Dirham: Journal of Sharia Finance and Economics

Islamic Financial Institutions’ Role in Applying 5C+1S Principles for Sharia-Compliant Financing Decision-Making Practices

Marendra Marendra — 2026-02-11

Purpose: This study analyzes the implementation of the 5C+1S Principles in Islamic Financial Institutions, focusing on its effectiveness in providing financing.

Methods: This study used a descriptive research method. Data collection techniques included literature review and triangulation, utilizing various data sources to ensure comprehensive analysis.

Results: The findings highlight several key points for each of the 5C+1S Principles. The Character principle emphasizes the importance of debtor discipline. The Capacity principle focuses on whether the customer owns a business, while capital concerns the amount of funds used by the debtor in their business. Collateral is the guarantee provided by the debtor, and the Condition of Economy evaluates the debtor's ability to handle future economic situations. The Sharia principle ensures that the customer’s business does not violate Islamic law and complies with the fatwa of the DSN.

Conclusions: This study confirms that implementing the 5C+1S Principles is beneficial for Islamic Financial Institutions in ensuring responsible financing and minimizing the risk of bad debt.

Limitations: The researcher acknowledges certain limitations of this study, particularly regarding the depth of analysis, as this study only briefly explores the 5C+1S principles in the context of financing.

Contributions: The authors hope that this study will be useful and provide insights.

Governance and Development Sharia Micro Wakaf Bank Towards Medium Small Micro Enterprises

Amin Setiyadi — 2026-02-11

Purpose: This study examines the governance and distribution of Islamic micro waqf banks to micro, small, and medium enterprises (MSMEs) in Indonesia.

Research Methodology: This study used a qualitative approach with secondary data, including a literature review. The literature sources were gathered from journals, books, and relevant Internet sources related to the governance and development of Islamic micro waqf banks.

Results: This study concludes that the governance of micro waqf banks includes management functions such as planning, organizing, leadership, and supervision, while ensuring that operations follow Sharia principles. Islamic micro waqf banks are predominantly distributed in Java, with East Java, Central Java, and West Java having the highest concentrations, followed by Yogyakarta and Banten.

Conclusions: Islamic micro-waqf banks’ governance is crucial for their operational success, with management practices aligned with Sharia principles. The distribution of these banks is most prominent in Java, contributing to MSME empowerment in the region.

Limitations: This research is limited by the availability of relevant literature and in-depth analysis of the topic. The study also highlights that Islamic micro waqf banks are still a relatively new concept, with limited establishment across the country and limited funding.

Contributions: The researchers hope that this study provides valuable information and insights for students, academics, managers of Islamic micro waqf banks, and society.

Optimization of Professional Equipment in Improving Economic Welfare in Zakat Financial Institution

Yuli Dahlia Saputri — 2026-02-11

Purpose: This study aims to analyze zakat management optimization, focusing on professional zakat in zakat financial institutions, to improve economic welfare in Indonesia.

Methods: A qualitative descriptive research approach was used, combining field research and literature review. Interviews were conducted with key stakeholders in zakat management, and secondary data from zakat institutions were analyzed.

Results: The study found that optimizing professional zakat involves aspects such as the potential of zakat payers (muzakki), institutional professionalism, zakat publication efforts, commitment from zakat payers, and effective distribution methods. However, challenges remain, including insufficient stakeholder support and low awareness of professional zakat among muzakki.

Conclusions: The study concludes that effective zakat management, especially professional zakat management, can significantly improve economic welfare. This requires the efficient collection, distribution, and utilization of zakat funds by professional institutions such as BAZNAS, supported by better stakeholder engagement and public education.

Limitations: This research is limited to zakat financial institutions (BAZNAS) and does not explore other types of zakat or zakat institutions. Additionally, data on zakat management practices from different regions were not gathered comprehensively.

Contributions: This research provides valuable insights into the role of professional zakat in improving economic welfare and offers recommendations for better zakat management in Indonesia. This study contributes to the understanding of how zakat can be optimized for societal benefit, particularly in Indonesia.

Analysis of ZIS, Taxes, and Poverty Alleviation Fund Impacts on Poverty Rates in Indonesia

Muhamad Erda Aminanto — 2026-01-27

Purpose: This study examines the impact of Zakat, Infaq, and Sadaqah (ZIS), taxes, and poverty alleviation funds on poverty rates in Indonesia between 2013 and 2019.

Methods: A quantitative approach was used with secondary data from national ZIS institutions (BAZNAS), the Directorate General of Taxes, and the Ministry of Social Affairs. Data were analyzed using multiple linear regression to assess the relationship between ZIS, taxes, poverty alleviation funds and poverty rates.

Results: The findings indicate a significant positive effect of ZIS and taxes on poverty rates, suggesting that both variables contribute to higher poverty levels when they are inadequately managed. In contrast, the poverty alleviation fund showed no significant effect on poverty reduction. Among the three, taxes had the greatest influence on poverty rates, followed by the ZIS.

Conclusion: This study concludes that taxes and the ZIS play a crucial role in addressing poverty in Indonesia. However, effective management and utilization of poverty alleviation funds are necessary to ensure a positive impact. Increased efficiency in fund allocation and distribution is vital for achieving significant poverty reduction.

Limitations: This study is limited to the Indonesian context and focuses on three main variables: ZIS, taxes, and poverty alleviation funds. Future studies should explore comparative research across countries and incorporate other potential factors affecting poverty rates.

Contribution: This study provides insights into the roles of the ZIS, taxes, and poverty alleviation funds in poverty reduction, offering recommendations for enhancing the effectiveness of these interventions.