VOlUME 04 ISSUE 12 December 2025
1Armiadi Musa, 2Bismi Khalidin, 3Mertisa Fardesi, 4Nur Ulfia, 5Hadistsul Munawarah
1,2,3,4,5State Islamic University of Ar-Raniry, Banda Aceh, INDONESIA
DOI : https://doi.org/10.58806/ijsshmr.2025.v4i12n19Google Scholar Download Pdf
ABSTRACT
The paper explores the multifaceted roles of Islamic monetary policy in fostering economic growth. Not only is monetary policy crucial for maintaining economic stability and overcoming crises, but it also plays a pivotal role in promoting growth and development. Drawing from Islamic literature and principles, the paper elucidates the foundations of Islamic monetary policy embedded in the Holy Quran and the Hadiths of Prophet Muhammad pbuh. The historical analysis reveals the flexibility and adaptability of Islamic monetary policy during the time of Prophet Muhammad and the Caliphs, emphasizing the universal applicability of monetary principles in Islam. The principles of Islamic monetary policy, rooted in ethical and moral considerations, reject interest-based transactions and align financial practices with Quranic values. The paper delves into the intricate relationship between Islamic monetary policy and investment, highlighting the influence of interest rates on economic growth. The profit-sharing system emerges as a distinctive feature of Islamic monetary policy, offering an alternative to interest-based models. However, the practical implementation in Islamic banking often faces challenges, with murabaha dominating over profit-sharing systems. While Islamic monetary policy holds the promise of ethical and equitable financial practices, the paper acknowledges the need for adaptability and a holistic understanding of the economic ecosystem. Bridging the gap between theoretical ideals and practical implementation remains a challenge for Islamic banks to contribute significantly to economic growth. Ultimately, the study underscores the nuanced dynamics between Islamic monetary policy, interest rates, and profit-sharing rates, emphasizing the interconnectedness of the financial system and regulatory environment in fostering sustainable economic development.
KEYWORDS:Islamic Monetary Policy, Economic Growth
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VOlUME 04 ISSUE 12 December 2025
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