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Dynamic model of Ibn Khaldun

theory on poverty
Empirical analysis on the poverty in
majority and minority Muslim population
after the financial crisis
Akhmad Affandi
Business and Administration, Kulliyah of Muamalat,
Insaniah University College, Alor Star Kedah, Malaysia, and

Dewi Puji Astuti

Baitul Maal Muamalat, Bank Muamalat Indonesia, Jakarta, Indonesia
Abstract
Purpose The purpose of this paper is to examine the poverty rates of Indonesia, Malaysia and
Pakistan, representing majority Muslim populations, and of India as a minority Muslim population,
according to Ibn Khalduns dynamic model on poverty.
Design/methodology/approach According to Ibn Khaldun, poverty is not merely influenced by
economic dimension. He initiated fundamental factors as mentioned in his formula P
f W ; G; N ; S; g; J where P is a function of Wealth of the Nation (W ), Government (G ), Human
Resource (N ), Sharia (S ), Growth ( g) and Justice ( J ). This study generates secondary data covering
from 2000-2010 or after financial crisis of 1997. These data employed using Panel method.
Findings The studys findings reveal that the variable of Dynamic model of Ibn Khaldun
influenced significantly the level of poverty in Indonesia as a Muslim majority population, whereas in
Pakistan only the HDI variable has significant influence. Meanwhile (like Malaysia) in India, the
variable of Dynamic model of Ibn Khaldun does not influence significantly.
Research limitations/implications Each country has certain characteristics and background
with respect to economic growth, government policy and population that might influence poverty. As
a result, the application of Ibn Khaldun model varies accordingly.
Practical implications The findings reveal that quite a few challenges lie ahead in applying Ibn
Khaldun model in these countries. This needs to be taken on promptly by each country, especially
Muslim countries.
Originality/value This paper is one of few studies which employ Ibn Khaldun theory on poverty,
using panel data to investigate the appropriateness of the model.
Keywords Indonesia, Malaysia, Pakistan, Islam, Poverty, Economic growth, Government policy,
Development, Ibn Khaldun, Muslims, Economics, Sociology
Paper type Research paper

Humanomics
Vol. 29 No. 2, 2013
pp. 136-160
q Emerald Group Publishing Limited
0828-8666
DOI 10.1108/08288661311319193

Introduction
Background
Poverty is an economic phenomenon that considered as severe disease in some
countries. Various ways and efforts undertaken by the government to overcome the
poverty that occurs, but poverty still continues without any significant reduction.
JEL classification I32, O11, B31, C53

Meanwhile, the economic situation in majority Muslim population recorded to be more

serious compared to Western countries (non-Muslims) as revealed by the data of Human
Development Report. In 2010 the poverty rate in Muslim and non-Muslim countries
recorded 16.70 percent, Malaysia 7.41 percent and Pakistan 34.99 percent compared to
Singapore which was only 2.9 percent. This fact is an evidence that poverty level is still
relatively high in Muslim countries although there are also non-Muslim countries that
have poverty levels considered as high like in the case of India which has a 28.60 percent
poverty rate in 2010. The poverty rate of majority Muslim population in this
study represented by Indonesia, Malaysia and Pakistan as well as minority Muslim
population (India) can be seen in Figure 1.
Empirical studies revealed that the problems faced by Muslim countries is a chronic
absolute poverty, high unemployment, inequality of income distribution, low levels of
productivity in primary sector, increasing inequality of living standards, less optimal
fulfillment of public facilities (education and health), a worsening balance of payments
and the most severe is the foreign debt and the weakening of the institutional structure
and system of values and customs are increasingly faded due to external influences
(Djumiarti, 2005, p. 886).
According to Hanafiah (2009, p. 1) the gap in poverty rate that occurred between
majority and minority Muslim countries are very reasonable since the majority of
Muslim countries are former colonies of the colonial Western countries. During colonial
times human resources being underestimated that resulted in a sluggish of national
economy. In addition to poverty, corruption is another serious problem that inherent in
the government system and become an obstacle and barriers to boost the economy.
This is evidenced from unequal distribution of resources and huge gap between the
poor and wealthy. The financial institution not functioning well to bridge and channel
the funds from the surplus to the deficit unit where resources diverted to increase the
profits of one or several parties only. In overall, the government is not able to optimize
the provision of public goods to society. Levels of corruption majority and minority
Muslim population (Indonesia, Malaysia, India and Pakistan) can be seen in Figure 2.
The economist now attempting to parse and seek appropriate solutions to overcome
the poverty that occurred as Ibn Khalduns thought to eradicate and strive to find the
exact solution towards poverty since 605 years ago as written in his phenomenal book

Source: Human Development Report

Ibn Khaldun
theory on
poverty
137

Figure 1.
The poverty rate of
muslim countries

HUM
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138

Figure 2.
Levels of corruption
reduction

Muqaddimah that discusses economic principles with a more bright, elegant, deep and
fore-sighted, so the theory put forward 6,050 years ago are still relevant to the current
situation (Khalduns, 2011).
According to Ibn Khaldun, poverty is a process that is triggered by the decline of the
political community that is not valid due to the lack of democracy that resulted in the
emergence of a variety of evils. Poverty is not merely due to the economic dimension, but
also influenced by other factors besides the economy. According to Ibn Khaldun,
dimensional effect on poverty is a moral, intellectual, social, demographic and political,
so that appropriate solutions to reduce poverty is not only focused on the improvement
of economic sector alone, but it must be some balance improvements in various sectors
as mentioned by Ibn Khaldun in Chapra (2001). In summary, the thought of Ibn Khaldun
can be formulated as mentioned in Hanafiah (2009) and Chapra (2001):
P f W ; G; N ; S; g dan j

1:1

According to Ibn Khaldun Poverty (P) is a function of state wealth (W), Government (G),
human resources or the community (N), sharia (S), construction (g) and justice (j).
Poverty in majority Muslim population in general and minority Muslim population in
particular is still a serious problem and has a strong bond with economic growth and
income distribution. Poverty is not merely a lack of income and property issues (lack of
income and assets). Poverty is a problem of low quality of human resources, the issue of
clothing, food and shelter, employment and the problem of future uncertainty.
There are several factors that led to increase the poverty levels in both the Muslim
and non-Muslim countries, which is a reflection of the failure of government in
redistributing income to the community. According to Hanafiah (2009), a significant
variable affecting poverty is the total investment, GDP per capita, genie ratio,
government spending in health and education as well as human development index
whereas the constitution of the state variables do not affect the level of poverty in
Muslim countries. Meanwhile according to the Nanga (2006), fiscal transfers in the State
of Muslims and non-Muslims have tended to exacerbate the impact of income inequality
and poverty, income inequality effect on poverty which is indicated by a responsive and
elasticity changes in the genie ratio.

Poverty alleviation in the context of philanthropy and pure humanity still remain as
a challenging although some developing countries including majority Muslim
population have achieved remarkable performance in improving their standard of
living. Social and economic inequality within these nations is an obstacle part to achieve
the sense of wellbeing. Therefore, philanthropy and wellbeing concept is inevitable part
of poverty alleviation as the concept of humanity inherent in the objective of poverty
alleviation whilst profoundly concerned with the plight of people living in severe
poverty. Poverty is a proof of inequality and inequity in income distribution from the
central government. It is also a reflection of government performance in the relevant
period. By looking at the phenomenon of prolonged poverty in majority and
minority Muslim population, this study investigates the effect of variables in the model
of the dynamics of Ibn Khaldun to the poverty level Muslim and non-Muslim countries.
Problem statement
With reference to the background of the above problems, this study is aimed to
analyze the dynamics model of Ibn Khaldun to the level of poverty in majority and
minority population and to find out more about the influence of variables in the
model of the dynamics of Ibn Khaldun on poverty in majority and minority muslim
population. So that the formulation of the problem can be decomposed in the following
question:
.
How is the countrys wealth influence (W) to the level of poverty in majority and
minority Muslim population after the financial crisis?
.
How is the governments influence (G) to the level of poverty in majority and
minority Muslim population after the financial crisis?
.
How do human resources (N) influence the level of poverty in majority and
minority Muslim population after the financial crisis?
.
How is the influence of sharia (S) to the level of poverty in majority and minority
Muslim population after the financial crisis?
.
How does the construction of (g) to the level of poverty in majority and minority
Muslim population after the financial crisis?
.
How does justice ( j) influence the level of poverty in majority and minority
Muslim population after the financial crisis?
Research objectives
The purpose of this study could not be separated from above problem, namely:
(1) To determine the influence of the countrys wealth (W) to the level of poverty in
Muslim non-Muslims majority and minority population?
(2) To determine the influence of the government (G) to the level of poverty in
Muslim non-Muslims majority and minority population.
(3) To determine the influence of human resource (N) to the level of poverty in
Muslim non-Muslims majority and minority population.
(4) To determine the influence of sharia (S) to the level of poverty in Muslim
non-Muslims majority and minority population.

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(5) To determine the effect of development (g) to the level of poverty in Muslim
non-Muslims majority and minority population.
(6) To determine the influence of justice (j) to the level of poverty in Muslim
non-Muslims majority and minority population.
Research methodology
The method used in this research is quantitative research methods. The data used
derived from the United Nations Development Program (UNDP), the Islamic
Development Bank (IDB), and the global competitiveness. What specifically processed
using the method of the panel is employed by using software e-views.
Hypothesis
The hypotheses in this study are as follow:
Ho 0 which means, there is no significant influence among the countrys wealth
(W) to the level of poverty in majority and minority Muslim population after
the financial crisis.
H1 0, which means, there is a significant influence among the countrys wealth
(W) to the level of poverty in majority and minority Muslim population after
the financial crisis.
Ho 0 which means, there is no significant effect between the government (G) to
the level of poverty in majority and minority Muslim population after the
financial crisis.
H1 0 which means that there is significant effect between the government (G) to
the level of poverty in majority and minority Muslim population after the
financial crisis.
Ho 0 which means, there is no significant effect between human resource (N) to
the level of poverty in majority and minority Muslim population after the
financial crisis.
H1 0, which means, there is significant influence between human resource (N) to
the level of poverty in majority and minority Muslim population after the
financial crisis.
Ho 0 which means there is no significant influence of sharia (S) to the level of
poverty majority and minority Muslim population after the financial crisis.
H1 0, which means, there is significant influence between sharia (S) to the level
of poverty in majority and minority Muslim population after the financial
crisis.
Ho 0 which means, there is no significant effect between development (g) to the
level of poverty in Muslim non-Muslims majority and minority population.
H1 0, which means, there is significant influence between development (g) to the
level of poverty in majority and minority Muslim population after the
financial crisis.

Ho 0 which means, there is no significant effect between justice (j) to the level of
poverty in majority and minority Muslim population after the financial crisis.
H1 0, there is significant influence between development (j) to the level of poverty
in majority and minority Muslim population after the financial crisis.

Literature review
The concept of philanthropy and wellbeing in Ibn Khalduns model
Ibn Khaldun Center for analysis that he viewed is the concept of wellbeing. In his
analysis the phenomenon of the rise and fall not only depend on economic variables, but
also on a number of other factors that also determine the quality of individuals,
communities, authorities and institutions. Thus, in Muqaddimah, he determines the
factors affecting quality by analyzing the interrelated factors such as moral,
psychological, political, economic, social, demographic and historical phenomenon of
the rise and fall of dynasties and civilizations (Chapra, 2001, p. 126). In this regard, Ibn
Khaldun forms a dynamic model which is a reflection of an interdisciplinary science
where he advised the king as follows:

The power of sovereignty (al-Mulk) could not be maintained except by implementing sharia
[. . .]: Sharia could not be implemented except by a sovereign (al-mulk): sovereignty will not
gain strength except when supported by human resources (ar Rijal): human resources could
not be maintained unless the property (al-mal): property could not be obtained except by the
construction (al Emirate): development could not be achieved except through justice (al adl):
a measure of justice (al mizan) which God used to evaluate the human and sovereign contains
charge responsibility to uphold justice (Khaldun, p. 39).

These eighth advices are referred to as sentences of hikammiyah of political wisdom

which is connected each other to gain strength where beginning and end of the cycle
could not be distinguished. In Ibn Khalduns analysis reflects the dynamic and
interdisciplinary character because it connects all the important of political and
socio-economic variables such as sharia (S), the political authority or wazi (G), human
or Rijal (N), property or Mal (W), construction or imarat (g), and justice or al adl ( j).
In an independent rotation of cycle, each influencing the other and in turn will be
influenced by others as well. In this case it can be concluded that no determination of
the dependent and independent variables, but can take turns to be the dependent
variable. The cycle occurs in a chain reaction in a long period as shown in Figure 3. The
concept of ceteris paribus does not apply for long-term analysis because there are no
constant variables. One variable acts as a trigger mechanism and the other can react in
the same direction. If other factors do not react in the same direction, all in one sector
will not go to other variables, so that it will lead to the possibility of being repaired of
damaged sectors and the decline of civilization will happen slowly. However, if other
sectors running the same direction, you will get a momentum that could not be
identified because of the result of a phenomenon. In Ibn Khalduns thought this cause
and effect is called as a cycle or circle of equity justice.

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j&g

Figure 3.
Circle of equity

Source: Chapra (2001, p. 152)

Previous study
Widiastuti (2010) conducted a research which was based on the problem of poverty in
Central Java Indonesia due to continued high levels of poverty which is the impact
of the failure of development, so the purpose of this study was to unravel the broader
factors that affect poverty in Central Java. In this study, Widiastuti used a variable of
poverty as the dependent variable and economic growth (GRW), population ( JP),
Education (AMH) and fiscal decentralization (DF) as independent variables. The model
of this study as follow:
KM f GRW JP; AMH ; DF

2:1

The results of this study are: first, economic growth has significant negative effect on
poverty, in the sense that when there is economic improvement, it will reduce poverty.
Second, the population has positive and significant impact on poverty. Which means that,
when an increase in the number of population, it will increase the level of poverty. Third,
education has significant negative effect on poverty, meaning that the growing level of
education will have an impact on reducing poverty. Fourth, fiscal decentralization has
positive and significant impact on poverty, meaning that the higher the degree of fiscal
decentralization of one region the increase the level of poverty in the region.
Since the problems of poverty is very complex and multidimensional, Prastyo (2010)
started his research on the factors that influence the level of poverty in Central Java in
2003-2007. The data used are secondary data from the Central Bureau of Statistics with
the following models.
Equation of cross section is:
Y i b0 b1 X 1 m i : i 1; 2; . . . ; N
where N is the number of cross section data.

2:2

Time series model equation is:

Y t b0 b1 X 1 mt : t 1; 2; . . . ; T

2:3

where T is the number of time series data.

The results of this study were unemployment variable and 27 dummy variables
regency or city significantly affected the level of poverty and economic growth,
education, minimum wage and a dummy region of Semarang district significantly affect
the level of poverty.
Firdausi (2010) conducted a study on the factors that influence the level of poverty
in Indonesia, but this study also aims to analyze the influence of GDP per capita and
life expectancy, while also trying to compare the projections between 2004 and 2006
with projections of 2004 and 2008. In each of the projections was analyzed the trends of
poverty in 30 provinces in Indonesia until 2015. The method used in this analysis is the
analysis of panel data which is the merger between the time series data and cross
section. The model established in this analysis are as follow:
KMSKN i f PDRBi ; AHH i

2:4

KMSKN i b0 b1 PDRB1 b2 AHH i U i

2:5

The result of this study revealed that the variable of GDP per capita and life
expectancy are negative and significant impact on poverty. This means that if GDP
and AHH increase, it will have an impact on reducing poverty, vice versa, if a decline in
GDP and AHH, it will increase the level of poverty.
Hudayas Research (2009) about the factors that influence the level of poverty in
Indonesia aims to describe the state of poverty in Indonesia and analyzes the factors
that influence the level of poverty in Indonesia. In his research, Hudaya (2009)
employed a poverty as the dependent variable and the open unemployment rate (TPT),
per capita income (PP) and literacy rates (AMH) as independent variables. The method
used is the panel. The model used in this study are as follows:
tkmi;t a b1 amhit b2 ppit b3 ppit 1

2:6

The results of this study is, factors which significantly influence poverty is
unemployment, income per capita, and education, these indicate that the high and low
levels of poverty that occurred in Indonesia certainly depends on the above three factors.
Among the three factors above, income per capita has the greatest effect; this suggests
that the role of government in the unemployment rate is not maximized in reducing
poverty.
According to research by Hanafiah (2009), the level of poverty that occurs in Muslim
countries. The condition was used as a basis, because there are differences in conditions
of poverty among Muslims and non-Muslim country, so Hanafiah (2009) conducted an
analysis on the influence of variables in the model the dynamics of Ibn Khaldun to the
level of poverty in some Muslim countries. In this analysis, Hanafiah using panel data
methods with the dependent variable number of poor, while the independent variable is
the total investment, GDP per capita, genie ratio, government spending on education and
health sector, the human development index and the state constitution. The data used in
this study from the UNDP, the IDB, SESRTCIC and the World Bank. Limitation of this
study is research data from the year 2000-2004 with analysis unit 15 countries, namely

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Jordan, Tunisia, Gambia, Senegal, Malaysia, Algeria, Guinea, Marocco, Cameroon,

Niger, Egypt, Nigeria, Pakistan, Indonesia and Bangladesh. The basis of this research is
the functional relation of Ibn Khaldun as our model of the dynamics of the following:
P f W ; G; N ; S; g dan j

144

2:7

The above function is formed as manifest variables, so the model becomes:

Miskin f lninves; lnGDPkap; Gini; Health; Educ; HDI ; Kons
In accordance with the above model, the influence of variables in the dynamics model of
Ibn Khaldun within this study is the total investment which is a portion of the wealth
(W), a statistically significant (negative), which means that the total investment is a
factor that affecting the poverty of Muslim country, unequal distribution of income
(g and j) will increase poverty, it can be seen from the genie ratio, if the higher value, then
the level of poverty in the country concerned considered high as well. From the income
per capita perspective, it turns out positively influence the poverty level of the Muslim
country. Government spending for health, education and HDI negatively affect the
poverty, while the state constitution does not affect the current level of poverty.
Another study conducted by Saleh (2002) examined the determinants factor of
poverty rate in Indonesia, motivated by the level of poverty that occurs particularly in
Indonesia never resolved since the beginning of independence until today. In his study,
Saleh (2002) using the standard calculation based on BPS and non-food factors between
regions or areas. In his analysis, Saleh entered the crisis as a factor of poverty in
Indonesia and the result is a change in the population below the poverty line in rural
areas in 1996-1999 were highest in Jambi Province that reached 127.11 percent or an
average of 42.37 percent per year, while the lowest change actually occurred in Maluku
Province, which was only 2.02 percent or an average increase of 0.67 percent per year.
Although in absolute terms, highest changes in Province of East Java which that 1990
thousand people. This indicates that the provinces which suffered most as a result of the
economic crisis that hit Indonesia is the province of Jambi although in absolute terms
that the most suffer is the East Java Province. The model of the study is as follow:
POV i a lX i j 1i

2:8

POV it ait gi X itj 1it

2:9

where the first model is the model estimated using cross section data, while model 2
estimates models using panel data. POV is the dependent variable while Xj is the
explanatory variables, i and t is the province-I and time-to-t. The use of panel estimation
model has several advantages, especially the use of restrictions on where the estimated
coefficients a and g can have a fixed value (fixed) or variable (random). The method used
was regression with panel data with the dependent variable and independent variables
are the poverty levels of income per capita (YPC) per province (in the tens of thousands),
government spending for investment in human resources (IMP) per province (the sum of
spending on education sector development, culture and belief in God the Almighty: the
health, welfare, role of women, children and adolescents: the labor sector: and the
sector of science and technology), government spending for physical investment (IFP),
life expectancy (HH), literacy rate (AMH), the average length of schooling of the

population (RS), with establishment of a human index (HDI), GEI or index participation
of women in economic and political (women empowerment index), genie ratio (RG),
the ratio of household population not have access to clean water (PNW), dummy
variables for time (time dummy variables) which reflects the before and after the crisis.
In this paper, Suryanarayana (2002) analyzed the poverty in India where measures
taken by governments to cope the poverty. It turned out that in India there is an error
state estimation and the policies implemented by the government, so that the expected
drop in poverty was not achieved significantly. Starting from the problems that often
occur in developing countries is associated with development. This paper discussed the
mistakes that occurred in the determination of policies to address the problem of poverty
in the country, case studies of India. India itself has a strategy that is used to catch or to
enhance the growth of its economy, namely the redistribution strategy, although with
little potential. The strategy raises a consequence of poverty which is based on the
calorie level in India that has decreased from 55 percent in 1970 and decreased to
25 percent in 2002. In this study, it is also included a list of applications of implicit
assumptions underlying the calculation of poverty levels on income or consumption.
Researchers also conducted a study on the change of government or institution during
the development process which will ultimately impact on the incidence of errors in the
calculation assuming the level of poverty in India. This study concludes that the
measurement of poverty levels which is based on time-invariant norms on the level of
consumption or calorie needs could not show a significant and visible reduction in
poverty levels.
Siddiqui and Kemal (2002) focused on poverty levels that occurred in the State of
Pakistan premises using the analysis in the sector of liberal trade and payments
system. This study describes the impact of two shocks which is liberal trade policies
and decrease payments to the level of welfare and poverty in Pakistan. The finding of
this research is that decrease payment will decrease profit of liberal trade. The negative
impact is decrease payment more dominant compared to positive impact in rural area.
However, the positive impact of cities area and poverty rate in Pakistan in year 1990s
strongly influenced by the decrease payment.
Sirageldin (2000), conducting research that aims to reduce levels of poverty, using
the strategy of Islam or Islamic philanthropy. The policy is expected to be fair act so it
does not result in increasing poverty. Based on empirical evidences, this paper covers
Islamic ethic that stimulate the strategy of eradicating poverty which is based on
philanthropy and wellbeing principles that support just economic growth and
productivity. This justice can only be obtained from zakat distribution. In other words,
the optimum zakat institution is the way out to eradicate poverty.
Research methodology
Types and sources of data
The data used in this study is secondary data from the Human Development Report
and the annual global competitiveness year 1995-2010 with the following details:
.
Human Development Report via the web site: www.hdr.undp.org
.
The Global Competitiveness Report (World Economic Forum).
The data used in this study is panel data from 1995 to 2010 using four countries unit of
analysis.

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Variables and operational definitions

In accordance with the formulation of the problem how to generate the model of
dynamics of Ibn Khalduns influence on poverty in majority and minority of muslim
population, then the dynamics of Ibn Khalduns model is:
P f W ; G; N ; S; g dan j

146

3:1

where:
P

poverty.

wealth of the country.

Government.

human resources/people.

Sharia.

g and j development and justice.

The above equation implies a dynamic model of Ibn Khaldun (Table I). In this case the
variables included in the model of the dynamics of Ibn Khaldun to be formed or
manifest variable proxy variable, so the model becomes:
pov f I ; GDP; LnGini; Health; Educ; LnHDI ; LnCPI

3:2

where:
Pov

state poverty level.

total investment.

GDP

GDP/capita.

LnGini Genie Ratio.

Health health sector expenditure.
Educ

education sector expenditure.

LnHDI human development index/human development index.

LnCPI corruption perception index.

Table I.
Variable identification

Variable

Definition

Sources

POV
I
GDP
Gini
Health
Educ
LnCPI

Poverty rate (%)

Investment (%)
GDP per capita (%)
Genie ratio (%)
Government spending for health (%)
Government spending for education (%)
Corruption perception index (%)

HDR
HDR
HDR
HDR
HDR
HDR
The Global Competitiveness Report

Research methodology
This study employs panel methods to examine the dynamics model of Ibn Khaldun to
the level of poverty in majority and minority Muslim population. The data used is
quantitative data that contains numerical data. Time series data were collected over
time from an individual, while the cross section data is data that is collected for one
time of many individuals. So in accordance with the conditions of data already
collected, then the data in this study contained several cross sections which are
followed in the period from time to time. The advantage of this method is that the data
will be increased. The modeling in panel data can be viewed as follows.
Model with cross section data:
Y i a bX i 1i ; i 1; 2; . . . ; N

3:3

N : the number of cross section data.

Models with time series data:
Y t a bX t 1t ; t 1; 2; . . . ; T

3:4

T : the number of time series data.

Because the panel data is a combination of cross section data and time series, then the
modeling for panel data is:
Y it a bX it 1it ; i 1; 2; . . . ; N ; t 1; 2; . . . ; T

3:5

where:
N

: number of observations.

: time (period).

NXT : the number of panel data.

According to Nachrowi and Usman (2006, p. 310) there are several ways that can be
used to measure the parameters of the model with panel data, namely.
Ordinary least square
As mentioned earlier, the panel data is a combination of time series and cross section
and will generate more data than cross section data or time series only and if it is
analyzed will produce output that tends to be better. The simple approach in panel
method is ordinary least square or pooled method using the following model:
Y it a X jit bj 1it ;

i 1; 2; . . . ; N ;

t 1; 2; . . . ; T

3:6

where N is number of unit cross section and T is the amount of time. To get the
parameter values a and b are constant and efficient, can be obtained in the form of
greater regression by involving NT using the following models:
Y it a bX it 1it ;

i 1; 2; . . . ; N ;

t 1; 2; . . . ; T

3:7

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However, the value of a and b are constant that is less realistic, so the solution of
ordinary least square model is the method of fixed effect and random effect model.
Fixed effects method
The difficulties in employing ordinary least square is the use of ordinary least square
where the use of intercept and slope from regression equation assumed to be constant
across the time that might be not realistic. This can be generalized by inserting dummy
variable to obtain differences in parameter whether for cross section or time series. The
fixed effect method is as follow:
Y it a bX it g 2 W 2t g3 W 3t gN W Nt d2 Z i2 d3 Z i3 dT Z iT 1it
3:8
where:
Y_it dependent variable for the ith individual and the time to t.
X_it independent variable for the ith individual and the time to t.
W_it and Z_it dummy variables are defined as follows:
W_it 1; for individual i, i 1, 2, . . . , N.
0; other.
Z_it 1; for period t; t 1, 2, . . . , T.
0; other.
Random effects model
The use of fixed effects model in the panel method will also lead to a consequence
(trade off). The use of dummy variables will reduce the number of degree of freedom
which in turn will reduce the efficiency of parameter estimation. So that the solution
that can be used to address this problem in the fixed effects method is to use a random
effects model. In this model the different parameters between regions and between the
time will be placed into error and that is why the random effects model is often called
the error component model. Random effects model in this method are as follows:
Y it a X iti bj 1it

3:9

1it u i vt wit

3:10

where:
ui, N (0, d2u)
vt, N (0,

d2v)

wit, N (0,

d2w)

component of cross section error.

the component of time series error.
component of error combinations.

In this model, it is assumed that individual errors are not well correlated with the error
as well as combinations thereof. The advantages of the random effects model is the
ability to save the use of degrees of freedom and does not reduce their numbers as

found in the fixed effects model. It also will produce a more efficient parameter.
Selection decision model to be used in data analysis can be done using a statistical test
by using a number of considerations. These considerations are:
.
If T . N, then the fixed effects and random effects will not be much different, so
it can choose the approach that is easier to quantify the fixed effect.
.
If N . T, then the estimation results of both approaches will differ significantly,
so, if the study is more convinced that the cross section of the selected units in the
study are drawn at random then the random effects should be used. Conversely,
if the author believes that cross section of the selected units are not randomly
drawn, and then the research should use a fixed effect.
.
If the individual error components (1_i) correlated with the independent variable
X, then the parameters obtained with the random effects will be biased, while the
parameters obtained with the fixed effect is not biased.
.
If N . T, and if the assumptions underlying the random effects can be met, then
the random effects is more efficient than fixed effects.
Test of classical assumption
Multicollinearity test. The meaning of multicollinearity is that there is a high correlation
between two or more independent variables in the model. In other words a definite
linear relationship exists between all independent variables. The characteristics of
multicollinearity are as follow:
.
Has the variance and standard error.
.
High R 2 but no significant variable from t test.
.
The results of the coefficient estimates are sometimes not in accordance with the
substance, resulting in misleading conclusions, Nachrowi and Usman (2006, p. 126).
Heterokedasticity test. One of the assumptions that must be met in order for the
estimated parameters in the regression model is BLUE, then var (u_t) must be equal to
sigma (s2) (a constant), or in other words, all the residual or error have the same
variance. These conditions are called homoskedasticity, while if the variance is not
constant or variable called heteroskedasticity.
Heteroskedasticity usually found in cross section, but will not rule out going to
happen on time series data. The impact of heteroskedasticity are inaccuracies in the
analysis of both hypothesis t-test and f-test and will eventually have an impact on the
inaccurate conclusions.
Autocorrelation test. In time series data, observations are collected periodically and
error of one observation with error of another observation are correlated. If this happens,
then it is called serial correlation or a member of the observations in some time series,
serial correlation, or between members of the observation of objects or spatial correlation.
In serial correlation, regressing variable from one period to another period is
affected or influenced by the value of regression variable which is called as spatial
correlation. Some of the reasons are the occurrence of autocorrelation lags economic
data; the bias specifications issued the relevant variables of the model, the grace period
or lag, the data manipulation and transformation of data (Manurung et al., 2005, p. 138).
In research using time sequence data (time series), the possibility of autocorrelation is
greater than the cross section data. In time series data, the value of a variable at time t

Ibn Khaldun
theory on
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149

HUM
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150

is correlated with the data at an earlier time (t 2 1). The symptoms of autocorrelation
can be known by looking at the value of the Durbin-Watson (DW). DW numbers are less
than 2 indicate negative correlation. DW test is used in a way to compare DW value with
the value of dL and dU of the table with the following rules:
.
When DW , dL indicate a positive correlation.
.
If dl , DW , dU, could not be concluded whether there is correlation or not.
.
If dU , DW ,4 dU is positive or negative correlation occurs.
.
When 4 dU , DW , 4 dL, could not be concluded whether there is
correlation or not.
.
When DW . 4 dL, a negative correlation occurs.
More details can be seen from Figure 4.
Normality test. Normality test conducted by observing the histogram or on residual
value and statistical Jarque-Fallow (Kuncoro, 2004, p. 94). Normality test can be seen from
the picture of Scatter plots in the equation, if the scatter plot spread alongside the normal
scatter, then the model is free from the problem of normality, if one or more of its own
separate data (outliers) exist, then the model is hampered by the problem of normality.
Result and analysis
Interpretation and analysis of the model
a. The movement of poverty variable with human development index variable. Figure 5
can be concluded that the relationship between poverty level and human development
Not known
Correla (+)

Figure 4.
Method to compare
DW test

Figure 5.
Poverty movement versus
human development
report

dL

Not known
Correlat ()

No correlation

dU

4 dU

Source: Nachrowi and Usman (2006, p. 144)

4 dU

index in Indonesia is positive. Human development index in Indonesia is high as the

level of poverty. In Indonesia, low human development index will decrease the level of
poverty, but after 2001, an increase in the human development index and is accompanied
by an increase level of poverty. Likewise with the conditions in Malaysia, before 2006,
the human development index varies positively with the level of poverty, but after 2006,
an increase in the level of poverty, the human development index also has decreased.
Like India and Malaysia, the relationship between poverty and human development
index in these countries is positive, but starting 2002 can be seen that the relations
between the two variables are proportionally negative and positive in 2010.
Looking at the condition of these four countries (Indonesia, India, Malaysia and
Pakistan), it can be concluded that the relationship between the human development
index and the level of poverty can be positive and negative because the calculation of
the human development index is not only the dimensions of poverty, but also
incorporate and consider other dimensions as well.
b. Variable of poverty and gross domestic gross. By looking at Figure 6, it reveals that
there is negative relationship in Indonesia between the level of poverty and GDP. This
means that if GDP increases poverty will reduce. From some studies, although this is
contrary to the results of research by Hanafiah (2009), but in theory when there is an
increase in GDP, there will be a decrease in the level of poverty. This also happened in
India where the poverty rate in India has negative relationship with GDP. Another thing
with Indonesia and India, in 1995-1997, poverty in Malaysia has positive relationship
with GDP. In 1995 declined in poverty levels, but it is followed by a decline in GDP. It
does not last long, after 1997-2010 the relationship between poverty versus GDP was
negative as in Indonesia and India.
In accordance with the Human Development Report, that the State of Pakistans
economy was in the lowest position when compared with other third countries (Indonesia,
India and Malaysia). It can be seen from the State of Pakistans GDP which is still below
the three other State. The relationship between poverty rates and GDP in the State of
Pakistan is still uncertain, and sometimes to the level of poverty in their country and see
the output of data processing, the relationship between the GDP to the level of poverty is
negative, this means that if an increase in GDP, it can reduce the levels of poverty.

Ibn Khaldun
theory on
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151

Figure 6.
Poverty movement
versus GDP

HUM
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152

Figure 7.
The movement of poverty
and government spending
in the health sector

c. The variables of poverty on government spending in the health sector. The

commitment of government in overcoming the poverty rate is priority and become
the focus of national development. The attempt of government will not succeed without
cooperation among sector in the economy, federal government and district government
and society as well. This can be concluded that the increase of government spending in
health sector is an attempt to reduce the poverty of one country. When the budget for
health sector increases, it is expected that poverty will decrease so that there will
negative relationship between poverty and health.
Figure 7 shows the negative relationship between government spending in the
health sector on poverty in Indonesia, this means that when there is an increase in the
government budget in the health sector, the poverty rate will decline. The governments
effort to alleviate poverty not only focusing on economy per se, but also health and
education. Figure 7 is a proof that there is a correlation between the economy and health
sector.
Unlike the case with the conditions in the State of India, the movement between
government spending to the level of poverty preceded by a positive relationship,
although in the end it turned into a negative relationship. While the movement of
government spending areas of health and poverty in Malaysia as to the conditions in
Indonesia. Negative relationship occurs between the two. Similar to Malaysia and
Indonesia, the movement of government spending areas of health and poverty in the
State of Pakistan is negative.
d. The variables of poverty on government expenditure in education (Figure 8)
e. Variable of poverty on genie ratio. Genie ratio is one measure of inequality of income
or the ratio between the two areas with a range between 0 and 1 (Suhaimi, 1) (Figure 9).
Inequality occurs when the ratio approaches 1 and is said to equal if the ratio is close
to 0. The correlation between the genie ratio should be compared with poverty rates.
Genie ratio is a reflection because of the level of justice, when the value of genie ratio
close to 1, it indicates that the inequality is very high. When inequality is very high,
meaning that the level of fairness that country is uneven and ultimately will have an
impact on increasing levels of poverty.

Ibn Khaldun
theory on
poverty
153

Figure 8.
The movement of poverty
and government spending
in the health sector

Figure 9.
The movement of poverty
and genie ratio

f. Variable of poverty on investment (Figure 10)

g. Variable poverty on corruption perception index. Not so different from the genie ratio,
corruption perception index (CPI) also had a positive impact on a countrys poverty
level. If the CPI close to 1, indicating that the level of corruption of a country is very
high, this will cause increased levels of poverty (Figure 11).
Data analysis
This study aims to examine the influence of variables in the model of the dynamics of
Ibn Khaldun to the level of poverty that occurs in majority and minority Muslim
population. In this case, the variables were used for analysis is the level of poverty as the
dependent variable, human development index, gross domestic product, the allocation
of government funds health and education, genie ratio, the level of investment and the
CPI as the independent variables used to measure the effect on the level of poverty.

HUM
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154

Figure 10.
Poverty movement
versus investment

Figure 11.
Movement of poverty
and the CPI

Human development index is a proxy of the community. This index contains three
important things in human development poses, namely: the level of meeting the needs of
life (long life) or is referred to as longevity, healthy life, the level of knowledge. Each of the
components used to measure HDI above the base has a different calculation. Longevity is
measured from life expectancy, knowledge measured from the adult literacy rate and
school, access to resources is measured from the power of real purchasing power parity of
income per capita (Hanafiah, 2009) (Table II).
By looking at the above data, it can be seen that the diversity of the independent
variable (HDI, GDP, health, education, genie ratio, investment and CPI) in explaining the
dependent variable (poverty) by 88 percent and the remaining 12 percent is explained by
variables other than the independent variables. Based on the results of data processing
in the above PLS model obtained from the estimation equation as follows:

Variable
HDI?
GDP?
HEALTH?
EDUCATION?
GINI?
INVESTASI?
CPI?
R2
Adjusted R 2
SE of regression
DW stat
R2
Sum squared resid

Coefficient

SE

66.71228
4.327027
1.480550
2.432003
21.412045
1.201774
20.227860
0.305415
212.16668
6.041669
7.756614
2.530240
6.745163
1.796849
Weighted statistics
0.887544
Mean dependent var
0.875706
SD dependent var
17.69568
Sum squared resid
2.283861
Unweighted statistics
0.262631
Mean dependent var
95,490.00
DW stat

t-statistic

Prob.

15.41758
0.608778
21.174967
20.746068
22.013795
3.065564
3.753884

0.0000
0.5451
0.2449
0.4587
0.0488
0.0033
0.0004

Ibn Khaldun
theory on
poverty
155

79.72159
60.17660
17,848.82
35.42603
2.194530

Notes: Dependent variable POVERTY?; method pooled EGLS (period weights); date August 15,
2011; time 03:53; sample 1995-2010; included observations 16; cross sections included 4; total
pool (balanced) observations 64; linear estimation after one-step weighting matrix; period SUR
(PCSE) standard errors and covariance (df corrected)

Table II.
Panel regression with
pooled least square
method

poverty 66:7122777307*HDI 1:4805495869*GDP 2 1:41204505143*HEALTH

2 0:227860382324*EDUCATION 2 12:1666813948*GINI
7:75661402768*INVESTASI 6:74516320325*GPI
In addition to visits from the R 2 value, can be analyzed also the significance of each
independent variable as in Table III.
By looking at the above data, HDI, genie ratio, investment and CPI significant effect
on levels of poverty, because it has a probability value below a (10 percent). It seen the
value of the coefficient of each variable, the variable that HDI is very dominant
variable on the level of changes in poverty with a value of 66,712. Variable of education
or government spending in education contributing the effect of the lowest compared
with other variables, the coefficient value of 0.228.
Tests of hypotheses
Having analyzed the data with the PLS model, and then continued using the fixed
effect model. The good test of comparison between the PLS model with fixed effects
indicates that the fixed effect model is the best using the Chow test in Table IV.
Variable
HDI?
GDP?
HEALTH?
EDUCATION?
GINI?
INVESTASI?
CPI?

Coefficient

Probability

66.712
1.481
21.412
20.228
212.167
7.757
6.745

0.000
0.545
0.245
0.459
0.049
0.003
0.000

Table III.
Probability values and
the coefficients
in the PLS model

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156

The best model selection decision between the PLS and fixed effect can be done by
looking at the probability value in chow test. The value in this probability test is 0.3193
which indicates that the best model that can be used for the analysis are fixed effects,
because the probability value is greater than a, whereas if the probability value is less
than a, then used the PLS. The fixed effect model used as in Table V.
Looking at the above output can be concluded the poverty model for respective
country as follows:
326:244236021 2 104:404453103 134:722709329*HDI_INDONESIA
36:9851593799*GDP_INDONESIA 2 19:5418901706
*HEALTH_INDONESIA 2 2:70648874481
*EDUCATION_INDONESIA 42:160690164*GINI_INDONESIA
2 13:391563059*INVESTASI_INDONESIA 2 5:15469432579
*CPI_INDONESIA
1207:85812952 2 104:404453103 2 83:5956588984*HDI_INDIA 2 145:918620334
*GDP_INDIA 93:5776074932*HEALTH_INDIA 2 6:76189361279
*EDUCATION_INDIA 2 5:66198485446*GINI_INDIA
81:4060574401*INVESTASI_INDIA 6:68730195241*CPI_INDIA
2 346:243174265 2 104:404453103 2 5:4519382626*HDI_MALAYSIA
2 48:6905036705*GDP_MALAYSIA 2 12:152666475*HEALTH_MALAYSIA
19:1008772665*EDUCATION_MALAYSIA 292:840763204
*GINI_MALAYSIA 2 173:892640805*INVESTASI_MALAYSIA
2 12:5716751851*CPI_MALAYSIA
2 535:370719233 2 104:404453103 152:812653231*HDI_PAKISTAN
2 12:4600541029*GDP_PAKISTAN 19:2282076174
*HEALTH_PAKISTAN 2 3:77771701487
*EDUCATION_PAKISTAN 154:54202361*GINI_PAKISTAN
2 31:7097567933*INVESTASI_PAKISTAN 53:107646631
*CPI_PAKISTAN
Level of diversity of the independent variable (HDI, GDP, health, education, genie ratio,
investment and CPI) are used in influencing the dependent variable (poverty) is equal
to 84.92 percent, while the remaining 15.08 percent influenced by other variables

Table IV.
Chow test

Effects test

Statistic

df

Prob.

Cross section F

1.217371

(3.32)

0.3193

Notes: Redundant fixed effects tests; pool POOL01; test cross section fixed effects

Variable

Coefficient

SE

t-statistic

Prob.

C
_INDONESIA HDI_INDONESIA
_INDIA HDI_INDIA
_MALAYSIA HDI_MALAYSIA
_PAKISTAN HDI_PAKISTAN
_INDONESIA GDP_INDONESIA
_INDIA GDP_INDIA
_MALAYSIA GDP_MALAYSIA
_PAKISTAN GDP_PAKISTAN
_INDONESIA HEALTH_INDONESIA
_INDIA HEALTH_INDIA
_MALAYSIA HEALTH_MALAYSIA
_PAKISTAN HEALTH_PAKISTAN
_INDONESIA EDUCATION_INDONESIA
_INDIA EDUCATION_INDIA
_MALAYSIA EDUCATION_MALAYSIA
_PAKISTAN EDUCATION_PAKISTAN
_INDONESIA GINI_INDONESIA
_INDIA GINI_INDIA
_MALAYSIA GINI_MALAYSIA
_PAKISTAN GINI_PAKISTAN
_INDONESIA INVESTASI_INDONESIA
_INDIA INVESTASI_INDIA
_MALAYSIA INVESTASI_MALAYSIA
_PAKISTAN INVESTASI_PAKISTAN
_INDONESIA CPI_INDONESIA
_INDIA CPI_INDIA
_MALAYSIA CPI_MALAYSIA
_PAKISTAN CPI_PAKISTAN
Fixed Effects (Cross)
_INDONESIA C
_INDIA C
_MALAYSIA C
_PAKISTAN C

2104.4045
134.7227
283.59566
25.451939
152.8127
36.98516
2145.9186
248.69050
212.46005
219.54189
93.57761
212.15267
19.22821
22.706489
26.761894
19.10088
23.777717
42.16069
25.661985
292.8408
154.5420
213.39156
81.40606
2173.8926
231.70976
25.154694
6.687302
212.57168
53.10765

322.6144
19.74208
150.9180
120.4722
56.39643
8.246724
88.02525
62.18815
13.35973
4.654657
71.10965
63.83986
14.05151
0.343124
11.69529
21.70240
14.51460
18.17434
113.3147
177.0540
92.39901
7.120566
99.19625
148.7256
59.81227
1.905581
22.53038
54.94531
32.60559

20.323620
6.824140
20.553915
20.045255
2.709616
4.484830
21.657691
20.782955
20.932657
24.198353
1.315962
20.190362
1.368408
27.887776
20.578172
0.880127
20.260270
2.319792
20.049967
1.653963
1.672551
21.880688
0.820657
21.169218
20.530155
22.705051
0.296813
20.228803
1.628790

0.7483
0.0000
0.5835
0.9642
0.0107
0.0001
0.1072
0.4394
0.3580
0.0002
0.1975
0.8502
0.1807
0.0000
0.5672
0.3854
0.7963
0.0269
0.9605
0.1079
0.1042
0.0691
0.4179
0.2510
0.5997
0.0109
0.7685
0.8205
0.1132

Ibn Khaldun
theory on
poverty
157

2326.2442
1,207.858
2346.2432
2535.3707
Effects specification

Cross section fixed (dummy variables)

R2
Adjusted R 2
SE of regression
F-statistic
Prob. (F-statistic)
R2
Sum squared resid

Weighted statistics
0.849274 Mean dependent var
0.703259 SD dependent var
37.60255 Sum squared resid
5.816333
DW stat
0.000002
Unweighted statistics
0.650609 Mean dependent var
45,246.46
DW stat

84.55549
112.4265
45,246.46
2.910049

35.42603
3.011584

Notes: Dependent variable POVERTY?; method pooled EGLS (cross section weights); date August
15, 2011; time 03:25; sample 1995-2010; included observations 16; cross sections included 4; total pool
(balanced) observations 64; linear estimation after one-step weighting matrix; period SUR (PCSE) standard
errors and covariance (df corrected); WARNING estimated coefficient covariance matrix is of reduced rank

Table V.
Fixed effect model

HUM
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158

beyond the independent variable are used. For probability values and coefficients of
each variable can be seen from Table VI.
From the probability values in Table VI, variables which significantly influence the
level of poverty is the HDI Indonesia, Pakistans HDI, health, education, genie ratio,
investment and CPI Indonesia since it has a probability value below a (10 percent).
For poverty in Indonesia, it has a constant value of 2 326.2442, this indicates that, if the
coefficient of independent variables 0, then the value of 2 326.2442 poverty in Indonesia.
The above equation of poverty in Indonesia can be seen that in the aggregate, have a
significant independent variable. HDI has a coefficient value of 134.722, it indicates if
there is a change in the HDI for a unit, then the poverty rate of 134.7227 Indonesia will
change one unit. The influence of HDI variable is positive which means that if there is the
addition of one unit on the HDI will increase the level of poverty of 134.7227 units. HDI is
measured from the edge longevity, knowledge and the literacy rate, the positive
influence of HDI is possible the uneven level of welfare in Indonesia, so that the HDI
value has not been able to reduce the level of poverty.
Conclusion
Based on finding that the influent variable in dynamic model of Ibn Khaldun towards
poverty in Muslim and non muslim countries from 1995 to 2010 can be concluded as follow:

Table VI.
Coefficients and
probability variables
in fixed effect model

Variable

Coefficient

Probability

C
_INDONESIA HDI_INDONESIA
_INDIA HDI_INDIA
_MALAYSIA HDI_MALAYSIA
_PAKISTAN HDI_PAKISTAN
_INDONESIA GDP_INDONESIA
_INDIA GDP_INDIA
_MALAYSIA GDP_MALAYSIA
_PAKISTAN GDP_PAKISTAN
_INDONESIA HEALTH_INDONESIA
_INDIA HEALTH_INDIA
_MALAYSIA HEALTH_MALAYSIA
_PAKISTAN HEALTH_PAKISTAN
_INDONESIA EDUCATION_INDONESIA
_INDIA EDUCATION_INDIA
_MALAYSIA EDUCATION_MALAYSIA
_PAKISTAN EDUCATION_PAKISTAN
_INDONESIA GINI_INDONESIA
_INDIA GINI_INDIA
_MALAYSIA GINI_MALAYSIA
_PAKISTAN GINI_PAKISTAN
_INDONESIA INVESTASI_INDONESIA
_INDIA INVESTASI_INDIA
_MALAYSIA INVESTASI_MALAYSIA
_PAKISTAN INVESTASI_PAKISTAN
_INDONESIA CPI_INDONESIA
_INDIA CPI_INDIA
_MALAYSIA CPI_MALAYSIA
_PAKISTAN CPI_PAKISTAN

2104.405
134.723
283.596
25.452
152.813
36.985
2145.919
248.691
212.460
219.542
93.578
212.153
19.228
22.706
26.762
19.101
23.778
42.161
25.662
292.841
154.542
213.392
81.406
2173.893
231.710
25.155
6.687
212.572
53.108

0.748
0.000
0.584
0.964
0.011
0.000
0.107
0.439
0.358
0.000
0.198
0.850
0.181
0.000
0.567
0.385
0.796
0.027
0.961
0.108
0.104
0.069
0.418
0.251
0.600
0.011
0.769
0.821
0.113

Variable in dynamic model of Ibn Khaldun influenced the level of poverty in

Indonesia as muslim majority population. HDI has positive influence with
probability value a and coefficient of 134.7227. GDP also influenced significantly
towards poverty in Indonesia with coefficient of 219.542 and 22.706, respectively.
Genie ratio as a proxy of justice significantly influenced the poverty rate with
coefficient of 42.161. The investment level of one country significantly influenced
and tend to reduce the poverty with coefficient value of 213.392 while CPI
significantly influenced with coefficient of 25.155. Unlike Indonesia, variable in
dynamic model of Ibn Khaldun not significantly influenced towards the poverty
rate whereas Pakistan only HDI variable has significant variable.
Like Malaysia, in India, the variable of dynamic model of Ibn Khaldun not
significantly influenced.

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Ibn Khaldun
theory on
poverty
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Widiastuti, A. (2010), An analysis on the factors that influence poverty in West Java 2004-2008,
thesis, Faculty of Economics, Diponegoro University, Semarang.
Further reading
Khaldun, I. (2000), Islam and Economic Development, Gema Insani Press, Jakarta (translated by
Ihwan Abidin B).
Sitepu, R.K.K. (2007), The impact of human capital investment and income transfer towards income
distribution and poverty in Indonesia, PhD dissertation, Bogor Agriculture Institute, Bogor.
About the authors
Akhmad Affandi obtained his first degree with honors in Islamic Economics from the Faculty of
Economics and Management Sciences, International Islamic University Malaysia in 2002. He
was employed in his first professional capacity as Vice President of Namirah Capital Ltd in
Singapore, prior to conferment of his Master degree. He then pursued his post graduate study in
Economics, majoring in Islamic Banking and Finance, in the Faculty of Economics and
Administration, University of Malayam, graduating in 2006. He continued his professional
experience in the finance industry by joining Metanexus Global Berhad as Director of Finance in
Kuala Lumpur after completing his Master degree. In late 2006, he was attached to Tazkia
University College of Islamic Economics Indonesia until mid 2011, as Deputy Rector of Academic
Affairs and now he serves as a Lecturer whilst pursuing his PhD in Islamic banking and Finance
at Insaniah University College Malaysia. During his involvement in academic affairs since 2006,
he has written many academic articles that have been published in referred journals,
newspapers, magazines and also actively presents his expertise in some international, as well as
domestic, conferences and workshops; particularly, presenting on the Islamic economics
curriculum. In 2011 he published books on Islamic banking and finance in Germany and on
Islamic financial instruments published in Indonesia. His general expertise is in Islamic
economics but specifically he focuses on Islamic banking and finance. Akhmad Affandi is the
corresponding author and can be contacted at: affandi74@gmail.com
Dewi Puji Astuti works for Baitul Maal Muamalat, Bank Muamalat Indonesia, Jakarta,
Indonesia.

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