Contribution of Islamic Social Finance Instruments to Social Inequality in Indonesia

Abstrak

Of the many social problems experienced around the world, inequality is one of the main issues, including in Indonesia. In addition to government assistance, Islam provides solutions to this problem through the instruments of zakat, infaq, and sadaqah as forms of wealth/income redistribution. Given that Indonesia is a country with a Muslim majority, there is considerable potential to address this issue. Therefore, this study aims to determine the impact of the distribution of zakat, infak, and sedekah on social inequality, with PDRB as the intervening variable. The research design uses a quantitative research method with secondary data from 2020–2024. This study focuses on regions with the highest inequality in Indonesia over the past five years, namely Yogyakarta, Jakarta, Gorontalo, West Java, Papua, Southeast Sulawesi, West Nusa Tenggara, West Papua, and South Sulawesi. Data were analyzed using panel regression techniques with the assistance of the Eviews 12 program. The study results indicate that the effectiveness of zakat, infak, and sedekah distribution can significantly reduce social inequality when both are integrated. However, when tested separately, only zakat distribution can reduce social inequality with a significant value, while infak and sedekah cannot. Meanwhile, GRDP does not contribute to inequality, and this variable is also not influenced by zakat and infaq sadaqah in other regressions. Thus, GRDP, in its role as a mediator between zakat and infaq sadaqah on inequality, also yields insignificant values.