Agricultural Financing and Food Security in Sumatra: The Role of Islamic and Conventional Banks in a Dual Banking System

Sulaeman (Department of Islamic Economics, Faculty of Economics and Business, Universitas Airlangga, Surabaya, Indonesia)
Husnul Mirzal (Faculty of Islamic Economics and Business, Universitas Islam Negeri Ar-Raniry, Banda Aceh, Indonesia)
Rodame Monitorir Napitupulu (Faculty of Islamic Economics and Business, UIN Syekh Ali Hasan Ahmad Addary Padangsidimpuan, Padangsidimpuan, Indonesia)
Novy Anggraini Sudibyo (Hungarian University of Agriculture and Life Sciences (MATE), Godollo, Hungary)

Journal of Islamic Economics and Business Ethics
Vol 3 No 2 (2026): JIESBI: Journal of Islamic Economics and Business Ethics

Food security is a key target of the Sustainable Development Goals (SDGs), aiming to end hunger and promote sustainable agriculture by 2030. This study examines the role of agricultural financing under a dual banking system, encompassing Islamic and conventional banks, in enhancing food security across 10 provinces in Sumatra from 2019 to 2023. Using panel regression analysis, the results indicate that agricultural financing provided by both Islamic and conventional banks has a significant and positive impact on food security in the region, highlighting the importance of bank-based financing in supporting agricultural productivity and food availability. In addition, agricultural labor, the Human Development Index (HDI), and the Farmer Exchange Rate (FER significantly contribute to improving food security across Sumatra. These findings suggest that expanding and strengthening agricultural financing portfolios within both Islamic and conventional banking systems can effectively support government efforts to enhance national food security and promote sustainable agricultural development. Overall, this study provides policy-relevant evidence on the importance of an inclusive agricultural financing framework in strengthening food security across Sumatra.