The role of Islamic banking intermediation in poverty reduction in the context of global economic inequality

Abstract

This study aims to examine the role of Islamic bank intermediation in poverty alleviation amidst global economic inequality. Operating on the principles of justice, transparency, and profit-sharing, Islamic banks serve as alternative financial institutions focused on community empowerment. Through intermediation mechanisms such as microfinance, productive zakat, and social investments, Islamic banks enhance financial access for underprivileged groups. This research employs a qualitative method with a data collection technique in the form of literature review, by analyzing relevant academic literature, accredited journal articles, research reports, and policy documents. The findings indicate that Islamic bank intermediation plays a significant role in reducing structural poverty and promoting economic equity. In the context of global disparities, Islamic banks also act as instruments of stabilization and fair wealth redistribution. To optimize this role sustainably, regulatory support and cross-sector collaboration are essential.