Islamic Social Finance Ecosystem and Human Development: Panel Evidence from Selected ASEAN Countries

Almizan Almizan (UIN Imam Bonjol Padang)
Seppi Mustion (STAI Solok Nan Indah)
Karimaturrizky Syukri Nasution (Faculty of Economics, Marmara University, İstanbul)
Rana Nurulita Handra (UIN Imam Bonjol Padang)

Ekuilibrium : Jurnal Ilmiah Bidang Ilmu Ekonomi
Vol 21 No 2 (2026): September

This study investigates the effect of the Islamic Social Finance Ecosystem (ISFE) on human development in selected ASEAN countries by examining the moderating role of institutional quality and the mediating role of financial inclusion. Unlike previous studies that primarily focused on individual Islamic social finance instruments, this research conceptualizes Islamic social finance as an integrated ecosystem comprising Islamic banking, zakat, and waqf. A quantitative panel data approach was employed using annual data from five ASEAN countries Indonesia, Malaysia, Brunei Darussalam, Thailand, and the Philippines covering the period 2010–2022. The ISFE index was constructed using Principal Component Analysis (PCA), while the Human Development Index (HDI) was used as the proxy for human development. The analysis employed panel unit root and cointegration tests, Fixed Effects and Random Effects models, moderated regression analysis, mediation analysis, and the dynamic System Generalized Method of Moments (System-GMM) to ensure robustness and address potential endogeneity. The findings reveal that the Islamic Social Finance Ecosystem has a positive and significant effect on human development. Furthermore, institutional quality strengthens the contribution of ISFE to human development, while financial inclusion partially mediates this relationship by improving access to financial services and expanding economic opportunities. These results suggest that the effectiveness of Islamic social finance depends not only on the availability of Islamic financial resources but also on supportive institutional frameworks and inclusive financial systems. This study contributes to the literature by introducing an ecosystem-based perspective on Islamic social finance and providing cross-country empirical evidence from ASEAN. The findings offer practical implications for policymakers to strengthen governance, enhance financial inclusion, and integrate Islamic social finance into national development strategies to achieve inclusive and sustainable human development.