ascarya, ascarya (2022) The Role of Islamic Social Finance During Covid-19 Pandemic in Indonesia’s Economic Recovery. International Journal of Islamic and Middle Eastern Finance and Management, 15 (2). pp. 386-405. ISSN 1753-8394

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Abstract

Purpose – This study aims to propose Islamic solutions to the Covid-19 health and economic crises, specfically using Islamic social finance (ISF) instruments, including zakat, infaq and waqf. Design/methodology/approach – This study applies the qualitative content analysis method, guided by a model of composite approaches of poverty alleviation in Islam, integrated Islamic commercial and social finance (IICSF) and crisis management of Umar bin Khattab, to construct various programs and/or policy actions toward economic recovery in Indonesia. Findings – The results show that ISF with its instruments, especially zakat, infaq and waqf could help the government and the economy to recover from the crisis. The proposed solutions include: save lives, including medical assistance using zakat-infaq and health-care waqf using waqf; save households, by creating a social safety net and graduation program using zakat-infaq; save businesses, especially micro-small enterprises (MSEs), through financial and business assistance (especially digital marketing) leveraging zakat-infaq-waqf and save financial institutions, especially micro-small financial institutions, by the development of cash waqf and the adoption of fintech and IICSF, especially in Islamic financial institutions targeting MSEs. Research limitations/implications – This study is exploratory in nature, which needs further investigations using more sophisticated qualitative and/or quantitative methods. Practical implications – If the above programs using ISF instruments are implemented, the economic surplus would be re-established and the acceleration of economic recovery can be realized. Social implications – The successful adoption of ISF could at the same time reduce poverty, accelerate MSEs development and improve equitable well-being. Originality/value – The Covid-19 pandemic has caused health, economic and social problems, which must be solved holistically, including ISF within IICSF.

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