Inggris The Role of Islamic Banks in Promoting Inclusive Growth and Community Well-Being in Indonesia

Abstract

This study examines the role of Islamic banks and Islamic financial institutions (IFIs) in promoting economic growth and improving community welfare in Indonesia using a qualitative literature review. The findings reveal that Islamic banks act as financial intermediaries that not only channel funds to the real sector but also uphold justice and sustainability in line with Islamic law. Key drivers of optimization include strong government regulations, product and service innovation, institutional synergy, and banking digitalization. Major challenges involve low financial and digital literacy, limited human resources, and uneven technological infrastructure. The literature also highlights the significant contribution of IFIs in expanding financial inclusion, supporting the halal industry, and managing social funds such as zakat and waqf. By integrating the principles of *maqasid al-shariah*, Islamic banking fosters a fairer and more sustainable distribution of wealth, although innovation and literacy challenges remain.