The Implementation of the Islamic Financial Institution Qanun and Economic Growth in Aceh Province
Abstract
This study aims to analyze economic growth during the implementation of Aceh Qanun No. 11 of 2018 concerning Islamic Financial Institutions by examining the roles of investment and poverty. The study employs a quantitative approach using panel data from 56 regencies and municipalities in Aceh and North Sumatra during the 2022–2024 period. Panel data regression is applied, with model selection based on the Common Effect Model (CEM), Fixed Effect Model (FEM), and Random Effect Model (REM), followed by the Hausman and Lagrange Multiplier (LM) tests. The results indicate that the Fixed Effect Model (FEM) is the most appropriate model. Estimation using cluster-robust standard errors shows that investment has a positive but statistically insignificant effect on economic growth, while poverty has a negative and statistically significant effect. These findings suggest that investment has not yet contributed significantly to regional economic growth during the study period, whereas poverty reduction remains an important factor in promoting economic growth. The study highlights the importance of improving investment quality and strengthening poverty alleviation policies to support sustainable regional economic development.
Keywords
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