Urban Community Welfare and Economic Inequality:  The Role of Islamic Social Finance

Atika Atika; Adelyna Oktavia Nasution; Reni Ria Armayani Hasibuan

doi:10.55980/ebasr.v5i3.484

Authors

Atika Atika Fakultas Ekonomi dan Bisnis Islam, Universitas Islam Negeri Sumatera Utara, Medan, Indonesia
Adelyna Oktavia Nasution Fakultas Ekonomi dan Bisnis Islam, Universitas Islam Negeri Sumatera Utara, Medan, Indonesia
Reni Ria Armayani Hasibuan Fakultas Ekonomi dan Bisnis Islam, Universitas Islam Negeri Sumatera Utara, Medan, Indonesia

DOI:

https://doi.org/10.55980/ebasr.v5i3.484

Keywords:

Economic Inequality , Urban Welfare , Gini Index , Islamic Social Finance , Medan City

Abstract

This study examines economic inequality and welfare trends in Medan City and discusses the redistribution potential of Islamic social finance. A quantitative longitudinal design uses seven annual observations from BPS for 2018–2024, complemented by zakat and infaq collection data from BAZNAS Medan City for 2018–2022. Descriptive statistics, Pearson correlations, ordinary least squares regression, and projections assess changes in the Gini Index, per capita expenditure, poverty, and the Human Development Index (HDI). The Gini Index increased from 0.3140 in 2018 to a peak of 0.4020 in 2021, before declining to 0.3560 in 2024. Meanwhile, expenditure generally increased, poverty declined from 8.25% to 7.94%, and HDI rose annually. None of the Gini Index’s bivariate correlations with the welfare indicators reached the 5% significance threshold. Regression estimates indicated positive expenditure and poverty coefficients, although statistical inference remains provisional because of reporting inconsistencies, possible residual autocorrelation, and the small sample. Reported projections suggest an increase in the Gini Index from 0.371 in 2025 to 0.387 in 2027. Zakat and infaq collection increased from IDR 773 million to IDR 2.135 billion, indicating greater funding capacity but not demonstrated welfare effects. The study highlights the importance of assessing welfare achievements alongside distributional outcomes and distinguishing social finance resources from recipient benefits. Household-level evidence and verified model estimates are needed to strengthen policy conclusions.

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