Islamic Banking and the Development of the Muslim Economy: An Analysis of Its Role and Prospects
Keywords:
Islamic Banking, MSMEs, Microeconomics, Islamic Bank Merger, Financial InclusionAbstract
Islamic banking plays a crucial role in supporting microeconomic growth in Indonesia, particularly in expanding access to finance based on Sharia principles. This study aims to examine the development of Islamic banking in Indonesia and its contribution to strengthening the micro, small, and medium enterprise (MSME) sector. The method used is a qualitative literature study, which draws on various scientific literature, official documents, and secondary data. The results show that Islamic banking in Indonesia has experienced significant growth since the establishment of Bank Muamalat Indonesia in 1992, followed by the emergence of various Islamic financial institutions, including BPRS (Small and Medium Enterprises) and Baitul Mal wat Tamwil (BMT). The merger of three state-owned Islamic banks into Bank Syariah Indonesia (BSI) in 2021 strengthened the competitiveness of the national Islamic banking industry, particularly in supporting MSME financing amidst the challenges of the Covid-19 pandemic. This study confirms that strengthening Islamic banking is a key element in building economic independence for the people and equitable distribution of social welfare.
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