The Role of Islamic Banks in Enhancing Indonesia's Economy

This study aims to analyze the role of Islamic Banks in supporting Indonesia's economy, particularly in productive sectors such as MSMEs, infrastructure, and housing. The study also explores the challenges faced by Islamic banks in driving economic growth and the impact of Islamic financial literacy on the development of the Islamic banking sector. The research method used is a literature review with a qualitative descriptive approach, where data is obtained from secondary sources, including journals, research reports, and related literature. The findings indicate that Islamic Banks play a significant role in providing financing to MSMEs, infrastructure, and housing sectors. However, major challenges include limited infrastructure, a lack of human resources trained in Islamic principles, and regulatory uncertainties governing the sector. Additionally, high Islamic financial literacy can increase the adoption of Islamic banking products and support the sector's growth. The study concludes that to strengthen the role of Islamic Banks, there is a need to improve infrastructure, human resource training, as well as regulatory and financial literacy enhancements.