THE LINKAGE BETWEEN FOOD SECURITY, ISLAMIC FINANCING, EXCHANGE RATE, AND ECONOMIC GROWTH IN INDONESIA

Abstract

This research purpose to analyze of food security, Islamic financing in the agricultural sector , Islamic non-performing financing, and the exchange rate on economic growth in Indonesia. The Autoregressive Distributed Lag method and Toda-Yamamoto causality are used in this study as novelty. The research data use quarterly data from 2014Q1 to 2020Q4. The results showed that eventually, food security had a significant positive effect on economic growth, while non-performing financing had a significant negative effect on economic growth. In the short term, explain that the financing of the agricultural sector has a significant positive effect and the exchange rate has a significant negative effect. Food security, non-performing financing, and agricultural sector financing have no significant effect. The results causality test show that all explanatory variables have a direct two-way relationship with economic growth, except for financing in the agricultural sector. Interestingly, non-performing financing and financing for the agricultural sector have a relationship with food security, which will indirectly impact economic growth. Based on these findings, the government must improve food security and stability exchange rate. Additionally, the Islamic banks need to reduce bad financing and encourage more financing for farmers. Keywords: Economic Growth, Food Security, Non-Performing Financing, Sharia Financing, Exchange Rate DOI： https://doi.org/10.35741/issn.0258-2724.58.1.32