Analysis of the Impact of the Sukuk Market and Sharia Financing on Economic Growth in Indonesia

The development of sukuk and Sharia banking financing in Indonesia continues to rise, yet economic growth results remain mixed. This situation highlights the need for an analysis that considers Sharia financing instruments, investment, and macroeconomic conditions. This study aims to analyze the relationship between outstanding sukuk and Sharia banking financing and Indonesia's economic growth, incorporating Gross Fixed Capital Formation (GFCF) and inflation as control variables. The study utilizes quarterly secondary data from 2010 to 2024 and employs the Autoregressive Distributed Lag (ARDL) approach to identify short- and long-term relationships. The results indicate a long-term relationship among economic growth, outstanding sukuk, Sharia banking financing, GFCF, and inflation. However, in the long run, none of these variables demonstrate a statistically significant impact on economic growth. In the short run, GFCF has a positive and significant effect on economic growth, whereas outstanding sukuk, Sharia banking financing, and inflation do not show a significant impact. Furthermore, the negative and significant error correction term coefficient indicates the existence of an adjustment mechanism toward long-term equilibrium. These findings suggest that the dynamics of Indonesia's economic growth in the short run are more closely linked to changes in capital formation than to changes in sukuk, Sharia banking financing, or inflation.