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Enhancing food security through agricultural financing and loans within Indonesia’s dual banking system: empirical study approaches

Enhancing food security through agricultural financing and loans within Indonesia’s dual banking system: empirical study approaches

Title: Enhancing food security through agricultural financing and loans within Indonesia’s dual banking system: empirical study approaches

Authors:

  1. Sulaeman;
  2. Husnul Mirzal;
  3. Muhammad Sultan Mubarok;
  4. Indar Fauziah Ulfah;
  5. Akhmad Fauzi Nurulhamzah;
  6. Moh Agus Nugroho;
  7. Sulistya Rusgianto

Department: Department of Islamic Economics Journal Name: Regional Statistics

Kinds of Journal: Scopus Q2

Keywords: Indonesia; Islamic bank; agricultural financing and loans; conventional bank; dual banking system; food security

Abstract::

Food security is a crucial issue due to its role in community welfare, and one approach to achieving this is through agricultural financing and loans provided by the banking industry. Indonesia’s dual banking system combines interest-based conventional banking and Islamic banking, which offers interest-free financing and profit-sharing. This study empirically analyses the impact of agricultural financing and loans from Islamic and conventional banks on food security in Indonesia. Using panel data from provinces in Indonesia (2018–2024), this study applies selected static panel data techniques, namely the fixed effects model (FEM) and robust least squares (RLS) with method of moments estimation. Based on the FEM results, the main findings of this study show that increasing agricultural financing from Islamic and conventional banks improve food security in Indonesia. However, some explanatory variables were confirmed to be insignificant in this model. To validate these results, a robustness test using RLS was conducted, which reaffirmed that agricultural financing from both bank types significantly impacts food security. This strengthens the consistency of the findings and highlights the critical role of agricultural financing in improving food security. The novelty of this study lies in its comprehensive analysis of the role of agricultural sector financing and loans in enhancing food security across all provinces in Indonesia, providing unique insights into the relationship between banking support and food security at a national level.

For details: https://doi.org/10.15196/RS150502

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