based on time periods. This research offers a comprehensive model, while still considering the proven theoretical framework. From an academic perspective, this research provides a fresh viewpoint to Islamic philanthropy from an empirical-based approach.
The Commonalities of Socially Responsible Investment With Islamic Finance: A Bibliometric Analysis
This study aims to evaluate the number of overviews on the commonalities of socially responsible investment (SRI) with Islamic finance by providing critical thinking in terms of the investment screening process. The main critical reviews are obtained from the articles, paperwork, and previous related studies from reputable open access journals such as Emerald, SSRN databases, and other indexed-Scopus on the Web of Science. This study finds that the commonalities of socially responsible investment with Islamic finance has seemingly been characterized as a slow-moving but unstoppable works since global movements aspire to prevent a transgression of Earth's boundaries towards financial risks. Intertemporal choice accounts for how reliable constitutes for transitioning and adapting planetary boundaries in investment decisions. The challenge is to bridge the postulated gap on the commonalities of SRI with Islamic finance leading into social and financial return aspects in order to construct long-term predictions and scenarios embodying the Islamic finance concept through environmental, social and governance (ESG) approach.