Date of Award


Degree Name

Master of Science



First Advisor

Sylwester, Kevin


The purpose of this paper is to investigate the effect of financial development on poverty reduction in a dual banking system in Indonesia. We focused on comparing the impact of financial development, credit and deposit, both in conventional banks to Islamic banks as to what extent each contributes to poverty reduction in Indonesia using panel data in province level covering 33 provinces over the period of 2010-2018. We employed a fixed effects model as our empirical method to see the different effects of credit and deposit both in conventional and Islamic banks on reducing poverty in Indonesia. We found that credits in Islamic banks are more strongly correlated, especially for poverty gap and poverty severity measures, with poverty reduction in Indonesia compared to its counterpart. Whereas, for deposit, conventional banks showed more pro-poor than Islamic banks.




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