ANALYSIS OF ISLAMIC FINANCIAL INSTITUTIONS ON POVERTY IN INDONESIA

Abstract

Poverty is a complex problem and must be addressed immediately. Various efforts have been
designed and realized by the government to reduce poverty in Indonesia. One of them is
establishing a financial institution that is based on Islamic principles commonly known as an
Islamic Financial Institution (LKS). The purpose of this study is to find out the role of Islamic
financial institutions in poverty alleviation. This research uses the library research method with
the search engine used in the literature search is Google Scholar with the keywords Islamic
Financial Institutions, poverty alleviation, and poverty of the Indonesian people. The results of
the study show that in the LKS there are instruments that can help solve the problem of poverty,
namely through the distribution of zakat, utilizing the insurance sector, the BMT program, and
capital development as an effort to alleviate poverty. The conclusions of this study indicate that
Islamic Financial Institutions can assist the poor in solving the problem of poverty. in poverty
alleviation following the goals of the SDGs. Islamic financial institutions have a role, namely
helping underprivileged communities by holding zakat distribution programs, utilizing the
insurance sector, increasing people's income and businesses to bring prosperity such as through
MSME funding, and being able to reduce poverty. to channel various funding needs so that it
can have positive value for economic improvement in society as a poverty alleviation effort in
Indonesia.