Shariah Law and Islamic Finance as Tools for Economic Empowerment in Rural Indonesia

Amila Yanti (1), Seo Jiwon (2), Lee Jiwon (3)
(1) Univeristas Islam Negeri Sunan Ampel Surabaya, Indonesia,
(2) Sogang University, Korea, Democratic People's Republic of,
(3) Yonsei University, Korea, Democratic People's Republic of

Abstract

Shariah law and Islamic finance have emerged as powerful tools for promoting economic empowerment, particularly in rural areas where poverty and financial exclusion are prevalent. In Indonesia, the world’s largest Muslim-majority country, Islamic finance offers unique opportunities to address economic disparities and foster inclusive growth. This study examines the role of Shariah law and Islamic finance in empowering rural communities in Indonesia, focusing on their impact on poverty alleviation, financial inclusion, and sustainable development. The research aims to identify the challenges and opportunities associated with implementing Islamic finance in rural areas and propose strategies for enhancing its effectiveness. Using a mixed-methods approach, this study combines quantitative analysis of socio-economic data with qualitative interviews with rural communities, Islamic financial institutions, and policymakers. Data were analyzed to assess the impact of Islamic finance on income levels, access to financial services, and community development. The findings reveal that Islamic finance, particularly through instruments such as zakat, waqf, and microfinance, has a positive impact on economic empowerment in rural areas. However, challenges such as lack of awareness, limited infrastructure, and regulatory gaps hinder its full potential. The study concludes that enhancing the role of Shariah law and Islamic finance in rural Indonesia requires targeted strategies, including education, infrastructure development, and regulatory reforms.

Full text article

Generated from XML file

References

Aji, J. S., Mina, F. L. P., & Pahlevi, R. W. (2025). THE EFFECTIVENESS OF THE ROLE OF VILLAGE-OWNED ENTERPRISES (BUMDes) AS AN INSTRUMENT FOR IMPROVING COMMUNITY ECONOMIC EMPOWERMENT. IOP Conf. Ser. Earth Environ. Sci., 1475(1). Scopus. https://doi.org/10.1088/1755-1315/1475/1/012019

Alayed, S., & Alateeg, S. (2025). Women economic empowerment leads towards social innovation in rural setting of Saudi Arabia. Cogent Economics and Finance, 13(1). Scopus. https://doi.org/10.1080/23322039.2025.2481228

Amandaria, R., Darma, R., Tenriawaru, N., Fudjaja, L., & Akzar, R. (2025). Gender, empowerment, and rural sustainable development: A case study of crab business integration. Open Agriculture, 10(1). Scopus. https://doi.org/10.1515/opag-2025-0416

Apat, S., & Mohapatra, S. (2025). Productivity of women self-help groups through quality training and capacity building. International Journal of Productivity and Quality Management, 44(1), 1–17. Scopus. https://doi.org/10.1504/IJPQM.2025.143964

Chanda, H., Mohareb, E., Peters, M., & Harty, C. (2025). Nexus between solar-PV adoption and wild food sustainability: Case of income from honey, fruits, traditional-beer, and vegetables in rural Zambia. Energy for Sustainable Development, 85. Scopus. https://doi.org/10.1016/j.esd.2025.101694

Chipenda, C. (2025). Transformative Social Policy Through Land Reform: Women’s Economic Agency and Rural Social Change in Zimbabwe. Journal of Asian and African Studies. Scopus. https://doi.org/10.1177/00219096251313546

Debessa, K. C., Negeri, K. G., & Dangisso, M. H. (2025). Women’s enrollment in community-based health insurance and its determinants in Sidama national regional state, Ethiopia, 2024: A multilevel analysis. PLoS ONE, 20(2 February). Scopus. https://doi.org/10.1371/journal.pone.0316948

Fatima, U., Ahmad, N., Menegaki, A. N., & Wang, H. (2025). How do information and communication technologies (ICTs) empower women? Women’s Studies International Forum, 109. Scopus. https://doi.org/10.1016/j.wsif.2025.103057

Ghouse, S. M., Shekhar, R., & Chaudhary, M. (2025). Driving financial inclusion: Exploring mobile wallet adoption among rural Omani millennials. Journal of Islamic Marketing, 16(4), 1229–1257. Scopus. https://doi.org/10.1108/JIMA-02-2024-0073

Goli, I., Bijani, M., Koohi, P. K., Skominas, R., Värnik, R., Van Passel, S., Dogot, T., & Azadi, H. (2025). Toward tenure security: The relationship between women’s land ownership, formal land title documents and their empowerment. Land Use Policy, 148. Scopus. https://doi.org/10.1016/j.landusepol.2024.107389

Jisha, V. G., & Rupashree, R. (2025). Empirical Study on Acquaintance of Karnataka State Women Development Corporation (KSWDC) Schemes Towards Empowering of College Girls Students. Dalam Stud. Syst. Decis. Control (Vol. 568, hlm. 205–213). Springer Science and Business Media Deutschland GmbH; Scopus. https://doi.org/10.1007/978-3-031-71526-6_18

Kertamukti, R., Anderson, S. M., & Asy’ari, A. Z. (2025). EMPOWERING RURAL WOMEN THROUGH TRANSFORMATIVE LEADERSHIP: INSIGHTS FROM KWT PAWON GENDIS. Jurnal Ilmiah Peuradeun, 13(1), 647–668. Scopus. https://doi.org/10.26811/peuradeun.v13i1.1244

Kipkogei, S., Han, J., Mwalupaso, G., Tanui, J., & Brenya, R. (2025). The synergistic effects of microcredit access and agricultural technology adoption on maize farmer’s income in Kenya. PLoS ONE, 20(1 January). Scopus. https://doi.org/10.1371/journal.pone.0316014

Kumar, M., & Mandal, S. K. (2025). Tourism and Community Development: A Holistic Perspective from the Local Community in Bodhgaya. Journal of Environmental and Earth Sciences, 7(3), 133–150. Scopus. https://doi.org/10.30564/jees.v7i3.8045

Lei, J., Xie, Y., Chen, Y., Zhong, T., Lin, Y., & Wang, M. (2025). The Transformation of Peri-Urban Agriculture and Its Implications for Urban–Rural Integration Under the Influence of Digital Technology. Land, 14(2). Scopus. https://doi.org/10.3390/land14020375

Lou, L., Hong, M., Qiao, S., & Zhou, D. (2025). Exploring the impact of the new round of farmland certification on rural household consumption: Empirical evidence from China. Humanities and Social Sciences Communications, 12(1). Scopus. https://doi.org/10.1057/s41599-025-04444-4

Malhotra, N., & Saravanan, P. (2025). In pursuit of the sustainable development goals: Success stories of women entrepreneurs in emerging economies. Dalam In Pursuit of the Sustain. Dev. Goals: Success Stories of Women Entrep. In Emerg. Econ. (hlm. 241). Emerald Publishing; Scopus. https://doi.org/10.1108/9781836085324

Mehta, S. A., Dutt, A., Tannirkulam, A., Singh, A. P., Verma, A., Singha, A., Sreenidhi, A., Nandi, A., Kumar, A., Dabli, A., Athira, P., Ramachandran, B., Bansal, C., Sheth, C. S., Dsouza, C., Kumar, D., Sharma, D., Singh, J., Dadheech, K., … Seth, A. (2025). Initial Observations from Field Testing of a Digital Participatory Tool to Improve Water Security in Rural India. ICTD - Proc. Int. Conf. Inf. Commun. Technol. Dev., 337–364. Scopus. https://doi.org/10.1145/3700794.3700816

Opoku, E. E. O., & Acheampong, A. O. (2025). Women’s political participation and disease prevention: Evidence from access to water and sanitation services. Social Science and Medicine, 365. Scopus. https://doi.org/10.1016/j.socscimed.2024.117585

Premalatha, G., & Mary, Sr. SE. (2025). Pt. Thiyagaraya Chettiyar: A Cooperative Pioneer in Indian Banking and Finance. Journal of Neonatal Surgery, 14(1), 454–472. Scopus.

Rahayu, H. C., Lestari, E. P., Brata, A. G., & Gitya, F. (2025). The Role of Distribution Channels and Logistics Innovation in Empowering MSMEs in Tourism Villages: A Community-Based Tourism Perspective. Journal of Distribution Science, 23(2), 119–130. Scopus. https://doi.org/10.15722/jds.23.02.202502.119

Ramasamy, I., Saravanan, S. A., Rangasamy, G., & Subramanian, D. (2025). Exploring the impact of digitalisation on rural women’s socio-economic status: A bibliometric and scoping study. Multidisciplinary Reviews, 8(2). Scopus. https://doi.org/10.31893/MULTIREV.2025063

Ravikumar, A., & Ojeda del Arco, A. P. (2025). Have ‘life plans’ delivered on their transformative aspirations for Indigenous empowerment through conservation? Evidence from four watersheds in the Peruvian Amazon. World Development, 190. Scopus. https://doi.org/10.1016/j.worlddev.2025.106972

Rumbayan, M., Kindangen, J., Sambul, A., Sompie, S., & Cross, J. (2025). Solar energy implementation in rural communities and its contributions to SDGs: A systematic literature review. Unconventional Resources, 6. Scopus. https://doi.org/10.1016/j.uncres.2025.100180

Santos, A. R., Galano, J. A., Claudio, E. G., & Obligado, J. R. T. (2025). Project Liwanag Kita: Assessing its impact on community empowerment and economic development. International Journal of Public Policy and Administration Research, 12(1), 1–16. Scopus. https://doi.org/10.18488/74.v12i1.4152

Setini, M., Putra, I. B. U., Wahyuni, N. M., Asih, D., Triandini, E., & Santikayasa, I. P. (2025). Innovative strategy: Utilizing social capital to develop green products. Journal of Project Management (Canada), 10(2), 429–440. Scopus. https://doi.org/10.5267/j.jpm.2024.12.003

Shen, J., Zhao, H., & Xiao, F. (2025). Empowerment and Pathways of Digital Economy in Rural Revitalization: A Case Study of Low Urbanization Areas in China. Sustainability (Switzerland), 17(7). Scopus. https://doi.org/10.3390/su17072797

Sia, R., Darma, R., Salman, D., & Riwu, M. (2025). Sustainability Assessment of the Arabica Coffee Agribusiness in North Toraja: Insight from a Multidimensional Approach. Sustainability (Switzerland), 17(5). Scopus. https://doi.org/10.3390/su17052167

Singh, N., Kaur, K., Moid, S., Rehman, A. U., & Rushdi, N. J. (2025). Crafting empowerment through Madhubani painting: The journey of rural women artisans. TQM Journal. Scopus. https://doi.org/10.1108/TQM-04-2024-0151

Sintiawati, N., Hilmi, M. I., Hendrawijaya, A. T., Mutamam, M. H. A., Amalia, K. N., & Kurniawan, D. (2025). E-CODIGIMARK PROTOTYPE: A TOOL FOR SUPPORTING DIGITAL MARKETING OF RURAL COMMUNITIES. Journal of Engineering Science and Technology, 20(3), 73–80. Scopus.

Skhephu, A., Mayekiso, A., & Toko, A. (2025). KEY DRIVERS OF HOUSEHOLD FOOD SECURITY AND CONSUMPTION PATTERNS IN THE POST-COVID-19 PANDEMIC: LESSONS FROM UMZIMVUBU AND NTABANKULU LOCAL MUNICIPALITIES, EASTERN CAPE PROVINCE, SOUTH AFRICA. African Journal of Food, Agriculture, Nutrition and Development, 25(2), 26004–26020. Scopus. https://doi.org/10.18697/ajfand.139.25390

Syahza, A., Tampubolon, D., Asmit, B., & Irianti, M. (2025). Poverty alleviation through cross-sectoral approaches: Solutions to accelerate coastal community economy. Cogent Social Sciences, 11(1). Scopus. https://doi.org/10.1080/23311886.2025.2462451

Timilsina, A., Shrestha, A., Neupane, P., Nepal, S., Kandel, B., Devkota, S., & Thapa, S. (2025). HIV Care Seeking Pathways and Barriers to the Continuum of Care Faced by Persons Living With HIV in Rural Nepal: A Qualitative Study. Health Expectations, 28(1). Scopus. https://doi.org/10.1111/hex.70141

Tudu, B., Khatua, P., & Panda, L. (2025). Financial Inclusion: A Catalyst for Sustainable Development and Economic Empowerment. Dalam FinTech and Financial Incl.: Leveraging Digital Finance for Economic Empowerment and Sustainable Growth (hlm. 165–178). Taylor and Francis; Scopus. https://doi.org/10.4324/9781003514114-12

Varkey, L. M., Veettil, P. C., Singh, K., Borgohain, R., Bhattacharya, A., & Singh, S. (2025). How differential vulnerability and empowerment dynamics work to determine the agricultural performance of women-operated smallholdings: Evidence from Assam, North-East India. Gender, Technology and Development, 29(1), 28–59. Scopus. https://doi.org/10.1080/09718524.2024.2417472

Wedajo, A. D., Khan, S. T., Bhat, M. A., & Zahran Al Balushi, Y. M. (2025). Mapping the landscape of female entrepreneurship in Africa: Trends, networks and hot topic through text mining techniques. Management and Sustainability, 4(1), 24–46. Scopus. https://doi.org/10.1108/MSAR-07-2023-0038

Williams, A., Stuart, C., Perrin, N., Heise, L., Anglewicz, P., & Decker, M. R. (2025). Who are the “vanguard” women? Strategies for identifying women going against economic participation norms across 49 low- and middle-income countries. World Development, 186. Scopus. https://doi.org/10.1016/j.worlddev.2024.106846

Yuan, W., Zhang, L., & Chen, T. (2025). Research development context and prospect of rural industry revitalization in China. Journal of Chinese Agricultural Mechanization, 46(1), 299-306and337. Scopus. https://doi.org/10.13733/j.jcam.issn.2095-5553.2025.01.043

Zhang, D., Jiang, D., & He, B. (2025). Empowering Agricultural Economic Resilience with Smart Supply Chain: Theoretical Mechanism and Action Path. Sustainability (Switzerland), 17(7). Scopus. https://doi.org/10.3390/su17072930

Authors

Amila Yanti
amilayanti@gmail.com (Primary Contact)
Seo Jiwon
Lee Jiwon
Yanti, A., Jiwon, S., & Jiwon, L. (2025). Shariah Law and Islamic Finance as Tools for Economic Empowerment in Rural Indonesia. Sharia Oikonomia Law Journal, 3(2), 166–178. https://doi.org/10.70177/solj.v3i2.2087

Article Details