Tamansiswa Accounting Journal International Volume 8, No 1, January 2023

Tamansiswa Accounting Journal International ISSN 2775-1651
Table Of Content
Green Energy, Globalization, FDI and Government Debt in Indonesia.............................................. 1
Ayu Cahyani, Devi Ekayanti, Durrotus Sa'adah, Achmad Muzakky, Adi Sugiarto, Aditya Wahyu
Eko Prasetyo
The Influence of the Nu Sumbersari Jember BMT Financial Inclusion Program on Moneylender
Transactions (Case Study of Wirolegi Market Traders, Sumbersari District Jember) ...................... 9
Erika Aditya Kusuma, Zainuri, Ferianti Puspita Sari, Rochmatulloh Alaika, Ageng
Mayshaktiawan Eko Budhi Putra, Aisyah
How Does Financial Inclusion Support a Green Economy in Asia? .................................................. 23

Fika Destalia, Isnaeni Hidayati, Lailia Nur Rahmawati, Carla Ita Kharisma, Charis Achmad
Qusyairi, Cindy Eka Nurmasari
Non-Performing Loans, Bank Size, GDP, Exchange Rates, Inflation, And Interest Rates In Spain 32
Murti Sari Dewi1, Nafiatul Hasanah, Rinna Siti Nur Azizah, Dashen Allen, Wempi Aprilla
Maulanasyah Para Wibangga, Danang Candra Pratama, Darmaji
The Connection Between Tax Revenue And Paid Tax In Australia .................................................. 39
Sekar Arum Kinasih, Yanu Antika Ningsih, Yuda Agus Setiawan, Muhammad Khairun Ikhsan,
Devi Dwi Sasmita, Didin Arifianto, Dita Mei Anggorowati, Dwi Agus Priyono
The Negative Impact of Interest Rates on GDP, Consumption and Investment in the UK: Does
Islamic Finance Offer a Solution?....................................................................................................... 49
Dashen Allen, Bambang Hadi Prabowo
The Influence of Workplace Spirituality on Employee Engagement in Indonesia ............................ 61

Paulina Markova Anastasia
Globalization and Indonesia's Political Economy: A Nonlinear Correlational Analysis between

Trade, Investment and International Cooperation ............................................................................ 67
Ilham Imamudin
Effects of the COVID-19 Pandemic and Vaccination Policy on Employment, Income, Wages, and
Social Protection in Indonesia: A Regression Analysis ...................................................................... 80
Denindi Karunia Putri Rahmanto, Kayyis Mukasyafah, Putu Septin Diah Safitri, Yanicha Lukma
Anggarie
The Impact of Gender Discrimination in the World of Work on Women's Welfare and Mental
Health in the Makassar Region. .......................................................................................................... 93
Intan Wahyu Wulandari, Hanin Nafilah, Dera Virnanda, Elsa Sally Netimanta
Bitcoin Money Market Efficiency in Indonesia: Descriptive Analysis, Multiple Linear Regression,
and Market Efficiency Tests ............................................................................................................. 110
Dimas Chandra Kurniawan, Fadlan Zaki Ramadhan, M. Chusni Tamimi, Okta Dwi Ega Favorito
The Effect of Investment, Labor, and Government Spending on Economic Growth in Semarang
City (2013-2022) ................................................................................................................................ 121
Serli Mauliyah, Yusrinniza, Nasya Adha Risma, Isabela Valentika
i
Volume 8, No 1, January 2023
Green Energy, Globalization, FDI and Government Debt in

Indonesia
Ayu Cahyani1, Devi Ekayanti2, Durrotus Sa'adah3, Achmad Muzakky4, Adi Sugiarto5, Aditya
Wahyu Eko Prasetyo6
1,2,3,4,5,6
STIE Jaya Negara Tamansiswa Malang,Indonesia
Abstract
The link between renewable energy usage, public debt, globalization, FDI, and institutional quality
in Indonesia from 1990 to 2021 is examined in this study. All study variables show stationary after
the first difference. Cointegration tests have been used to demonstrate the long-term link between
the variables provided and the variables specified. This study found that institutional quality and
trends in government debt were shown to be negatively correlated. Where the debt of the
Indonesian government is significantly inversely the quality of institutions in Indonesia.
Globalization, financial development, and FDI reinforce each other in Indonesia and strengthen the
quality of institutions in Indonesia. In contrast, Indonesian government debt was disclosed to
suppress the institutional quality of the Indonesian government which in turn suppressed the
Indonesian economy including FDI. Renewable energy consumption positively affects institutional
quality
Keyword : Green Energy, Globalization, FDI,Government Debt

JEL Classification: C10, E10,J10
Received: November 6,2022 Accepted: Desember 1,2022
DOI : 10.54204/TAJI/Vol812023001
Introduction
Institutional quality is very important in the economy where institutions are important pillars in
ensuring economic sustainability (Ahmed, Kousar, Pervaiz, & Shabbir, 2022). Institutions
guarantee the health of institutions with a set of rules that prevent abuse of power and prevent
corruption. Institutional quality has an impact on production and the real sector of the economy
(da Silva et al., 2019).
Institutional quality has bound macroeconomic factors to have a positive influence on economic
growth (Yakubu, 2020). Trade openness has become a pillar of international economic
cooperation which has an impact on international trade flows. The economy and the environment
must run well and with quality (Gnangnon, 2019).
The green economy is a pillar of a sustainable economy. The effectiveness of government
institutions has a direct impact on the country's economy (Zhang, Ozturk, & Ullah, 2022).
Institutions also guarantee economic sustainability and protect the environment. Renewable
energy, government debt and FDI are of interest in building a sustainable economy that is free of
corruption (Mahbub, Ahammad, Tarba, & Mallick, 2022).
Renewable energy is directly related to the green economy. Institutional quality plays a dominant
role in the success of a green economy. Renewable energy gives a touch to the quality of state
institutions (Yang, Du, Razzaq, & Shang, 2022). Institutional quality such as corruption
1
prevention has a positive impact on the economy and green economy consumption. Increased
consumption of green energy has an impact on improving institutional quality (Uzar, 2020).
Government debt is an indicator of institutional quality and the effectiveness of state financial
arrangements. However, an increase in state debt has an impact on a decrease in institutional
quality (Mohsin, Ullah, Iqbal, Iqbal, & Taghizadeh-Hesary, 2021). Other studies show that an
increase in government debt actually increases institutional quality. Government debt can
encourage investment and promote economic growth (Ben Ali, & Ben Abdul Aziz Al Yahya,
2019). However, government debt has a complex effect on the quality of state institutions and is
very vital in the economy (Maris, Sklias, & Maravegias, 2022). Government debt also has a
negative influence on the nation's future (Qamruzzaman, Karim, & Jahan, 2022).
Globalization drives economic growth in many countries and improves the quality of state
institutions (Nasreen, Mahalik, Shahbaz, & Abbas, 2020). International competition encourages
the improvement of institutional quality and economic efficiency (Hayat, 2019). Globalization
has clearly provided an impetus for increasing the quality of institutions in many countries
(Farooq, Ozturk, Majeed, & Akram, 2022). However, the impact that globalization has had on
institutional quality varies in many places (Godil, Sharif, Ali, Ozturk, & Usman, 2021).
The gap between previous studies with conflicting results is our empirical gap in conducting
research. The issue raised in this study is the dependence of the economy on consumption of
fossil energy where economic growth must be paid for by a decrease in environmental quality,
besides that this research also raises institutional quality, globalization and government debt
which are still very complex and still need to be explored. The goal of this research is to
thoroughly examine the interactions between government debt, institutional quality,
globalization, and renewable energy.
Literature Review
Institutional qualities indicated by the level of corruption are in line with the level of government
debt (Briceño & Perote, 2020). The higher the level of corruption which is used as a benchmark,
the lower the quality of state institutions, followed by an increase in government debt which is
also higher (Del Monte & Pennacchio, 2020). Corruption, democracy and the shadow economy
have a significant impact on the economy. Poor institutional quality increases corruption
constrains economic growth and increases government debt (Nguyen & Luong, 2020).
Good state governance with high institutional quality promotes economic growth. However,
government debt in developed countries with good economies still tends to be high. This is of
course a mystery that still needs to be investigated further (Adedoyin, Erum, & Bekun, 2022).
Long-term increase in corruption hinders economic growth. The increase in corruption was also
followed by an increase in government debt (Ibrahim, 2020). But countries with very low levels
of corruption also still have government debt (Law, Ng, Kutan, & Law, 2021). Although in many
studies, the level of corruption is negatively correlated with government debt (Shittu, Ismail,
Abdul Latiff, & Musibau, 2020), there are several studies that find that the level of corruption in
countries with low levels of corruption has no effect on state debt (Fagbemi & Olatunde, 2019).
The two main causes of economic failure are corruption and the shadow economy. According to
Dada, Ajide, and Adeiza (2022), corruption is a sign of the caliber of institutions that have an
immediate influence on the economy. There is no doubt that corruption contributed to the rise in
governmental debt. However, corruption cannot have a direct impact on the rise in the national
debt.Corruption has a direct impact on increasing government debt and decreasing the quality of
government spending so that it has a direct impact on economic decline through a decrease in the
quality of infrastructure and a decrease in the quality of public services (Abid & Sekrafi, 2020).
2
Increasing the quality of institutions improves the economic climate and increases investment
which in turn improves the economy (Huynh, Nguyen, Nguyen, & Nguyen, 2020). Institutional
improvements have an impact on increasing FDI which encourages growth in the real sector
which has an impact on increasing economic growth (Zakari, A., & Khan, I. (2022). Economic
improvement and globalization increase technology imports thereby encouraging good economic
efficiency (Usman, Jahanger, Makhdum, Balsalobre-Lorente, & Bashir, 2022). However, the
effect of globalization on improving institutional quality is not the same in many places (Islam,
Khan, Tareque, Jehan, & Dagar, 2021).
Globalization is positively tied to the rules of international law where institutional qualities
determine the success of globalization in improving the economy (Hammudeh, Sohag, Husain,
Husain, & Said, 2020). The impact of globalization is also not always positive. Globalization
does not always help developing nations' economies grow; in fact, for certain nations, it tends to
make things more difficult. The effectiveness of a nation's institutions determines how
globalization affects its economy (Le & Ozturk, 2020).
Globalization in several countries actually suppresses the quality of institutions because the
independence of the state is eroded due to globalization. Globalization fills up failed state
legitimacy and increases conflict and chaos due to the failure of institutions to take advantage of
globalization (Paul, 2021). Globalization also increases competition which sometimes for
countries that are not ready to become a frightening thing because their independence is eroded.
Globalization can suppress corruption in countries with economies middle and high country but
is still a mystery to developing countries. Several studies have found surprising results that
globalization has no effect on the quality of institutions in developing countries (García, 2019).
Research methods
The link between renewable energy usage, public debt, globalization, FDI, and institutional
quality in Indonesia from 1990 to 2021 is examined in this study. In order to analyze institutional
quality and globalization, this study looks at FDI and renewable energy inflows. The final
empirical relationship between the described variables and the explanatory variables is as follows
IQt =α0 +β1t GDt +γ1t GLOt +γ1t FDIt +δ1t REt +ϵt
Where the coefficients of β1t,β1t,γ1t and δ1t explain the magnitudes of renewable energy (RE),
government debt (GD), globalization (GLO), FDI, and financial development on institutional
quality (IQ). The intercept and white noise report in α0 and α
Institutional quality in this study is measured by taking into account a proxy taken from six
indicators from the WGI database through Principal Component Analysis (PCA). Globalization
can create new jobs and reduce costs for parent companies. Globalization promotes economic
growth and living standards of developing countries. This study applies tests to the unit roots of
Dickey and Fuller, Phillips and Perron. This study conducted the Ng-Perron Ng and Perron unit
root test. For long-term assessment, this study applies the Bayer and Hanck joint cointegration
test, the Fishers equation. The Maki cointegration test has been used with unknown structural
breaks.
Results and Discussion

One argument made in support of the need for a unit root test is the sequence in which the
variables were integrated. Table 1 displays the findings for the unit root.
Table 1. The Unit Root Test
3
At level
Variables ADF GF-DLS PP KPSS
IQ -1.3118 -1.2007 -0.9227 -0.8227
DEBT -1.0911 -1.1123 -0.7232 -0.7233
GLO -1.0015 -1.1221 -0.8724 -0.2341
FDI -2.1158 -1.8247 -1.2237 -0.2242
RE -1.0311 -1.1223 -1.0253 -0.7722
After first difference
IQ -8.2331 -7.2231 -5.1336 -0.2121
DEBT -7.1311 -6.2133 -6.1311 -0.2112
GLO -6.8025 -5.7132 -5.7613 -0.1221
FDI -5.2731 -4.7116 -4.1341 -0.1212
RE -7.1232 -6.2331 -5.1341 -0.2712
All variables are stationary at the first difference, according to the test findings in Table 1, hence
this study employs the first difference in the subsequent estimate. In addition, the results of the
Ng-Perron unit root test have shown a similar line of static properties. Following the unit root
test, the study used a static test with an unknown structural failure, and the findings are displayed
in Table 2.
Table 2. Result Of Unit Root Test With An Unknown Structural Break
Name At level After first df.
T-stat. Time break T-stat. Time break
IQ 2.2332 2001 5.3116 2008
DEBT 2.7133 2003 6.2321 2005
GLO 2.6234 2004 6.2432 2006
FDI 3.2241 1997 7.1126 2012
4
RE 2.4232 2002 6.1331 2015
According to the statistical test, all stationary variables in the first difference with one structural
break. The long-term association between the variables specified and explained by the combined
cointegration of Bayer, Hanck, and Maki is documented in this study using a cointegration test.
The null hypothesis of no cointegration was disproved in this study since all test findings were
statistically significant at the 5% level, which suggested a long-term connection. Table 3 displays
the results of the cointegration test.
Table 3. Reports The Results Of The Cointegration Test
0.05
H Eigenvalue T- Stat. Critical Value Prob.**
None * 0.521179 11.77231 8.22111 0.0711
At most 1 0.115521 6.013221 7.11252 0.0721
At most 2 0.011221 0.226322 6.13236 0.0621
Furthermore, research extends the assessment of long-term associations. The results of
symmetric and asymmetric long-term associations are shown in Table 4.
Variables Symmetric assessment Asymmetric assessment
Coeff. T-stat S.E Coeff. T-stat S.E
DEBT 0.2211 0.003 16.3322 0.0722 0.001 4.0212
GLO 0.7121 0.014 16.1121 0.0712 0.004 5.2232
FDI 0.3322 0.019 17.2234 0.0331 0.007 4.1554
RE 0.3213 0.002 16.2242 0.0311 0.001 6.1232
Long-term cointegration between IQ, DEBT, GLO, FD and FDI under symmetry and
asymmetry. Following the discovery of long-term relationships, we examine the elasticity of the
explanatory factors on IQ. According to an asymmetric evaluation, a study demonstrates a
nonlinear link between institutional growth and renewable energy over long and short durations.
According to the findings in table 4, adding renewable energy to the energy mix has a favorable
and statistically significant long-term impact on raising institutional quality. The Indonesian
government is a key player in promoting renewable energy in Indonesia. FDI in Indonesia is
significantly impacted by Indonesia's institutional quality as well. The thing that is of sufficient
concern to the Indonesian government is that government debt tends to reduce institutional
quality.
Conclusion
Institutional quality and trends in government debt were shown to be negatively correlated.
Where the debt of the Indonesian government is significantly inversely the quality of institutions
in Indonesia. Globalization, financial development, and FDI reinforce each other in Indonesia
and strengthen the quality of institutions in Indonesia. In contrast, Indonesian government debt
5
was disclosed to suppress the institutional quality of the Indonesian government which in turn
suppressed the Indonesian economy including FDI. Renewable energy consumption positively
affects institutional quality
Limitation
This research is limited by data availability
Suggestion
To enhance institutional quality, policymakers, particularly the Indonesian government, must
promote the use of renewable energy. The Indonesian government must be careful in making
debt policies because it can reduce the quality of Indonesian institutions. Future research can
continue this research by examining more deeply renewable energy with the community's
economy.
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8
The Influence of the Nu Sumbersari Jember BMT Financial

Inclusion Program on Moneylender Transactions (Case Study of
Wirolegi Market Traders, Sumbersari District Jember)
Erika Aditya Kusuma1, Zainuri2, Ferianti Puspita Sari3, Rochmatulloh Alaika4, Ageng
Mayshaktiawan Eko Budhi Putra5, Aisyah6
1,3,5,6
STIE Jaya Negara Tamansiswa Malang,Indonesia
2,4
Faculty of Economics and Business, University of Jember,Indonesia
Abstract
MSMEs in Indonesia are useful in terms of equal distribution of people's income. But
capital is a constraint. This BMT is expected to be a supporter for MSEs (Micro Small
Enterprises) which are of course in accordance with sharia principles and replace the
practice of moneylenders who are considered to be stifling the small economy in prolonged
debt bondage. In this case, one of the BMTs that is developing in Jember is the BMT NU
Sumbersari Branch. Based on the questions asked, to find out the implementation of the
NU BMT financial inclusion program for Wirolegi Market traders, to find out the effect of
the NU BMT financial inclusion program on loan shark practices at traders and to find out
the strategies carried out by NU BMT to reduce loan shark practices to traders in the
Wirolegi Market. This study uses a quantitative approach. Data collection technique is by
way of interviews. In this study there were 12 members who became respondents. The
results of research on the implementation of the BMT NU Financial Inclusion Program on
traders in the Wirolegi Market, respondents agreed as much as 67%, from the data obtained
there were 440 traders who were members of BMT NU partners and 59 traders who
accessed financing at BMT NU. We found that the main problem for traders is capital,
traders cannot access finance from financial institutions such as banks, cooperatives, or
BMTs. They prefer to use the services of loan sharks even though they are miserable. The
government has created an Inclusive Financial Program which is intended for middle to
lower entrepreneurs. In this Financial Inclusion Program, BMT is an institution that is used
as a program that is expected to provide solutions for traders to access finance, in this case
capital. The implementation of the BMT NU Financial Inclusion Program in terms of
submitting funds has been good, it's just that the implementation still needs to be improved.
The majority of respondents' answers regarding the implementation of the BMT NU
financial inclusion program agreed. The BMT NU Jember Financial Inclusion Program
reduces moneylender transactions.
Keyword : Financial Inclusion Program, Moneylender Practices,Jember, Indonesia.

JEL Classification : C31, O10, Q56
DOI : 10.54204/TAJI/Vol812023002
9
Background
Community needs are increasing in this modern era. However, this increase in demand was not
accompanied by an increase in income. The existence of these problems encourages people to do
something to meet their growing needs. The usual needs of the community or entrepreneurs are
funds or capital. In fact, if you look at the existence of MSMEs in Indonesia, it is very useful in
terms of equal distribution of people's income. In addition, it is able to create creativity. On the
other hand, MSMEs are able to absorb labor on a large scale so that they can reduce the number
of unemployed (Farida & Arifin, 2022).
The Inclusive Finance Booklet (Bank Indonesia, 2014) shows that only 49% of Indonesian
households have access to formal financial institutions. About 52% of Indonesia's population live
in rural areas and around 60% of them do not have access to formal financial services (Laili &
Kusumaningtias, 2020).
According to World, the use of financial institutions by the public is still very minimal,
especially for developing their businesses. Although the ability of medium-sized entrepreneurs in
terms of capital can still be overcome because they can still obtain access to financing in banks,
for small business actors, capital is a big obstacle because getting access to finance in the
banking world is relatively difficult for small entrepreneurs. small business. This happens
because Islamic banks still require guarantees in applying for financing, because it is impossible
for small businesses to fulfill them (Laili & Kusumaningtias, 2020).
Financial sector institutions in real sector capital that have long been present in Indonesia with
banking concepts, but the technical concepts of banking in the field have not yet touched Micro
and Small Enterprises (UMK). Because of this problem, the emergence of microfinance sector
activities whose activities originate from individuals in the community, these individual activities
provide the capital needed for MSEs. Individuals are often called loan sharks, small communities
or small entrepreneurs rely more on the financial services offered by moneylenders because they
are more flexible and fast even though they have to pay high interest (Farida & Arifin, 2022).
Moneylenders are said to be the backbone of the people's finances. However, its existence itself
does not bring benefits to the community, there are problems in the form of individual activities
including in the form of capital carried out by loan sharks. Debt to loan sharks is indispensable
with the needs of wholesalers who have to buy goods in the short term. However, if the borrower
or small trader is unable to repay the credit, the repayment term will be extended, resulting in
higher interest which adds to the borrower's burden. Interest and a relatively short time are used
as binding provisions, but this is prohibited in Islam (Moderat, 2020). So that this practice
indirectly does not provide a solution to the economic problems of the common people and
contains elements of usury. As we know usury is forbidden for Muslims, this is based on the Al-
Qur'an Ar-rum verse 39 which means;
“And something usury (additional) that you give so that human wealth increases, it does not
increase in the sight of Allah. And what you give in the form of zakat that you intend to gain the
pleasure of Allah, then those are the people who multiply (their rewards)."
The meaning of the verse above is that Allah SWT hates usury and that usury is not reciprocated
by Allah. This verse is a warning not to do negative things. Therefore, it is necessary to have
competent microfinance institutions that can meet the needs of the community and not get stuck
in a prolonged debt cycle. For this reason, the government (regulator) in this case the OJK,
which has regulatory and supervisory authority in the financial services sector, is starting to be
10
concerned with strengthening micro sector financial institutions, which is one of the strategies to
create a more inclusive financial system (Johan et al., 2020) .
Financial inclusion is an effort to encourage the financial system to be accessible to all levels of
society so that it can encourage quality economic growth and overcome poverty. Inclusive
Finance aims to remove all forms of barriers to public access in utilizing financial services that
are supported by existing infrastructure (Rijal, 2022).
BMT is an informal non-banking Islamic economic or financial institution, said to be informal
because this institution was founded by a Non-Governmental Organization (KSM). The
performance of microfinance institutions (BMT) that operate based on the sharia system is
intended to have the opportunity to meet the needs of the poor or low-income people and to
illustrate the ability of MFIs to establish themselves as banks for the poor which are difficult to
touch by formal financial institutions (banks) that have been side by side. to the rich than to the
poor (Meriyati, 2017). At the end of 1997 Indonesia experienced an economic and monetary
crisis. The role of BMT is quite large in helping small and medium enterprises, this role is very
important in rebuilding a healthy business climate in Indonesia. During economic and monetary
crises, BMT often observes and supervises various layers of society to see business partnership
opportunities (Millah & Halima, 2022). In fact, the emergence of an economic crisis cannot be
separated from economic practices or activities that are carried out contrary to Islamic values
such as consuming usury, monopoly, corruption, malpractice and others (Laili &
Kusumaningtias, 2020). BMT business activities aim to help small entrepreneurs by providing
financing in order to develop their businesses. With this business activity, the business develops
and BMT earns income so that BMT activities are sustainable independently. This BMT is
expected to be a supporter for UMK (Micro Small Enterprises) which is of course in accordance
with sharia principles so that this BMT is expected to be able to help micro and small businesses,
small traders in the market and replace the practice of moneylenders who are considered to be
suffocating the small economy in prolonged debt shackles.
Formulation Of The Problem

1. Is there any influence of the BMT NU Sumbersari Jember financial inclusion program on
loan shark transactions by traders at the Wirolegi Market?
2. What is the strategy of BMT NU Sumbersari Jember in minimizing moneylender
transactions by traders at the Wirolegi Market?
Research Purposes
1. To find out whether there is any influence of the BMT NU Sumbersari Jember financial
inclusion program on moneylender transactions by traders at the Wirolegi Market.
2. To find out how the BMT NU Sumbersari Jember strategy is in minimizing moneylender
transactions by traders at the Wirolegi Market.
Theoretical Basis
The term inclusive financial system or in English Financial Inclusion is synonymous with
the phrase inclusive financial system which means a universal, non-exclusive financial service
system. The inclusiveness of the financial system actually refers to the vision of creating a
financial services system that is able to reach all groups. Not only the rich, but also the low-
ranked or poor. In practice, the idea of financial inclusion takes the form of a scheme that is now
11
better known as microfinance. Inclusive Finance is an inclusive financing scheme with the main
objective of providing various financial services to the poor and low-income people. Various
financial services include capital loans, savings, insurance, and financial transfer services (Johan
et al., 2020). Financial inclusion is an effort to encourage the financial system to be accessible to
all levels of society so that it can encourage quality economic growth and overcome poverty.
Inclusive Finance aims to remove all forms of barriers to public access in utilizing financial
services supported by existing infrastructure (Khatimah, 2016).
Referring to the definition of the United Nations (UN), the term Financial Inclusiveness
refers to access to various financial services, at a reasonable cost, for people who are considered
unbanked and those who do business in rural areas; such as agriculture or animal husbandry.
These services include savings, short-term and long-term loans, leasing, mortgages, insurance,
pensions, payments, money transfers for local and international scope. So the conclusion that can
be drawn is that financial inclusion is best understood as a key dimension of financial services.
Namely access or credit capital (access to credit) (Farida & Arifin, 2022). In this case, the access
of poor, low-income people to various financial institutions is made possible by the existence of
a credit guarantee scheme by the state.
Judging from its objectives, the inclusive financial service scheme is intended to overcome
poverty situations. The first step is to open up the exclusivity of capital provision conditions
which are generally carried out by financial institutions. In general, financial institutions are only
willing to provide capital services to parties that are considered bankable. This is reasonable as
long as we pay attention to the importance of prudentiality for the continuity of a financial
institution (Laili & Kusumaningtias, 2020). This precautionary principle is basically a good
principle, especially when we talk in the realm of economic exchange. However, this does not
mean that this principle is not the only parameter that determines whether or not low-income or
poor people can get capital assistance. In fact, under the auspices of this strict prudential
principle, low-income and poor people are always considered not to qualify as credit recipients
(Laili & Kusumaningtias, 2020). In the end, they must be executed or written off as parties who
do not deserve capital assistance. In fact, socio-economically, it is precisely these parties that
need capital assistance the most. Both for the purpose of increasing financial security, taking
advantage of business opportunities, as well as in order to develop its business. Thus, first of all,
the term Inclusive Finance is more appropriate to begin with as an attempt to shift the old
paradigm that has been ingrained in financial institutions, which generally excludes people who
are not bankable from their rights to receive capital assistance. Second, in the idea of Financial
Inclusion there is one intention, namely the willingness to re-enter parties who have been
expelled or excluded from financial institutions as parties who deserve various services (Rijal,
2022).
Moneylenders come from the word rent which means interest. In the Big Indonesian Dictionary,
loan sharks mean people who make a living by paying interest, loan sharks. Moneylenders are a
type of work that is actually not much different from banks and non-bank financial institutions
engaged in savings and loan services. The difference is that loan sharks are entrepreneurs who
are not legal entities, who manage their own businesses with their own policies and regulations
(Moderat, 2020).
Moneylenders are people who offer unsecured short-term loans and are also called moneylenders
because they charge high interest rates on each credit package. Most loan sharks operate in rural
markets and they often visit people door to door. The sources of funds owned by moneylenders
12
in running their businesses come from their own capital, besides that they also borrow from other
people in the city with high interest rates (Hasan & Ilmi, 2022).
Moneylenders provide credit for agricultural, trade, crafts and consumption needs. In Islam, the
practice of moneylenders is the same as the term mu'amalat ribawiyah, namely the addition of
money capital arising from debt receivables transactions that must be given by the borrower to
the owner of the money when the debt is due (Srimulyani et al., 2022).
The practice of moneylenders, in positive law, is prohibited in Indonesia for the following
reasons:
a) There is a prohibition against making money making efforts, as stated in Article 1 of the
Money Transferring Law or Geldscheiter Ordanantie and in accordance with the
provisions of Article II of the Transitional Regulations of the 1945 Constitution;
b) Null for the sake of law because it does not meet the requirements for the validity of the
agreement stipulated in article 1320 Burgerlijk Wetboek, namely, something that is
lawful or does not violate laws and regulations;
c) Moneylenders or loan sharks are considered a form of social disease, so they must be
prevented and dealt with as referred to in Article 13, Article 14 and Article 15 paragraph
(1c) of Law Number 2 of 2002 concerning the Indonesian National Police. Due to loan
shark practices considered as one of the activities that are prohibited in Indonesia based
on positive regulations or laws that apply, then the perpetrators of this practice; both
lenders and borrowers, can be subject to legal sanctions.
According to Dal. W. Adam Renternir is an individual who provides short-term loans, does not
use certain collateral, has a relatively high interest rate and always tries to perpetuate credit with
his customers (Rahmadanii & Setiowati, 2017). In fiqh, according to Qardhawi, bank interest is
the same as usury, which is clearly forbidden. The Islamic economic system must be free from
interest (riba). Only the Islamic economic system can use capital properly and correctly, because
in a capitalist economic system it is found that the technical benefits achieved by science can
only be enjoyed by a handful of people (Rahmadanii & Setiowati, 2017). So many calamities are
befalling mankind today, especially in the economic field. With a very heinous form that had
never happened in the era of ignorance, namely usury or moneylenders who previously were
only carried out individually in their own homes, now on behalf of institutions, foundations and
modern banks. They are capable of such great strength and power. Able to play a role and
intervene in government institutions. With all the facilities they have, they are able to grow and
shape public opinion among the common people and the poor, whose flesh and bones have been
eaten by usurers or usurers under the auspices of the usury economic system (Hasan & Ilmi,
2022). In Islamic economics it has been repeatedly explained, the practice of leasing (usury) is
profit from various forbidden loans. In syara' it has been explained that what prohibits usury is a
strict prohibition, regardless of the amount, be it a little or a lot. Assets resulting from usury are
clearly forbidden (Srimulyani et al., 2022).
Baitul Maal Wal-Tamwil is one of the most recognized economic and financial institutions in its
early days. Baitul al-Maal developed during the heyday of Islam which functioned as a public
financial institution which some economic observers equated with institutions that carry out
modern economic functions, namely the central bank. Baitul Maal (BM) after changing to Baitul
Maal wal-tamwil is a microfinance institution that operates on the principle of profit sharing,
developing micro and small businesses in order to elevate the degree and dignity and defend the
interests of the poor (Farida & Arifin, 2022).
13
Baitul maal wal tamwil (BMT) is an institution consisting of two terms, namely Baitul Maal and
Baitul Tamwil. Baitul Maal is more directed at collecting and distributing non-profit funds such
as zakat, infaq, and alms. Baitul Tamwil is an effort to collect and distribute commercial funds
(Rahmadanii & Setiowati, 2017). This effort is an integral part of the BMT as an institution that
supports the economic activities of Islamic-based small communities. According to experts:
(Rahmadanii & Setiowati, 2017)
a) Arief Budiharjo Baitul Maal wal Tamwil (BMT) is a non-governmental
organization that seeks to develop productive businesses and investments with a
profit-sharing system to improve the economy of small entrepreneurs in alleviating
poverty.
b) Amin Azis that BMT is an integrated independent business center developed from
the concept of Baitul Maal wal Tamwil. In terms of baitulmal, Baitul maal wal
tamwil receives Bazis entrusted from the Zakat and Alms Fund and uses it for the
welfare of the poor, the poor, and the poor. In the aspect of baitul maal wal tamwil-
BMT developing productive businesses to increase the income of small and small
members.
From the statement above, it can be concluded that Baitul Maal wal Tamwil is an Islamic
financial institution based on a non-governmental organization that is based on small community
economic groups, seeks to develop productive businesses and investments with a profit-sharing
system, as well as channeling non-profit funds such as Bazis with the aim of improving the
economy small business and poverty alleviation. Conceptually, BMT has two functions, namely:
(Rahmadanii & Setiowati, 2017)
a) Baitulmal (Bait: House, Maal: Wealth) accepts ZIS funds (Zakat Infaq and alms)
and optimizes their distribution by providing compensation to those who are
entitled (asnaf) in accordance with the rules and mandates received.
b) Baitut Tamwil (Umpan: Rumah at-tamwil: property development carries out
productive and investment business development activities in improving the
economic quality of micro and macro entrepreneurs, especially encouraging saving
activities and supporting economic financing).
BMT aims to create a safe, peaceful and prosperous family and community life around BMT. In
addition to functions and objectives, BMT also has a vision and mission. BMT's vision is to
realize the quality of the community around BMT that is safe, peaceful and prosperous by
developing business institutions and BMT and POKUSMA (Muamalaah Business Groups) that
are advanced, trustworthy, safe, comfortable, transparent and prudent (Millah & Halima, 2022).
BMT's mission is to develop POKUSMA and BMT that are advanced, reliable, safe, transparent
and careful so that the quality of the community around BMT is safe, peaceful and prosperous.
To achieve the vision and implementation of BMT's mission and goals, BMT made several
efforts: (Rahmadanii & Setiowati, 2017)
1) Developing savings and loan activities with profit-sharing/sharia principles.
2) Develop the institutions and business of the muamaalah business group, namely
the savings and loan group which is the hallmark of the assisted BMT.
3) If the BMT has developed well enough, then start the development of real sector
business entities, busril from community groups as companion business entities.
14
Previous Research
Research from Jajang Nurjaman (2010) The role of BMT Al-Fath IKMI Ciputat in overcoming
the negative effects of moneylender practices related to this practice has been going well, as seen
from the many business partners who have left loan sharks and have moved around to join BMT
partners. As for the BMT Al-Fath IKMI Ciputat dressing that is already running:
1. Provide educational education to the public and be invited to think better for the
continuity of their business
2. Partners are invited to join BMT Al-fat IKMI - Outreach to the community such as:
holding social activities such as distributing brochures
3. The BMT deposit pick-up service pattern has great potential for alleviating poverty in
Indonesia because BMT operates in the micro-economic sector which is generally not
accessible to Islamic banking.
The difficulty of access for people who run micro-enterprises to sources of capital is the reason
many people are trapped by loan sharks. If moneylenders can be removed or restricted in their
own movements, BMT will develop more easily.
Research from Rozalinda (2013) in this study in Padang traditional markets, traders generally
borrow from loan sharks. Transactions known as julo-julo shoots (circulation of money between
community heads or heads of people and people who need fast funds by first receiving money
and then returning the time) have been around for a long time before they existed. from BMT.
The role of BMT in freeing them from loan sharks is the socialization of the sharia economy by
BMTs to the community and their role in freeing the community from loan sharks. BMT has not
played a significant role in freeing society from the shackles of moneylenders. BMT's efforts
have not been maximized in freeing the community from the practice of moneylenders who tend
to be more proactive in offering their services to traders.
Research Methods
This research was conducted on 28-29 October 2022 at the Wirolegi Market, Sumbersari
District, Jember Regency. The location selection was carried out purposively based on
information from BMT NU Sumbersari Jember that the market that received the most funds
through BMT NU Sumbersari Jember was the Wirolegi Market.
The method used in this study is descriptive quantitative by using analysis techniques
Spearman Rank correlation coefficient with the formula:
rs = 1 - (6∑_(i-1)^n▒d_1^2 )/(n ( n^2-1 ))
Information:
rs = Spearman Correlation Rank coefficient
n = the number of pairs of observations between one variable and another
d1 = is the ranking experiment obtained in each pair of observations
Methods of data collection using survey methods. Survey is a data collection method in research
by collecting data and interpreting data in general as it is in the field. This study used a total of
12 respondents, namely all traders who received assistance. To answer objective 1, namely to
analyze the effect of the BMT NU Sumbersari Jember financial inclusion program on
moneylender transactions by traders at the Wirolegi Market, it was carried out using guidelines
for preparing a Likert scale (Ridwan, 2002). The variables to be measured are translated into
variable indicators, then these indicators are used as a starting point for measuring instrument
15
items in the form of statements or questions. In compiling a Likert scale using alternative
answers:
1. Positive (S) = 3
2. Neutral (N) = 2
3. Negative (TS) = 1
The total value of the scale is grouped into three categories, namely positive, neutral and
negative. To get the range of the three categories using the formula: (maximum score-minimum
score)/(number of categories). The number of indicators used is 5 the number of questions about
the effect of moneylender transactions on the BMT NU financial inclusion program. Analysis of
each respondent's attitude
• Maximum score: 5 x 3 = 15
• Minimum Score : 5 x 1 = 5
Then the range is: ((5x3)-(5x1))/3-1 = 3 (rounded up)
• Positive: the effect of the BMT NU financial inclusion program on moneylender
transactions by traders in the Wirolegi Market is positive if it has a score of 13-15
• Neutral: the effect of the BMT NU financial inclusion program on moneylender
transactions by traders in the Wirolegi Market is neutral if it has a score of 9-12
• Negative: the effect of the BMT NU financial inclusion program on moneylender
transactions by traders in the Wirolegi Market is negative if it has a score of 5-8
The overall analysis is the number of indicator items (n), the highest score is 3 and the
lowest score is 1, so the range of calculations is:
• Maximum score: 15 x 3
• Minimum score : 15 x 1
• Then the range is: ((15x3)-(15x1))/3-1 = 9
Based on the range above, the level of influence of the BMT NU financial inclusion program on
moneylender transactions by traders at the Wirolegi Market from all respondents was divided
into three categories, namely:
• Agree: the effect of the BMT NU financial inclusion program on moneylender
transactions by traders at the Wirolegi Market agree to assistance 35-45
• Neutral: the influence of the BMT NU financial inclusion program on moneylender
transactions by traders in the Wirolegi Market impartial 25-34
• Disagree: the effect of the NU BMT financial inclusion program on moneylender
transactions by traders in the Wirolegi Market disagree 15-24
In order to analyze the relationship between the BMT NU financial inclusion program and
moneylender transactions by traders in the Wirolegi Market, the Rank Spearman correlation
coefficient is used. Spearman's Rank correlation coefficient to determine whether or not the
relationship between each variable is closely related. In this program the criterion for making a
significant decision is if P < 0.05 then the variable has a significant relationship and if P > 0.05
then the variable has an insignificant relationship (Noor, 2015).
Correlation values range from -1 to +1. Values that are close to -1 and +1 indicate a
stronger relationship, while values that are close to 0 are said to have a weak relationship
(Paramita et al., 2021). In order to answer objective 2, namely to identify how the BMT NU
Sumbersari Jember strategy is to minimize moneylender transactions by traders at the Wirolegi
16
Market, a descriptive analysis will be carried out by studying the data obtained from interviews,
field notes, documentation and observations (Purba et al. , 2021).

The implementation of the BMT NU financial inclusion program based on the ease of processing
financing according to the customer's point of view is presented in table 1.
Table 1. Distribution of Respondents by Category The implementation of the BMT NU financial
inclusion program is based on the ease of processing financing.
Category Score Criteria Amount (Person) Percentage
Agree 12-15 8 67%
Neutral 9-11 4 33%
Don't Agree 5-8 0 0%
Total 12 100%
Source: Primary Data 29 October 2022
From the answers of the respondents above, the implementation of the BMT NU financial
inclusion program is based on the ease of processing this financing, the majority of respondents
responded with an attitude of agreement with a percentage of 67%. Respondents who responded
agreed that financing at BMT does not need to choose and buy the goods because it is the
responsibility of the BMT and the customer does not need to worry about the risk of damage,
because it is the responsibility of the BMT if for example the damage is not caused by the
customer's negligence. The respondents answered neutral because they lacked financial literacy.
The implementation of the NU BMT financial inclusion program based on the elimination of
fines is presented in table 2.
Table 2. Distribution of Respondents by Category The implementation of the BMT NU financial

inclusion program is based on the elimination of fines.
Agree 12-15 8 67%
Neutral 9-11 1 8%
Total 12 100%
From the answers of the respondents it was concluded that the implementation of the BMT NU
financial inclusion program based on the absence of fines was that the majority of respondents
responded with an attitude of agreement, namely 67%. Even so, some of the other respondents
also responded neutrally and even disagreed. The majority of respondents who answered agreed
were because they were disciplined in paying and if they were late, it was only less than 8
months. The respondents who responded did not agree because they had not paid in installments
for more than 8 months and the respondents who answered were neutral due to lack of literacy.
The implementation of the BMT NU financial inclusion program based on the availability of
capital is presented in table 3.
Table 3. Distribution Of Respondents By Category The Implementation Of The BMT NU

Financial Inclusion Program Is Based On The Availability Of Capital
17

Agree 12-15 5 42%
Neutral 9-11 7 58%
Total 12 100%
From the answers of the respondents above, the implementation of the BMT NU financial
inclusion program is based on the availability of capital owned by the BMT NU, there are
respondents who agree and some are neutral. However, the majority of respondents responded by
being neutral with a total percentage of 58%. As for customers who apply for financing with
little capacity, they respond in agreement. While those who answered were neutral because they
had experience in dealing with moneylenders, so when they asked BMT officers how much
maximum capital they could provide, these customers concluded that they were the same as
moneylenders. The implementation of the BMT NU financial inclusion program based on the
fast process of disbursing funds is presented in table 4.
Table 4. Distribution of Respondents Based on the Implementation Category of the BMT NU

Financial Inclusion Program Based on the Speed of the Fund Disbursement Process.
Agree 12-15 7 58%
Neutral 9-11 4 33%
Total 12 100%
From the answers of the respondents it was concluded that the implementation of the BMT NU
financial inclusion program was based on the speed of time in the process of disbursing these
funds; the majority of respondents responded in agreement with a total percentage of 58%. They
answered that they agreed because of several factors, namely; perception and religion.
Meanwhile, those who answered were neutral because the majority of them were very
experienced in dealing with moneylenders so that they responded with a neutral attitude
(perception). The respondents who answered did not agree because it was based on their
perceptions. The implementation of the BMT NU financial inclusion program based on margin
relief is presented in table 5.
Table 5. Distribution of Respondents Based on the Category of Implementation of the BMT NU

Financial Inclusion Program Based on Margin Relief.
Agree 12-15 6 50%
Neutral 9-11 6 50%
Total 12 100%
18
From the respondents' answers above, the implementation of the BMT NU financial inclusion
program based on margin relief is fifty-fifty. This means that 50% of respondents responded with
an attitude of agreement and the other 50% responded with a neutral attitude. Respondents who
responded agreed because according to them, the margin provided by BMT was indeed smaller.
The respondents responded by being neutral because it was based on their perceptions and lack
of literacy. The overall attitude of traders towards the financial inclusion program at BMT NU
can be seen from the attitude of the respondents whether they were successful or not, useful or
not for all respondents, which can be seen in Table 6.
Table 6. Overall Attitude of Traders Towards Financial Inclusion Programs at BMT NU
Agree 12-15 8 67%
Neutral 9-11 4 33%
Total 12 100%
From table 6 the results of the data collection above it can be concluded that overall the
respondents' responses to the financial inclusion program implemented by BMT NU are in
agreement with a total percentage of 67%. While the other 33% are distributed in neutral
responses by some respondents. Respondents who responded agreed based on the author's review
of the five previous variables, due to several factors namely; religious knowledge, perception,
reality. As for the respondents who responded with a neutral attitude caused by factors, namely;
perceptions and lack of literacy, as well as for respondents who disagreed. Spearman's rank
correlation is used to look for relationships or to test the significance of the associative
hypothesis when each variable is connected in ordinal form. That Spearman's rank correlation
test is part of non-parametric statistics, therefore in this correlation analysis it is not necessary to
assume a linear relationship (linearity test) between research variables. If the research data uses a
Likert scale, the distance used must be the same and the research data does not have to be
normally distributed (Normality Test).
Table 7. Spearman Rank Correlation Test
NU BMT Financial Moneylender

Inclusion Program Transactions
Spearman's rho NU BMT Financial InclusionCorrelation Coefficient 1.000 -.907**
Program
Sig. (2-tailed) . .00001
N 12 12
Moneylender Transactions Correlation Coefficient -.907** 1.000
Sig. (2-tailed) .00001 .

N 12 12
Based on the correlation results above, it was found that the correlation relationship that was
owned was -0.97 indicating that the correlation between the BMT NU Financial Inclusion
Program and Moneylender Transactions had a very strong correlation. The negative sign means
19
that the BMT NU Financial Inclusion Program increases, the moneylender transactions will
decrease. Meanwhile, seen from the significance value of 0.00001, it states that the correlation
relationship between the BMT NU Financial Inclusion Program and Moneylender Transactions
is significant.
Basically, the community's need for capital assistance channeled by financial institutions such as
banks cannot be reached by medium to lower business actors, who incidentally only have limited
and relatively small capital. It is also sometimes difficult for middle and lower business actors to
access finance at financial institutions such as banks, because they do not really understand the
technicalities. This is what causes the emergence of financial services that have sprung up in
society, namely moneylenders, lending money to traders even though it looks okay but every
time we make a loan without paying interest the interest will continue to increase. Merchants are
used to borrowing money from moneylenders because it is easy and fast. They are more
comfortable borrowing from moneylenders because there are many traders who are used to
borrowing. The government began to hold a program called the financial inclusion program,
which was usually created for middle-class businesses.
The government makes BMT one of the institutions that run financial inclusion programs. For
BMT as a sharia microfinance institution, it is hoped that it will be able to provide solutions and
understanding to traders. As long as it makes it easier for traders, they are definitely interested in
becoming BMT partners. BMT is quite able to compete with other financial service providers,
but it needs continuous improvement so that the expected financial inclusion program can run as
desired.
Based on the research results above, customer perceptions of the success and usefulness of the
financial inclusion program at BMT NU Jember have been grouped into 5 indicators, namely
convenience, elimination of fines, availability of capital, speed of the process of disbursing funds
and lightening margins. The results of the analysis of the five indicators when combined show a
neutral attitude of customers by 33%, agree by 67%, and disagree by 0%. From these data it can
be seen that the program run by the BMT institution has been running well and in accordance
with the government's expectations so that for customers the program is very beneficial for small
traders. Respondents who responded agreed based on the author's review of the five previous
variables, due to several factors namely; religious knowledge, perception, reality. As for the
respondents who responded with a neutral attitude caused by factors, namely; perceptions and
lack of literacy, as well as for respondents who disagreed.
Meanwhile, based on the results of the data analysis technique test using the Spearman Rank
Correlation Test which states that the Effect of the BMT NU Jember Financial Inclusion
Program has a strong correlation with Moneylender Transactions. And the negative sign states
that if the BMT NU Jember Financial Inclusion Program increases, this will affect the
moneylender transactions to decrease. Meanwhile, seen from the sinification level of 0.0001, it
states that there is a significant influence between the Effect of the Jember NU BMT Financial
Inclusion Program on Moneylender Transactions at Traders in the Wirolegi Market. As for the
mainstay strategies carried out by BMT NU so that they are able to enter the scope of economic
activities for medium to lower businesses. Strategies include:
1. Through an approach by the BMT NU, usually the marketing department explains briefly
about the product, the explanation is made as attractive as possible so that the traders are
interested.
2. Providing friendly service so that traders feel at home asking questions about products
and transactions at BMT NU.
20
3. There is convenience in transactions, because traders in transactions with moneylenders

are used to very easy transactions
4. Providing facilities, namely in the form of picking up balls, the BMT NU parties go
directly to the field to carry out transactions, usually if traders want to save and withdraw
money.
Conclusion
The main problem for traders is capital, traders cannot access finance from financial institutions
such as banks, cooperatives, or BMTs. They prefer to use the services of loan sharks even though
they are miserable. The government has created an Inclusive Financial Program which is
intended for middle to lower entrepreneurs. In this Financial Inclusion Program, BMT is an
institution that is used as a program that is expected to provide solutions for traders to access
finance, in this case capital. The implementation of the BMT NU Financial Inclusion Program in
terms of submitting funds has been good, it's just that the implementation still needs to be
improved. The majority of respondents' answers regarding the implementation of the BMT NU
financial inclusion program agreed. The BMT NU Jember Financial Inclusion Program reduces
moneylender transactions.
References
Farida, N., & Arifin, M. (2022). Program Inklusi Keuangan Syariah Untuk Meningkatkan
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Economics and Islamic Business, 02(01), 21–32.
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Dalam Mengimplementasikan Inklusi Keuangan Bagi Masyarakat Pesisir Tuban: Study
Ekploratif. Ulûmunâ : Jurnal Studi Keislaman, 6(2).
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Meningkatkan Pemberdayaan UMKM (Studi Pada BMT Dasa Tambakboyo). Jurnal Ilmiah
Ekonomi Islam, 6(3), 436. https://doi.org/10.29040/jiei.v6i3.1204
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Pemberdayaan Ekonomi Masyarakat). Islamic Banking, 2(1337), 35–43.
Millah, H., & Halima, S. N. (2022). Motivasi Pedagang Melakukan Pinjaman Pada Rentenir
Versus Pembiayaan di Bmt Ugt Nusantara Capem Paiton. JEKOBIS : Jurnal Ekonomi Dan
Bisnis, 1(1).
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22
How Does Financial Inclusion Support a Green Economy in Asia?

Fika Destalia1, Isnaeni Hidayati2, Lailia Nur Rahmawati3, Carla Ita Kharisma4, Charis Achmad
Qusyairi5, Cindy Eka Nurmasari6
1,2,3,4,5,6
STIE Jaya Negara Tamansiswa Malang, Indonesia
Abstract :
The purpose of this research is to investigate financial inclusion with green economy
development performance. To achieve this goal, this study uses data envelopment analysis
(DEA) to assess the productive feasibility of green and complex basic designs in increasing
green profitability. This study uses CO2 emissions as an indicator for measuring green
economy development management. The results of this research are expected to provide an
overview and suggestions on how to develop financial inclusion while maintaining
environmental sustainability. This study uses quantitative non-parametric data
envelopment analysis (DEA) methods using robust analysis. We found that economic
development does not ignore environmental sustainability. Economic development must
also be able to minimize the impact of environmental damage. Infrastructure development
surprisingly has a negative impact on green economy development as well as credit.
However, financial inclusion provides optimistic results that have the potential to drive
Green economic development in Asia. The industrial structure that is affected by green
financial inclusion also positively encourages an increase in environmentally friendly
economic growth.
Keywords: Financial Inclusion,Green Economy, Asia, Economics Development

JEL Classification: C31, O40, Z30
DOI : 10.54204/TAJI/Vol812023003
Introduction
The United Nations Environment Program (UNEP) defines a green economy as one that results
in increased human well-being and social equity, significantly reduces environmental risk and
ecological scarcity. In addition, the green economy achieves economic development and efficient
consumption of resources (Chalil, 2020).
A green economy seeks to promote the development and responsible use of resources, minimize
environmental impacts and promote climate and social justice based on equality and inclusion of
vulnerable people. In addition, it aims to promote the creation of green jobs, i.e. jobs that directly
contribute to the preservation or restoration of the environment ( Khoshnava, Rostami, Zin,
Štreimikienė, Yousefpour, Strielkowski, & Mardani, 2019).
The green economy is one of the axes of Asian countries' environmental strategies, along with
risk mitigation, analysis and mitigation, adaptation to climate change, capacity building, and
political advocacy. Environmental degradation and climate change pose a new threat, and it is
one of the big (if not the biggest) concerns of the new generation (Dhyani, Murthy, Kadaverugu,
Dasgupta, Kumar, & Adesh Gadpayle, 2021).
23
According to Lee & Woo (2020), the green economy, sometimes also known as the ecological
economy, emerged as a response to the fight against climate change, the reduction of greenhouse
gas emissions, and the promotion of sustainable development. Green jobs, also known as
resource efficiency, are at the heart of green economy efforts to balance the creation of new jobs
and economic expansion. Green companies, on the other hand, are companies that take care of
nature and the environment while emitting less carbon dioxide. Moreover, many green
businesses not only create green jobs or green jobs, but also incorporate an environmental
mindset into their production, produce products that are better for the environment, and use green
marketing to emphasize their sustainability (Bilgaev, Sadykova, Mikheeva, Bardakhanova,
Ayusheeva, Li, & Dong, 2022).
A green economy is a type of economic model that aims to improve human well-being from a
transition to an economic system that takes into account a set of factors transcendental to the
planet: social justice, resource consumption efficiency and current (and future) factors that
generate problems environment ( Ossewaarde & Ossewaarde-Lowtoo, 2020).
Environmentally friendly energy is a need for sustainable development in Asia and governments
in Asian countries are committed to developing sustainable energy (Liu, Kong, & Zhang, 2021).
Globally developed financial inclusion is financial inclusion that is inexpensive and reaches all
levels of society. Groups of people who are underserved financially are things that need to be
handled efficiently. Limitations of financial accessibility by considering the risks of financial
services need to be continuously developed. Financial services are a necessity for society in
today's modern era. The economic cycle is always related to the time series period of the macro
economy. Financial inclusion is a vital factor in driving economic development (Liu, Luan, Wu,
Zhang, & Hsu, 2021).
A green economy is a necessary proposal to address the many challenges facing society today
that highlight the current needs of the planet at a financial level, but also at a climate, energy,
food and social level. Of course, for a green economy to be definitively implemented in each
country, there needs to be an optimal set of circumstances and the institutions involved (D'amato
& Korhonen, 2021). Undoubtedly, individual contributions will be important, but we know that
new regulations that support this type of economy will be necessary. This can achieve increased
public investment in the green sector and assistance to promote it. In the same way, public
administration policies that encourage private companies to bet on a green economy are needed
(Mohsin, Taghizadeh-Hesary, Iqbal, & Saydaliev, 2022).
Financial inclusion is very important in providing financial access to everyone in society. The
challenge is the considerable risk in providing financial access to economically weak groups.
The health of the financial industry is highly dependent on the current economic cycle (Omar &
Inaba, 2020). The banking sector is always influenced by macroeconomic performance. Poor
macroeconomic performance has an impact on increasing banking risk and increasing the
potential for default on parties who borrow money from banks or non-bank financial services.
The banking and financial services sector is closely related to the provision of capital in the real
sector (Omodero & Mlanga, 2019).
Another challenge of economic development aside from the macroeconomic environment is the
environment. The environment is important in building human life (Koren, Bondarenko, &
Pustovarov, 2020). Economic development is often paid for by environmental damage. But it is
getting attention at this time. Where economic development must also maintain environmental
sustainability. The challenge of environmental sustainability is closely related to capital. Where
capital in the banking sector can be carried out with a green capital scheme which of course
24
requires in-depth study (Fan & Hao, 2020). Research findings on financial inclusion and a green
economy are debatable. According to Xuan, Jiang, & Fang (2023), research on green economy
development has yielded mixed results. This study aims to investigate the relationship between
green economy development performance and financial inclusion. This study uses data
envelopment analysis (DEA) to evaluate the productive feasibility of basic green and complex
designs in increasing green profitability to achieve this goal. CO2 emission is used as an
indicator in this study to measure green economy development management. The results of this
examination are intended to provide outlines and ideas on how best to encourage monetary
considerations while retaining natural maintenance.
Literature review and hypothesis development

Modern economic development that is supported by industrialization and the use of fossil energy
has an impact on environmental sustainability. Current financial inclusion also contributes to
environmental damage, especially motor vehicle credit services which increase environmental
pollution from the production process of motorized vehicles to the use of motorized vehicles that
produce carbon dioxide (Raihan & Tuspekova, 2022). Financial services such as banking
encourage increased efficiency because with an increase in real sector capital it can increase
economies of scale. The financial services sector encourages environmental pollution by
increasing capital in industries that produce carbon dioxide in their production processes (Qu,
Shao, & Shi, 2020).
Green financial inclusion can use carbon dioxide emissions as an indicator in determining the
delivery of capital services to the real sector. Financial inclusion is a vital component in driving
real sector performance. But it also has a big impact on the environment. On the other hand,
financial inclusion can also be used as a tool in developing green economic performance by
increasing paperless transactions, green financing and so on (Zheng & Li, 2022).
Financial services can assist in realizing a green economy by providing capital support services
to industries that are energy efficient or that use renewable energy. Financial inclusion can be a
vital tool in green economy development. Environmental impact is an important indicator in
modern economic development (Zhao, Mahendru, Ma, Rao, & Shang, 2022). Financial inclusion
can help support green economy development. Support for eco-friendly industries can be
provided by the financial industry to encourage the promotion of green economy development
for sustainable economic development. Increasing funding is important in the real sector, where
financial service support for green industries can motivate business people to develop
environmentally friendly industries (Saleem, Nasreen, & Azam, 2022).
To support green economic growth, financial services ought to concentrate on the development
of environmentally friendly and energy efficient technologies. Capital support for green
industries also has an impact on environmentally friendly business strategies for obtaining green
finance funding (Mahmood, Zhao, Lou, & Geng, 2022). As a direct consequence of the
expansion of green financial services, there is a corresponding increase in the demand for eco-
friendly technologies. Naturally, this can encourage expansion and a business climate that is
friendly to the environment. According to Ulucak (2020), the likelihood that other sectors will
participate in the process of developing a green economy and gaining access to green finance
increases with the level of green financial inclusion.
Hypothesis 1: Increasing green financial inclusion can promote green economy development.
The increase in green financial inclusion is accompanied by an increase in the use of
environmentally friendly energy. The use of environmentally friendly energy has an impact on
increasing natural sustainability (Fareed, Rehman, Adebayo, Wang, Ahmad, & Shahzad, 2022).
25
Increasing the green economic climate has an impact on increasing consumption of renewable
and environmentally friendly energy among the public. Banking with increased support for
environmentally friendly industries can actively promote the use of environmentally friendly
energy or energy efficient industries (Khan, Zhang, Kumar, Zavadskas, & Streimikiene, 2020).
Hypothesis 2: Green financial inclusion has an impact on increasing environmentally friendly
energy and increasing the efficiency of energy use which in turn has an impact on green
economic development.
Economic efficiency can be achieved by improving technology and economies of scale as well as
efficient production methods (Rehman Khan, Yu, Sarwat, Godil, Amin, & Shujaat, 2022).
Financial inclusion can encourage efficiency by increasing technology financing and increasing
economies of scale (Mhlanga, 2020). Fossil energy and energy that is not environmentally
friendly can damage the environment and endanger human life. Financial services by providing
financing limits to industries that are not environmentally friendly can hinder the growth of these
industries (Adebayo, 2022).
Limiting the growth of industries that are less environmentally friendly can reduce the increase
in carbon emissions. The use of energy that is less environmentally friendly also has an impact
on soil, water and air pollution. Restrictions on financing in industrial sectors that are less
environmentally friendly have an impact on increasing the motivation of business actors in
developing environmentally friendly industries and ultimately encouraging the development of a
green economy (Shen, Su, Malik, Umar, Khan, & Khan, 2021).
Hypothesis 3: An increase in financing restrictions on industries that are less environmentally
friendly can encourage an increase in green economy performance.
Data And Methodology

This study uses quantitative non-parametric data envelopment analysis (DEA) methods using
robust analysis. We use the following equation:
GEE it = a0 + B1Fitit + B2Insit + B3Egit + B4Crit + B5Feit + B6TOit + B7Mit + B8ISit + eit
GEP = Green Economics Performance
Fit = Total financial inclusion
Ins = Insurance
Eg = Environmental Governance
cr = Credits
Fe = Fiscal Expenditure
TO = Trade Openness
M = Marketing
Is = Industrial Structure
e = term error
i = region 1...to i
t = time series
B = Coefficient
a = autonomus
We conducted research on 48 Asian nations and analyzed data from the World Bank and the
Organization for Economic Co-operation and Development (OECD). This study takes into
account the environment, fiscal spending, the connection between economic growth and
corporatization, corporate competitiveness, industry structure, financing, and insurance. Green
economy performance is measured by the OECD index of the effective use of natural resources
26
and green economy expansion. The significance of insurance is evaluated using OECD trends in
the insurance market. To measure total financial inclusion, we use data from the World Bank. To
gauge environmental governance, we use the World Bank's CO2 emissions (metric tons per
capita). We measure financial inclusion in terms of credit using data from the World Bank and
credit as a percentage of GDP from the domestic financial sector. As the government's strategy
for fostering economic expansion, we employ the final consumption expenditure (percent of
GDP) figure. To assess trade openness, we make use of World Bank trade data. To comprehend
aggregate demand, we make use of the World Bank's final consumption spending (percent
annual growth). Industry Structure is measured by utilizing the World Bank's value added
(percentage of GDP) for construction-related industries. The variables are described in detail in
Table 1.
Table 1. Description of Variable
Variables Description Source
Green Economics Efficient use of natural OECD
Performance resources and green economy
improvement
Total financial inclusion The total number of financial World Bank
inclusion
Insurance insurance market trends OECD
Environmental Governance CO2 emissions (metric tons World Bank
per capita)
Credits Financial sector domestic World Bank
credit (percent of GDP)
Fiscal Expenditure Spending on final World Bank
consumption by the
government (as a percentage
of GDP)
Trade Openness Trade (% of GDP) World Bank
Marketing Final consumption World Bank
27
expenditure (annual %
growth)
Industrial Structure Industry (including World Bank
construction), value added
(% of GDP)
Result and Discussion

In the estimation process, stationary data is needed so that it is necessary to test the stationarity
of the data presented in table 2.
Table 2. Test The Stationarity Of The Data In First Different
Variable PP – Fisher stat. Prob. Description
Green Economics Performance 69.1221 0.0000 Stationer
Total financial inclusion 53.1121 0.0000 Stationer
Insurance 33.0112 0.0007 Stationer
Environmental Governance 54.1233 0.0000 Stationer
Credits 16.3351 0.0000 Stationer
Fiscal Expenditure 29.2113 0.0000 Stationer
Trade Openness 21.2232 0.0000 Stationer
Marketing 13.1231 0.0007 Stationer
Industrial Structure 14.2111 0.0000 Stationer
The test results conclude that all data is stationary on the first difference. We estimate the impact
of the variables Total financial inclusion, Insurance, Environmental Governance, Fiscal
Expenditure, Trade Openness, Marketing, Industrial Structure on Green Economic Performance
which is presented in table 3.
Table 3. Financial Inclusion Impact On Green Economic Performance
Indicators Coefficient
Total financial inclusion 0.006 (0.001)
Insurance 0.005 (0.001)
Environmental Governance 0.278 (0.009)
Credits - 0.049 (0.001)
Fiscal Expenditure -0.038 (0.002)
28
Trade Openness 0.006 (0.001)
Marketing 0.005 (0.001)
Industrial Structure 0.016 (0.009)
N 98
Wald Chi2 18.21
Financial inclusion has the potential to boost green economic growth by 0.006% for every
percent increase in financial inclusion. Likewise insurance. The surprising thing is that credit and
fiscal expenditure actually suppress the green economy performance in Asia. The most important
and key things in developing a green economy are environmental governance and industrial
structure.
Conclusion
Economic development does not ignore environmental sustainability. Economic development
must also be able to minimize the impact of environmental damage. Infrastructure development
surprisingly has a negative impact on green economy development as well as credit. However,
financial inclusion provides optimistic results that have the potential to drive Green economic
development in Asia. The industrial structure that is affected by green financial inclusion also
positively encourages an increase in environmentally friendly economic growth.
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(2021). Agroforestry to achieve global climate adaptation and mitigation targets: Are South
Asian countries sufficiently prepared?. Forests, 12(3), 1-10.
Fan, W., & Hao, Y. (2020). An empirical research on the relationship amongst renewable energy
consumption, economic growth and foreign direct investment in China. Renewable energy,
146 (1), 598-609.
Fareed, Z., Rehman, M. A., Adebayo, T. S., Wang, Y., Ahmad, M., & Shahzad, F. (2022).
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Khan, S. A. R., Zhang, Y., Kumar, A., Zavadskas, E., & Streimikiene, D. (2020). Measuring the
impact of renewable energy, public health expenditure, logistics, and environmental
performance on sustainable economic growth. Sustainable development, 28(4), 833-843.
29
Khoshnava, S. M., Rostami, R., Zin, R. M., Štreimikienė, D., Yousefpour, A., Strielkowski, W.,
& Mardani, A. (2019). Aligning the criteria of green economy (GE) and sustainable
development goals (SDGs) to implement sustainable development. Sustainability, 11(17),
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31
Non-Performing Loans, Bank Size, GDP, Exchange Rates, Inflation,

And Interest Rates In Spain
Murti Sari Dewi1, Nafiatul Hasanah2, Rinna Siti Nur Azizah3, Dashen Allen4, Wempi Aprilla
Maulanasyah Para Wibangga5, Danang Candra Pratama6, Darmaji7
1,2,3
4
University of Birmingham,United Kingdom
5
Faculty of Economics and Business, University of Jember, Indonesia
Abstract
This study looks into how economic factors affect non-performing loans.The European
Central Bank (ECB) is the source of the secondary data used in this study. utilizing
quantitative techniques and the VECM (Vector Error Correction Model). Non-performing
loans (NPL), bank size, GDP, currency rates, inflation, and interest rates are all used in this
study. We found that Non-performing loans in the past have encouraged an increase in
current non-performing loans. Of particular interest is the relationship between bad loans
and GDP. GDP encourages problem loans. However, non-performing loans actually put
pressure on GDP. Likewise, inflation puts pressure on non-performing loans. However,
non-performing loans pushed up inflation. In a similar vein, the exchange rate promotes
non-performing loans; the stronger the currency, the more non-performing loans promote
an expansion of credit. The poorer the currency rate, however, the greater the amount of
non-performing loans. Interest rates encourage problem loans and vice versa. And bank
size has a reciprocal relationship with problem loans.
Keywords: Non-Performing Loans, Bank Size, GDP, Exchange Rates, Inflation, Interest.
JEL Classification: H30, L60, P10.
DOI : 10.54204/TAJI/Vol812023004
Background
One of the industries related to macroeconomics is the banking industry, this is because the
banking industry is very sensitive to the economic conditions of a country. If the economy of a
country is developing, the banking industry can also develop. On the other hand, the economic
condition that is currently experiencing a crisis can have an impact on the banking industry.
Banking has an important role in the economy of a country (Brychko, Bilan, Lyeonov, &
Mentel, 2021).
A bank is a type of financial organization that serves as a bridge between parties with surplus
cash and others who lack it. One source of bank income is interest derived from lending to the
public (Disemadi, 2019). In channeling credit to the public, banks do not rule out credit risk.
Because not all loans granted to customers can be collected on time but there are also loans that
are not smoothly repaid or can be classified as bad credit. Credit risk is the risk that is caused by
the debtor's inability to fulfill his obligations requested by the creditor (Ramadhanti, Marlina, &
Hidayati, 2019).
32
Credit risk to banks is seen from their bad credit. The cause of NPL can be seen from the
weakness of banks in analyzing and supervising credit distribution as well as moral factors
where banks do not apply prudential principles and do not apply unhealthy banking practices
(Diebold & Yilmaz,2015). NPL is one of the indicators in assessing the performance of bank
functions, high NPL shows the low health of the bank because there are still many bad loans in
bank activities. Large bad debts in the banking industry have a wide impact that will harm
banks (Haryanto, Chandrarin, & Bachtiar, 2019). Non-performing loans are influenced by two
factors, namely macroeconomic and microeconomic factors. Macroeconomic factors affecting
non performing loans include growth in the GDP and interest rates. And microeconomic factors
viewed from banking fundamentals include a return to assets (ROA), credit growth, and
allowance for credit losses. Bad credit is credit that can cause problems, not only for banks as
credit providers but also for customers who receive credit (Arham, Salisi, Mohammed, &
Tuyon, 2020).
The foreign exchange market, which is always open 24 hours a day, except on weekends, and is
made up of several sorts of currency dealers, determines exchange rates. Currency exchange
rates are largely influenced by the exchange of capital goods and services in international trade.
The local currency will depreciate, resulting in more expensive imports that will put a strain on
commercial banks' merchant credit financing and raise the chance of default (Shonhadji, 2020).
GDP growth shows an increase in individual income as well as an increase in firms, Therefore,
the credit increases and the impact is that NPLs decrease. Conversely, the decline in GDP
shows that individual income also increases in companies so that the ability to pay the debt
(credit) also decreases and NPLs have increased. The quality of loans declines as interest rates
rise, and it becomes harder for borrowers to repay their debts as credit interest rates rise. Thus it
can be interpreted that the higher the interest charged to debtors, the more likely it will increase
non performing loans. The association between interest rates and non performing loans can also
be explained by the diminished ability of borrowers to fulfill their commitments. Financial
System Stability plays an important role in the economy (Khan, Siddique, & Sarwar, 2020).
The financial system plays a very important role in the economy in line with its function of
channeling funds from parties that have funds (surplus of funds) to parties who need funds (lack
of funds). If the financial system does not work properly, the economy becomes inefficient and
the expected economic growth will not be achieved. Therefore, the sustainability of the
implementation of national development is greatly influenced by the stability and strength of
the financial system (Sugianto, Oemar, Hakim, & Endri, 2020).
The term risk or risk is a loss for the loss of money or other valuables. This is closely related to
business management, where there is a process of forecasting (forecasting) the decision making
that you will do in the future. Good financial risk management is one of the important
components of comprehensive financial planning. Risk is one of the things or elements that
must be present and carefully considered when we are making financial planning. Many things
can happen in life, some have good effects, some are not good. There are those that pose risks
to physical, mental, and so on, others have financial effects (Shaheen, Ağa, Rjoub, & Abualrub,
2020).
Liquidity risk is the risk that occurs when a party cannot pay its maturing obligations in cash
even though that party has an asset that is sufficiently valuable to pay off its obligations, but
when the asset is said to be illiquid. Liquidity is the uncertainty or possibility that the company
will not be able to meet its short-term obligations or unexpected expenses. This risk occurs
when the company is short of cash because all capital is in the form of securities, buildings, etc.
33
This risk creates bankruptcy for the business. Credit risk is the risk that the buyer on credit is
unable to pay the debt (Kaddumia & Al-Kilani, 2020).
Non performing loans are away or a key for a bank to assess whether the bank's function is
working well or not. There are several sorts of bank customers; the first type is a customer who
pays off credit promptly, while the second type is a client who does not pay off credit promptly,
resulting in poor credit. The huge rise in the NPL percentage ratio is a result of bad credit. Non
performing loans or commonly known as NPLs are non performing loans that are one of the
keys to assessing the quality of bank performance (Kartikasary, Marsintauli, Serlawati, &
Laurens, 2020).
Interest rates are indeed a source of bank income which if the bank no longer accepts
installments according to a predetermined period of time, it is feared that this will continue to
worsen the bank's condition. Factors that trigger NPLs in financial institutions (Resmawan,
2021). Many of the factors that often trigger this problem include the impact of a difficult crisis
dimensions that until now have made many of the bank debtors unable to solve their bad credit
problems. Another factor that often triggers this problem is the lack of good faith from the
debtors to immediately resolve this problem. As a result, it is not uncommon for banks or
institutions finances will receive the impact of the condition (Hynes, Trump, Love, & Linkov,
2020).
The high-interest rates often become a heavy burden for debtors to settle their obligations to the
bank, so that they are unable to complete loans according to the agreements that have been
made (Rogoff, 2022). Knowing the ins and outs of what a non-performing loan is, it seems that
it is not enough in the world of banking. To keep the bank in a safe condition, a good
management system really needs to be implemented optimally. Through good management in
various bank operational activities, especially for matters related to credit, will help maintain
the stability of conditions in the bank (Park & Kim, 2020). This study looks into how economic
factors affect non-performing loans in Spain.
Research methods
The European Central Bank (ECB) is the source of the secondary data used in this study.
utilizing quantitative techniques and the VECM (Vector Error Correction Model). Non-
performing loans (NPL), bank size, GDP, currency rates, inflation, and interest rates are all
used in this study with the following equation:
Where:
NPL = Non Performing Loan
GDP = Gross domestic product
INF = Inflation rate
Ir = Interest rate
EX = Exchange rate
BS = Bank Size
ui = Error rate
β0 = Intercept
34
β1, β2, β3, β4, β5 = The independent variable's coefficient value

et = Error Term

Stationary testing needs to be done to ensure there are no problems related to data stationarity
with the stationarity test outcomes shown in table 1.
Table 1. Stationarity Test Results
Level First Different
Prob. Description Prob. Description
NPL 0.1331 not fulfil 0.0000 fulfil
GDP 0.0003 Fulfil 0.0000 fulfil
INF 0.0021 fulfil 0.0000 fulfil
EX 0.2117 not fulfil 0.0000 fulfil
Ir 0.0009 fulfil 0.0000 fulfil
BS 0.2111 not fulfil 0.0000 fulfil
Information: 5% probability
Based on the test results in table 1. There are no problems related to data stationarity.
Determination of the optimum lag is carried out to determine the optimum lag for the most
optimal results of testing the relationship between variables with the test outcomes shown in
table 2.
Table 2. Results of Optimal Lag Test
Lag LR FRE AIC
0 NA 19901212 36.1121
1 278.4711 11121121 29.3211
2 178.2112 10312711 28.1121
3 71.6114 1221142 26.3221
4 33.7627 711221 21.5112*
Note: The lowest AIC value is shown by an asterisk and bold type.
Based on the test results in table no. 2. The optimum lag is at lag 4. It is important to perform a
cointegration test using the test results shown in table 3 in order to determine the use of the
Vector Error Correction Model (VECM).
Table 3. Results of a Cointegration Test
Eigenvalue T- Stat. 0,05 Crit. Value Prob.
None* 0.611211 138.4121 58.7221 0.0000
At most 1* 0.491611 76.15226 46.7222 0.0000
At most 2* 0.491123 49.7726 28.6112 0.0001
At most 3* 0.296524 17.3911 14.3811 0.0021
Information: 5% probability
Since it can be shown from the outcomes of the test in table 3 that the variable displays
cointegration, the VECM test may be run using the test results presented in table 4.
Table 4. VECM Result

NPL GDP INF EX Ir BS
35
NPL 0.841217 0.000211 -0.004112 0.004212 0.017121 0.012711

(0.01121) (0.00109) (0.00241) (0.00779) (0.01227) (0.02322)
[ 3.07211] [ 0.12211] [-0.41512] [ 0.57111] [ 1.26113] [ 0.51171]
GDP -0.691121 0.711132 -0.069171 0.231421 0.042217 -0.372111

(0.39211) (0.01121) (0.06232) (0.17821) (0.17211) (0.64111)
[-1.49211] [ 39.4112] [-0.71278] [ 1.71322] [ 0.11541] [-1.71122]*
INF -0.623113 0.011241 0.672411 0.123211 0.423246 0.291122

(0.29421) (0.01871) (0.05911) (0.14923) (0.13421) (0.51131)
[-1.07932]* [ 1.06921] [ 11.7223] [ 1.05922] [ 2.14114]* [ 0.31212]
EX -0.004117 -0.006913 -0.012271 0.162227 0.025511 0.114412

(0.23249) (0.00662) (0.03351) (0.05262) (0.07129) (0.1424)
[-0.02941] [-1.01833] [-0.41421] [ 13.1472] [ 0.29211] [ 0.82231]
Ir 0.192217 0.004911 0.073411 -0.071765 0.392239 -0.031131

(0.16917) (0.00843) (0.02954) (0.06923) (0.12371) (0.29411)
[ 1.23411] [ 0.47114] [ 1.92211]* [-1.07113] [ 3.65432] [-0.06911]
BS -0.106211 0.004123 -0.014522 -0.104251 -0.108711 -0.029531

(0.10721) (0.00611) (0.01925) (0.04913) (0.06929) (0.19159)
[-1.06931] [ 0.49116] [-1.08711] [-1.95231]* [-1.46628] [-0.15925]
C 6.224112 0.154223 1.190399 -0.197115 -0.921121 5.711212

(2.41179) (0.10491) (0.39928) (1.07582) (1.51149) (3.92614)
[ 3.20531] [ 1.09533] [ 1.72755] [-0.18224] [-0.52424] [ 1.48613]
R-sq. 0.882211 0.881421 0.842411 0.877112 0.821121 0.811268

Adj. R-sq. 0.873311 0.871073 0.837722 0.861192 0.794211 0.804711
Non performing loans in the past had a significant positive impact on current non performing
loans. The interesting thing is the relationship between defaulted loans and GDP. GDP
encourages non performing loans. However, non performing loans alone depress GDP.
Likewise, inflation put pressure on non performing loans. However, non performing loans
encourage inflation. In a similar vein, the exchange rate promotes defaulted loans; the stronger
the currency, the more non performing loans support credit expansion. The poorer the currency
rate, however, the greater the amount of defaulted loans. Interest rates and defaulted loans are
strongly correlated with one another. Additionally, non performing loans and bank size are
inversely correlated.
Conclusion
The number of current defaulted loans has increased as a result of defaulted loans in the past. Of
particular interest is the relationship between bad loans and GDP. GDP encourages problem
loans. However, non performing loans actually put pressure on GDP. Likewise, inflation puts
pressure on non performing loans. However, non performing loans pushed up inflation. In a
36
similar vein, the exchange rate promotes defaulted loans; the stronger the currency, the more non
performing loans promote an expansion of credit. The poorer the currency rate, however, the
greater the amount of defaulted loans. Interest rates encourage problem loans and vice versa.
And bank size has a reciprocal relationship with problem loans.
References
Arham, N., Salisi, M. S., Mohammed, R. U., & Tuyon, J. (2020). Impact of macroeconomic
cyclical indicators and country governance on bank non performing loans in Emerging
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Implementation Of Prudential Principles. Diponegoro Law Review, 4(2), 194-208.
Haryanto, S., Chandrarin, G., & Bachtiar, Y. (2019). Bank Size, Risk and Market Discipline
with A Deposit Insurance: Evidence of Banking in Indonesia. AFRE (Accounting and
Financial Review), 2(2), 81-90.
Hynes, W., Trump, B., Love, P., & Linkov, I. (2020). Bouncing forward: a resilience approach
to dealing with COVID-19 and future systemic shocks. Environment Systems and
Decisions, 40(1), 174-184.
Kaddumia, T., & Al-Kilani, Q. (2020). The effect of liquidity risk management on the
Jordanian financial sector–the proxy of commercial banks. International Journal of
Innovation, Creativity and Change, 14(1), 240-253.
Kartikasary, M., Marsintauli, F., Serlawati, E., & Laurens, S. (2020). Factors affecting the non
performing loans in Indonesia. Accounting, 6(2), 97-106.
Khan, M. A., Siddique, A., & Sarwar, Z. (2020). Determinants of non performing loans in the
banking sector in developing state. Asian Journal of Accounting Research, 5(1), 135-145.
Park, H., & Kim, J. D. (2020). Transition towards green banking: role of financial regulators
and financial institutions. Asian Journal of Sustainability and Social Responsibility, 5(1),
1-25.
Ramadhanti, C., Marlina, M., & Hidayati, S. (2019). The effect capital adequacy, liquidity and
credit risk to profitability of commercial banks. Journal of Economics, Business, and
Government Challenges, 2(1), 71-78.
Resmawan, H. (2021). The Effect of Non-Performing Loan and Loan to Deposit Ratio on
Return on Assets at PT. Bank Mandiri, Tbk Period 2011-2020. Kontigensi: Jurnal Ilmiah
Manajemen, 9(1), 42-50.
Rogoff, K. (2022). Emerging Market Sovereign Debt in the Aftermath of the Pandemic. Journal
of Economic Perspectives, 36(4), 147-66.
Shaheen, R., Ağa, M., Rjoub, H., & Abualrub, A. (2020). Investigation of the pillars of
sustainability risk management as an extension of enterprise risk management on
palestinian insurance firms’ profitability. Sustainability, 12(11), 1-10.
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Shonhadji, N. (2020). What Most Influence on Non-Performing Loan in Indonesia? Bank

Accounting Perspective with Mars Analysis. Journal of Accounting and Strategic
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banking sector: Random effects model. International Journal of Innovation, Creativity and
Change, 12(8), 208-218.
38
The Connection Between Tax Revenue And Paid Tax In Australia

Sekar Arum Kinasih1, Yanu Antika Ningsih2, Yuda Agus Setiawan3, Muhammad Khairun
Ikhsan4, Devi Dwi Sasmita5, Didin Arifianto6, Dita Mei Anggorowati7, Dwi Agus Priyono8
1,2,3,5,6,7,8
4
Abstract
This study seeks to determine how the contribution of the Paid tax affected the growth or
decline of Australia's government tax revenue. This analysis utilizes secondary data, which
consist of annual time series from 2001 to 2021 for all cross-section variables. This
research utilizes data acquired by the World Bank. This study examines the Taxes on
income, profits, and capital gains variables. Credit extended by the monetary sector to the
private sector, Claims on the central government, the ratio of bank liquid reserves to bank
assets, and tax revenue. Other than increases in Monetary sector credit to the private sector,
taxes on income, profits, and capital gains and the ratio of bank liquid reserves to bank
assets frequently have positive effects on other variables. Claims against the government,
with the exception of Tax revenue, which has a negative effect on other variables, this
indicates that Government tax revenue does have connections to the other variables.
Keywords: Paid tax, Tax revenue, Australia.

JEL Classification: A10, I20 , I32.
DOI : 10.54204/TAJI/Vol812023005
Introduction
In comparison to firms operating under the standard tax regime, those who choose the simplified
tax regime will manage their income less., resulting in an increase in accounting income. In
addition, firms subject to the standard tax system are discovered to use accruals of book-tax on
increase taxable earnings while diminishing accounting-only gains, which impacts reporting
objectives. The evidence supports the hypothesis that a rise in tax compliance will increase
earnings management. These findings have implications for tax policy, suggesting that tax
compliance should not be increased (Pais & Dias, 2022). However, From the findings of a study
regarding corporate tax management throughout the COVID-19 pandemic, corporations
intensified their tax avoidance tactics in reaction to the problem. This shows that during the
pandemic, financially strapped enterprises prioritized survival and engaged in higher levels of
tax dodging. These findings run counter to the notion that increased worries about reputation and
social responsibility would reduce tax evasion. These assure The importance of governance
effectiveness in reducing tax evasion, particularly during challenging times (Athira & Ramesh,
2023).
39
Implications of R&D tax credits on multinational corporations' (MNCs) R&D investment

behavior. The aggregate impact of tax rebates on total R&D expenditure is found to be minimal
and statistically negligible, showing that tax breaks cause MNEs to relocate rather than raise
their total R&D investments. This has significant policy consequences, including the necessity
for jurisdictional coordination to avoid beggar-thy-neighbor effects and casting doubt on the
usefulness of these incentives in tackling MNE R&D underinvestment (Knoll et al., 2021).
The function of the corporate headquarters (HQ) business units (BU) in lowering tax and tariff
payments through transfer pricing in multinational corporations (MNCs). The data imply that,
despite the lack of explicit incentives, BUs make greater contributions planning for income tax
and tariffs than HOs, demonstrating the benefits of delegating decision powers. BUs strategically
relocate trade expenses to higher tax nations without modifying transfer prices, resulting in
significant tax savings. (Kohlhase & Wielhouwer, 2022).
The relationship between anomalous changes in deferred tax assets and anticipated earnings was
moderated by governance, audit quality, and analyst professional competency. Companies with
lower levels of corporate governance, audit quality, and non-star analysts experienced a greater
impact than companies with higher Corporate governance standards, auditing standards, and
non-star analysts. Notably, anomalous adjustments to the impact of deferred tax liabilities on
analyst earnings projections was insignificant. (Xue, 2022). Population density, total net property
base, and served population have a substantial impact on the efficacy of tax agency
administration, as determined by the lower ground. The presence of a specialized tax collection
agency that governs itself also had a significant impact on provincial authorities (Belmonte-
Martin et al., 2021).
The efficacy of the improved forecasts by outperforming benchmark models and closely aligning
with actual revenue outcomes. The effectiveness of the model is a result of the combination of
monthly tax variables and carefully chosen macroeconomic indicators (Lahiri & Yang, 2022).
The prospective macroeconomic effects of proposed reforms in the European Union (EU)
concerning The consolidation of tax revenue reporting and harmonization of business tax bases.
Prior impact assessments lacked country-specific tax compliance cost estimates, which varied
from nation to nation due to institutional differences. countries with less expensive compliance at
baseline would more people will profit from the reforms, implying that countries with high
compliance costs may want to improve their tax systems to maximize the benefits. Furthermore,
countries with a significant immigrant population direct investments would be more receptive to
the reforms, as reduced compliance costs would encourage multinational corporations to invest
more in their foreign subsidiaries (Barrios et al., 2020).
Literature Review
Australia has a positive relationship between governance and Dividend Reinvestment Plans
(DRPs). The findings indicate that a rise in share price is the result of sound governance that
40
considers diverse clientele demands for dividend policy (Shamsabadi et al., 2021). Contrary to
the expectations of conventional governance theory of corporations, increasing the cash flow the
privileges of major stockholders via tax cuts on dividends does not necessarily diminish their
motivation to take possession of the assets of minority investors. Despite a moderate increase in
after-tax cash flow privileges resulting from dividend tax cuts, the findings indicate that large
investors are not particularly sensitive to variations in cash flow rights (H. Liu, 2021).
During the pandemic years, Increased COVID-19 rates of mortality have greatly increased
probability of internal conflict. The effect was primarily observed in civil disorder, while
terrorism and civil war danger was unaffected (Farzanegan & Gholipour, 2023). In addition to
these facts, countries with minimal tax motivation, where individuals justify avoidance of taxes,
have a higher incidence of roundtripping than nations with a higher tax morale. When tax
savings are more desirable, investors are more likely to commit tax evasion through
roundtripping (Kemme et al., 2020). corporate executives would contribute to a greater
comprehension of managerial strategies and responses to pressure from policymakers regarding
tax avoidance (Jones et al., 2018).
The economic impacts of tax credit scores on the innovation financing decisions of corporations.
Higher tax credit scores have a positive effect on companies, resulting in increased investment in
innovation, according to the findings. This positive effect is due to three primary factors:
enhanced identification of R&D projects, alleviation of financial constraints, and reduction of the
principal-agent problem (Yu & Fang, 2022). On the other hand, China's anti-corruption
campaign, as evidenced by investor reactions on the Chengtou bond market, may have positive
economic value by promoting more efficient capital allocation through differentiated funding
costs between corrupt and less corrupt places (Ang et al., 2023).
Governments that are more effective contribute to greater fiscal sustainability. Improved
efficiency enables governments to produce the same amount with fewer resources, resulting in a
healthier fiscal balance. Maintaining fiscal viability requires rationalizing public expenditures
without compromising the supply of public goods and services. This demonstrates the
significance of efficient public administration in enhancing the delivery of public products and
services while limiting government spending (Afonso & Alves, 2023). Therefore, fiscal policy
becomes more ambiguous during periods of elevated government debt, which may result in
counterproductive outcomes and debt crises. Understanding the effects of government debt's risk
premium is crucial for identifying and quantifying fiscal policy's properties (Y. Liu, 2023).
Following the emergence of the virus, Japanese ten-year inflation expectations deteriorated
further, traveling toward zero in 2020 and 2021. The study reveals during pronouncements of
monetary as well as changes in fiscal policy and activity restrictions, adjustments in long-term
inflation expectations were typically moderate and frequently negative. These findings imply that
Japan's long-term inflation expectations were mainly insensitive to policy efforts (Christensen &
Spiegel, 2023). The significance of heterogeneity in the financial sector, with changes in
41
systemic risk being primarily driven by large intermediaries and their diverse risk-taking
behaviors (Coimbra et al., 2022).
US monetary policy have significant effects on both growth rates and interest rates on loans.
These repercussions persisted even after accounting for adjustments in domestic monetary policy
and domestic income expansion, indicating the existence of international policy transmission
channels beyond interest-rate transmission and revenue-sensitive trade flows. These results are in
conformity with hypothesis that United States monetary policy affects lending activity of Asian
banks by influencing their funding conditions. In addition, we discovered that the US monetary
policy has a greater impact when US monetary policy changes are isolated from economic
conditions and when Emerging Market banks are the focus (Lee & Bowdler, 2022).
H1: Tax evation impact on government tax income
Research Method
The study is a kind of quantitative study using the estimate of VAR (Vector Autoregression).
Secondary data are the sort of this research employs a time series for its data. from 2001 to 2021.
The research will investigate the relationship between Taxes on income, profits and capital gains,
Monetary Sector credit in the private sector central government claims, Bank assets to liquid
reserves ratio against Australia’s Tax revenue using World Bank data sources. The following is
the model we used in this study:
TIPCt = β0 + β1MSPCt + β2CCGt + β3BLBSt + β4TRt + et eql 1
MSPCt = β0 + β1TIPCt + β2CCGt + β3BLBSt + β4TRt + et eql 2
CCGt = β0 + β1TIPCt + β2MSPCt + β3BLBSt + β4TRt + et eql 3
BLBSt = β0 + β1TIPCt + β2MSPCt + β3CCGt + β4TRt + et eql 4
TRt = β0 + β1TIPCt + β2MSPCt + β3CCGt + β4BLBSt + et eql 5
Description:
TIPC : Taxes on income, profits and capital gains
MSPC : Monetary Sector credit to private sector
CCG : Claims on central government
BLBS : Bank liquid reserves to bank assets ratio
TR : Tax revenue
β : the magnitude of the effect of causality
e = Error term
t = Time period
eql: equation
Table 1. Variable Description

Variable Explanation Data type Source
Taxes on income, profits Individuals' actual or Percent World Bank
and capital gains presumed net income,
corporate and business
42
profits, and realized or

unrealized capital gains
on land, securities, and
other assets are subject
to income, profit, and
capital gains taxation.
Internal payments are
eliminated through
consolidation.
Monetary Sector credit Domestic credit to the Percent World Bank
to private sector private sector refers to
financial resources
delivered to the private
sector that generate a
payback obligation,
such as loans,
acquisitions of non-
equity securities, trade
credits, and other
accounts receivable.
Credit to government-
owned firms is one of
some countries' claims.
Claims on central Claims against the Percent World Bank
government central government (IFS
lines 52AN and 32AN)
indicate net loans to
central government
agencies.
Bank liquid reserves to The bank liquid reserve- Percent World Bank
bank assets ratio to-asset ratio compares
claims on other
governments, non-
financial public
enterprises, the private
sector, and other banks
to domestic currency
holdings and deposits
with monetary
authorities.
Tax revenue The word tax revenue Percent World Bank
refers to mandated
transfers to the central
government for use in
the public sector.
Certain mandatory
43
transfers, such as fines

and penalties, as well as
the predominance of
social security
payments, are not
included. Negative
revenue includes
refunds and adjustments
for erroneously received
tax revenues.

Before conducting additional tests, it is necessary to ascertain the stationarity of the data. This is
done to determine whether or not the data stored is constant or not. Table 2 displays the
outcomes of the tests.
Table 2. Root Test Results
Variabel Unit Root Statistics for the Probability Description
Augmented
Dickey Fuller
Taxes on Level -3.667951 0.0154 Stationary
income, profits
First Different -5.238724 0.0006 Stationary
and capital
gains (TIPC)
Monetary Sector Level -2.404884 0.1529 Not Stationary
credit to private
First Different 0.0350 Stationary
sector (MSPC) -3.213391
Claims on Level 4.901687 1.0000 Not Stationary
central
First Different 0.879067 0.9925 Not Stationary
government
(CCG)
Bank liquid Level 9.482452 1.0000 Not Stationary
reserves to bank
First Different 5.314919 1.0000 Not Stationary
assets ratio
(BLBS)
Tax revenue Level -1.519105 Not Stationary
0.5026
(TR)
First Different -3.728254 0.0124 Stationary
*the limit value used at the significance level of 0.05
Based on the findings shown on Table 2. The fact that TIPC, MSPC, CCG, BLBS and TR
stationary data are not at the same level, so that the first differencing is put into action. The
44
results of the first differencing show that the data is stationary with a probability value < 0.05.
After knowing the stationarity of the data held, then testing is carried out to calculate the best lag
duration to utilize. The method used determining the optimal lag duration LogL, LR, FPE, AIC.
The smaller the value of LogL, LR, FPE, AIC, the lag is the most optimum lag. The outcomes of
the test are shown on table 3
Table 3. Maximum Lag Test

Lag LogL LR FPE AIC
0 -171.5257 NA 227.0455 19.61396
1 -128.8498 56.90117* 36.34270* 17.64998*
Table 3. Shows the optimum lag testing of the VAR model using the LogL, LR, FPE, AIC,
criteria. Based on these results, it is known that the optimum model is found in Lag 1 because the
LogL, LR, FPE, AIC, values in Lag 1 are the smallest compared to other Lags.
Table 4. Cointegration Test

Hypothesized at Eigenvalue Trace Statistic 0.05 Critical Probability
Most Value
None 0.911735 98.07793 69.81889 0.0001
1 0.736454 51.95719 47.85613 0.0196
2 0.654883 26.62018 29.79707 0.1113
3 0.284908 6.406607 15.49471 0.6475
4 0.001845 0.035081 3.841466 0.8514
*Trace test indicates 2 cointegrating eqn(s) at the 0.05 level
According to cointegration analysis on Table 4. According to the trace test, there is one
significant cointegration at the 5% threshold of significance with evidence that there is 1
probability
Table 5. VECM Estimation Results

D(TIPCT) D(MSPCT) D(CCGT) D(BLBST) D(TRT)
D(TIPCT(-
1)) 0.570595 -0.697296 -0.061045 0.203985 0.193894
(0.21291) (0.97283) (0.25110) (0.34906) (0.23211)
[ 2.68004] [-0.71677] [-0.24311] [ 0.58438] [ 0.83536]
D(MSPCT(-1)) -0.151452 0.565476 -0.044482 0.089113 -0.005747

(0.06269) (0.28645) (0.07394) (0.10278) (0.06834)
[-2.41589] [ 1.97409] [-0.60162] [ 0.86701] [-0.08409]
D(CCGT(-
1)) 0.786570 -2.201218 -0.194663 0.427481 0.337580
45
(0.28807) (1.31630) (0.33976) (0.47231) (0.31406)

[ 2.73044] [-1.67227] [-0.57295] [ 0.90509] [ 1.07490]
D(BLBST(-1)) 2.513713 -2.468482 0.065460 3.300314 1.075722

(0.53418) (2.44084) (0.63002) (0.87581) (0.58236)
[ 4.70572] [-1.01132] [ 0.10390] [ 3.76831] [ 1.84717]
D(TRT(-1)) -0.028447 -0.047455 -0.162297 -0.904380 0.030962

(0.30592) (1.39782) (0.36080) (0.50156) (0.33351)
[-0.09299] [-0.03395] [-0.44983] [-1.80314] [ 0.09284]
C -0.230312 2.334412 0.956050 -0.278077 -0.332113

(0.29553) (1.35038) (0.34855) (0.48453) (0.32219)
[-0.77931] [ 1.72871] [ 2.74292] [-0.57391] [-1.03081]
Based on Table 5. We can see that the connection between TIPCT and TIPCT is substantially
higher positive with 2.68004of t-statistic and 0.570595 of coefficient, TIPCT and MSPCT have a
substantial link negative with -0.71677 of t-statistic and -0.697296 of coefficient, TIPCT and
CCGT have a substantial link negative Having -0.061045 of coefficient and -0.24311 of t-
statistic. With 0.203985 of coefficient and 0.58438 of t-statistic, the link between TIPCT and
BLBST is statistically positive, TIPCT and TRT have a substantially positive with 0.83536 of t-
statistic and 0.193894 of coefficient, that is to say higher TIPCT will encourage positive BLBST
and TRT, but high TIPCT will cause a decline on MSPCT and CCGT in short-term.
MSPCT and TIPCT have a substantial negative association, with -0.151452 of coefficient and -
2.41589 of t-statistic, MSPCT and MSPCT have a substantially positve connection, with
0.565476 of coefficient and 1.97409 of t-statistic, a significant negative relationship between
MSPCT and CCGT with -0.044482 of coefficient and -0.60162 of t-statistic, MSPCT and
BLBST have a significant positive connection, with 0.203985 of coefficient and 0.58438 of t-
statistic, MSPCT and TRT have a substantial negative connection, with -0.005747 of coefficient
and -0.08409 of t-statistic, which means that high MSPCT will cause a decrease in TIPCT,
CCGT and TRT, in the other side an increases indicated on MSPCT itself and BLBST.
The CCGT-TIPCT association is positive, with 0.786570 of coefficient and 2.73044 of t-statistic,
With -2.201218 of coefficient and -1.67227 of t-statistic, the association between CCGT and
MSPCT is substantial on negative, The CCGT - CCGT association is noticeably negative, with -
0.194663 of coefficient and -0.57295 of t-statistic, With 0.427481 of coefficient and 0.90509 of
t-statistic, the association between CCGT and BLBST is substantially positive, The CCGT- TRT
association is positive, with 0.337580 of coefficient and 1.07490 of t-statistic, which means that
CCGT will encourage TIPCT, BLBST and TRT, CCGT will lead MSPCT and CCGT itself to a
decline in the short term.
With 2.513713 of coefficient and 4.70572 of t-statistic, the association between BLBST and
TIPCT is noticeably positive, With -2.468482 of coefficient and -1.01132 of t-statistic, the
46
association between BLBST and MSPCT is substantially negative, With 0.065460 of coefficient
and 0.10390 of t-statistic, the association between BLBST and CCGT is substantial positive,
BLBST and BLBST have a substantial positive association, with 3.300314 of coefficient and
3.76831 of t-statistic, BLBST and TRT have a substantial positive association, with 1.075722 of
coefficient and 1.84717 of t-statistic, which means that BLBST will cause a decrease on
MSPCT, on the other side TIPCT, CCGT, BLBST, and TRT increases in the short term.
The TRT-TIPCT association is negative, with -0.028447 of coefficient and -0.09299 of t-
statistic, With-0.047455 of coefficient and -0.03395 of t-statistic, the association between TRT
and MSPCT is substantial on negative, The TRT-CCGT association is noticeably negative, with
-0.162297 of coefficient and -0.44983 of t-statistic, With -0.904380 of coefficient and -1.80314
of t-statistic, the association between TRT and BLBST is substantial negative, The TRT - TRT
association is positive, with 0.030962 of coefficient and 0.09284 of t-statistic, which means that
TRT will cause a decrease on TIPCT, MSPCT, and CCGT, and an increases on TRT itself in the
short run.
Conclusion
In conclusion, the analysis emphasizes the intricate interaction between these variables. In
general, increases in Taxes on income, profits and capital gains and Bank liquid reserves to bank
assets ratio have positive effects on a number of variables, whereas increases in Monetary Sector
credit to private sector, Claims on central government, and Tax revenue tend to have negative
effects on other variables. These associations provide significant insight into the short-term
dynamics of these variables connections.
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48
The Negative Impact of Interest Rates on GDP, Consumption and

Investment in the UK: Does Islamic Finance Offer a Solution?
Dashen Allen1, Bambang Hadi Prabowo2
1
University of Birmingham
2
Abstract
The objective of this study is to analyze the causal relationship between interest rates and
the real sector, namely in terms of real GDP, consumption, and investment. By doing so,
we intend to assess the impact of Islamic financing on the economy of the United
Kingdom. This study adopts a macroeconomic framework to analyze the significance of
Islamic financing in the United Kingdom, focusing on macroeconomic data and it employs
a humanistic method to explore the economic behaviour of individuals. This research has
implications for understanding Islamic finance in the UK by understanding the causal
relationship between macroeconomic indicators and humanistic factors, namely Islam.
Vector analysis is used to measure and analyze the influence between variables so that the
direction of influence between interest rates, GDP, investment, and consumption can be
known. The impact of interest rates on the real sector is notably adverse, as seen by the
correlation between interest rates and both consumption and GDP. Based on an inverse
correlation, it may be inferred that the implementation of an Islamic financial system
characterized by zero interest rates or the absence of interest on capital has the potential to
stimulate growth in the real economy.
Keywords: Interest Rates on GDP, Consumption, Investment, Islamic Finance.

DOI : 10.54204/TAJI/Vol812023006
Introduction
Can the Islamic financial system improve economic prosperity? This is an important question for
many countries, especially those with large or significant Muslim populations, such as the UK
(Ainin, Feizollah, Anuar, & Abdullah, 2020). Islamic finance is a financial system based on
sharia principles, namely Islamic law that regulates all aspects of human life. Islamic finance
prohibits practices such as riba (interest), gharar (uncertainty), maysir (speculation), and haram
(forbidden). Islamic finance also emphasizes the importance of justice, welfare and social
responsibility in financial transactions (Fanshurna, 2022 ; Damayanti & Rusminingsih, 2020).
The Islamic financial system in England has developed since the 1980s and has become one of
the largest Islamic financial centers in the world. The UK has a large and diverse Muslim
population, who seek financial products and services that comply with Islamic principles. In
addition, the Islamic financial system also attracts interest from non-Muslims who appreciate the
49
ethical and social values offered by this system. The British government provides support and
facilities for the Islamic finance industry to develop in this country. Some examples of flexible
regulations are legal recognition of sharia contracts, tax exemptions for Islamic financial
products, and setting accounting and audit standards for Islamic financial institutions. The
Islamic finance industry in the UK continues to innovate and compete with the conventional
finance industry (Hanieh, 2020).
Islamic finance has grown rapidly in recent decades, both in scale and diversity of products and
services. According to the World Islamic Banking Competitiveness Report 2020, global Islamic
banking assets reached $2.2 trillion at the end of 2019, with annual growth of 11.4%. In addition,
there are more than 1,400 Islamic financial institutions operating in more than 80 countries,
including non-Muslim countries such as the UK, Germany and the United States (Alshater,
Khan, Hassan, & Paltrinieri, 2023).
The theory of aggregate demand and aggregate supply (AD-AS) in macroeconomics explains the
relationship between interest rates, GDP, consumption, and investment in the goods market and
money market. This theory can also be used to analyze the impact of monetary policy on the real
sector. Within the framework of AD-AS theory, the aggregate demand (AD) curve illustrates the
comprehensive level of demand for products and services within an economy across different
price levels. The negative slope of the aggregate demand (AD) curve may be attributed to many
factors, including the interest impact, exchange rate effect, and wealth effect. The interest effect
posits that an increase in the price level leads to a corresponding increase in real interest rates,
resulting in a decrease in demand for investment and consumption. The exchange rate effect
states that when the price level rises, the exchange rate of the domestic currency also rises,
thereby reducing the demand for exports and increasing the demand for imports. The wealth
effect states that when the price level rises, the real value of wealth also falls, thereby reducing
the demand for consumption (Yoshino, Gopakumar, Paramanik, Taghizadeh-Hesary, Revilla, &
Ram, 2022).
The AS curve shows the total quantity supplied of goods and services in an economy at various
price levels. The AS curve has a positive slope due to the effects of production costs, inflation
expectations effects, and profit effects. The production cost effect states that when the price level
rises, production costs also rise, thereby reducing the amount of output offered by producers. The
inflation expectations effect states that when the price level rises, inflation expectations also rise,
thereby increasing nominal wage costs and the cost of capital. The profit effect states that when
the price level rises, the real profits of producers also rise, thereby increasing the amount of
output supplied by producers (Clemens, 2021).
The application of the AD-AS theory allows for the investigation of the impact of interest rates
on the real sector via the use of vector analysis. Vector analysis is a statistical method that can
measure and analyze causal relationships between macroeconomic variables. By using vector
analysis, we can determine the direction and magnitude of the influence of interest rates on GDP,
consumption, and investment. The findings of the vector analysis indicate a notable adverse
50
impact of interest rates on the real sector. This is evident from the observed direction of the
effect exerted by interest rates on both consumption and GDP (Hansi, 2023).
AD-AS theory can also be used to examine the role of Islamic finance in the UK using a
humanistic approach. A humanistic approach is an approach that pays attention to human aspects
as economic actors, such as values, beliefs, and motivation. By using a humanistic approach, it
can be understood how Islamic finance can influence the economic behavior of British society,
which is predominantly Muslim. Islamic finance is a financial system based on Sharia principles,
such as the prohibition of riba (interest), gharar (uncertainty), and maysir (speculation). With the
existence of Islamic finance, British people who are Muslim can meet their financial needs
without violating the teachings of their religion. By using AD-AS theory and a humanistic
approach, this research can provide implications for understanding Islamic finance in the UK by
understanding the causal relationship between macroeconomic indicators and humanistic factors,
namely Islam. With a negative direction of relationship, The deduction may be made that the
implementation of an Islamic financial system characterized by the absence of interest rates or
interest on capital has the potential to stimulate growth in the real economy (Bruni & Milbank,
2019).
AD-AS theory was chosen as a theoretical framework because this theory is relevant to the
research topic and can explain macroeconomic phenomena well. This theory also has sufficient
depth to analyze research variables and test research hypotheses. This theory is appropriate to the
research context because England is a country that has a conventional financial system and
Islamic finance. This theory moreover makes a scholarly contribution to the advancement of
scientific knowledge as it effectively combines macroeconomic and humanistic viewpoints to
comprehend the function of Islamic financing inside the UK (Girdzijauskas, Streimikiene,
Griesiene, Mikalauskiene, & Kyriakopoulos, 2022).
Although many studies have examined the impact of the Islamic financial system on
macroeconomics, few have examined the direction of influence between these variables. Apart
from that, there has been no research that uses a humanistic approach to understand the human
aspect as an economic actor in the Islamic financial system. Therefore, the problem of this
research is: What is the direction of influence between interest rates, GDP, investment and
consumption in the context of the Islamic financial system in the UK? And how do humanistic
factors, namely Islam, influence this relationship?
The aim of this research is to examine the direction of influence between interest rates, GDP,
investment and consumption in the context of the Islamic financial system in the UK using
vector analysis. This research also uses a humanistic approach to understand human aspects as
economic actors in the Islamic financial system. This research has significance in understanding
the role of the Islamic financial system in the UK through macroeconomic indicators and
humanistic factors, namely Islam.
This paper consists of five parts. The first part is the introduction, which introduces the research
topic, provides research background, formulates the research problem, states the aim and
significance of the research, and provides an overview of the structure of the paper. The second
51
part is a literature review, which discusses related literature on the Islamic financial system,
macroeconomic indicators, and humanistic approaches in Islamic economics. The third part is
research methodology, which explains the research design, data and data sources, data analysis
techniques, and testing model assumptions. The fourth section is the results and discussion,
which presents and analyzes the results of vector analysis between research variables. The fifth
section is conclusions and suggestions, which summarizes research findings, concludes answers
to research problems, and provides suggestions for further research.
Literature Review
Islamic economics is a branch of economics that studies the economic aspects of Islam and its
ethical and moral principles. It aims to promote social justice, human welfare, and economic
development in accordance with the teachings of Islam. Islamic finance and economics is a field
related to the application of sharia principles in financial and economic activities. Sharia
principles prohibit interest, speculation, injustice, environmental damage and unethical business.
Islamic finance and economics offer an alternative that is equity-based, asset-oriented,
sustainable, environmentally and socially friendly, as well as inclusive and fair (Furqani, Adnan,
& Mulyany, 2020).
Islamic finance includes various sharia-compliant products and services, such as sharia banking,
sharia capital markets, Sukuk (shariah bonds), Takaful (sharia insurance), sharia microfinance,
zakat (welfare tax), waqf (land donation) and others (Alzahrani, 2019). Islamic finance has
grown rapidly in the last decade, with global assets reaching around US$2 trillion in 2020.
Islamic finance is not only in demand by Muslim-majority countries, but also by non-Muslim
countries looking to diversify their portfolios and attract investors sharia. Islamic economics is a
science that studies how humans manage limited resources in accordance with Islamic values.
Islamic economics emphasizes the importance of balance between individual and collective
interests, between this world and the hereafter, and between material and spiritual. Islamic
economics also encourages cooperation, prosperity, justice, efficiency and equitable growth
(Demirdöğen, 2021).
Islamic finance and economics have the potential to help solve various problems facing the
world today, such as poverty, inequality, unemployment, financial crises, climate change and
social instability. By connecting the financial sector with the real sector, Islamic finance can
support productive and inclusive economic development. By using profit sharing schemes,
Islamic finance can encourage better risk management and social solidarity. By applying ethical
principles, Islamic finance can increase the social and environmental responsibility of financial
actors (AbdulKareem, AbdulGaniyy, Mahmud, & Yazid, 2020).
Islamic monetary economics is a branch of Islamic economics that studies the role of money,
monetary policy, and financial institutions in an economic system that complies with Sharia
principles. One of the important characteristics of the Islamic economic system is the elimination
of interest from the financial system. Therefore, under the Islamic economic system, monetary
policy must rely on other tools (Rafay & Farid, 2019).
52
Islamic economics is one of the newest branches of knowledge originating from the Islamic
intellectual tradition. Islamic economics aims to achieve holistic human welfare, based on moral
and ethical values originating from revelation and rationality. However, Islamic economics also
faces challenges and controversies in defining, developing and applying its concepts in the
context of a pluralistic and dynamic modern world. One of these challenges is how to integrate a
humanist approach in Islamic economics. The humanist approach is a view that emphasizes the
dignity, potential and freedom of humans as intelligent and moral creatures. The humanist
approach also values diversity, creativity and human participation in building a just and
harmonious society (Adinugraha & Muhtarom, 2021).
A humanist approach can make a positive contribution to Islamic economics in several ways.
First, a humanist approach can help expand the scope and depth of understanding of human
welfare in Islam. Human welfare in Islam does not only include material aspects, but also
spiritual, psychological, intellectual, social and environmental. A humanist approach can help
identify and measure indicators of human welfare that are in accordance with Islamic views.
Second, a humanist approach can help balance human rights and obligations in Islamic
economics. Human rights in Islamic economics include the right to own, acquire, use and
distribute resources fairly and efficiently (Susamto, 2020).
Human obligations in Islamic economics include the obligation to carry out sharia, pay zakat,
give charity, give alms, protect the environment, and contribute to the progress of the people. A
humanist approach can help emphasize that human rights and obligations are interrelated and
mutually reinforcing (Achmad, 2022). Third, a humanist approach can help increase human
participation and cooperation in the Islamic economy. Human participation and cooperation in
the Islamic economy can be carried out through various institutions and mechanisms, such as
markets, companies, banks, cooperatives, waqf, baitul mal, etc. A humanist approach can help
ensure that these institutions and mechanisms function in a transparent, accountable, inclusive
and responsive manner to human needs and aspirations (Anggadwita, Dana, Ramadani, &
Ramadan, 2021). Thus, a humanist approach to Islamic economics can provide benefits for the
development of economic knowledge and practices that are in accordance with Islamic values. A
humanist approach can also provide an alternative to the conventional economic paradigm which
is dominated by utilitarianism and materialism. A humanist approach to Islamic economics can
be one way to realize the Islamic vision of a society that is physically and mentally prosperous
(Ahyani & Slamet, 2021).
Hypothesis 1: Interest rates have a positive influence on GDP in the Islamic financial system in
the UK.
Interest rates are one of the important factors that influence savings and investment levels. The
interest rate is defined as the cost of borrowing or the profit of borrowing (Lian, Ma, & Wang,
2019). However, according to Islamic teachings, usury or earning interest on savings or
investments is haram, and therefore, many Muslims try to avoid earning income from interest
rates. Therefore, the aim of this article is to assess the influence of these religious guidelines on
53
the financial decisions of residents of Islamic countries and their impact on savings and
investments (Gani, 2020 ; Prabowo, Sulisnaningrum, & Harnani, 2021).
Hypothesis 2: Investment has a positive influence on consumption in the Islamic financial

system in the UK.
The Islamic financial system is based on sharia principles which prohibit usury (interest), gharar
(uncertainty), and maysir (speculation). This system emphasizes the importance of justice,
prosperity and sustainable economic growth. Investments in the Islamic financial system are
carried out through various instruments such as mudharabah (profit sharing), musharakah (joint
venture), murabahah (cost plus), ijara (leasing), and sukuk (Islamic bonds) contracts (Kuyateh,
2022). These instruments connect investors and entrepreneurs directly, thereby minimizing moral
risk and adverse selection. Investments in the Islamic financial system also have positive social
and environmental impacts, because they must comply with the criteria of halal (permissible) and
toyyib (good). This encourages investment in sectors that benefit society and the environment,
such as education, health, renewable energy and infrastructure. Consumption in the Islamic
financial system is influenced by factors such as income, inflation, savings, state expenditure,
and remittances (Utomo, Sekaryuni, Widarjono, Tohirin, & Sudarsono, 2021). Consumption is
also influenced by Islamic values such as zakat (alms), infaq (donations), and qardhul hasan
(interest-free loans). Sharia-compliant consumption can improve the quality of life and happiness
of individuals and society. Investment and consumption in the Islamic financial system have a
positive relationship, because investment can increase income, employment and productivity,
which in turn can increase consumption. Conversely, high consumption can stimulate demand
for goods and services, which can encourage investment. This relationship can create a cycle of
healthy and sustainable economic growth (Zauro, Zauro, Saad, & Sawandi, 2020).
Hypothesis 3: Humanistic factors, namely Islam, have a positive influence on the economic
behavior of economic actors in the Islamic financial system in the UK.
Humanistic factors, namely Islam, are factors related to the moral and ethical values taught by
the Islamic religion. This factor can influence the economic behavior of economic actors in the
Islamic financial system in the UK (Valangattil Shamsudheen & Azhar Rosly, 2019). Zakat is an
obligation for every Muslim who has assets exceeding the nisab to set aside a portion of his
wealth to give to people who are entitled to receive it, such as the needy, poor, converts, etc.
Zakat aims to clean up wealth, reduce social inequality, and improve the welfare of the people
(Husain, Hamzah, Asse, & Kara, 2019). Riba is interest or additional income obtained from
loans or buying and selling transactions. Usury is prohibited in Islam because it is considered
exploitation and injustice. The Islamic financial system replaces usury with a system of profit
sharing or venture capital, where lenders and borrowers both bear the risk and gain profits.
Speculation is an activity that involves chance or taking advantage of market uncertainty.
Speculation is prohibited in Islam because it can cause losses to other parties, disrupt market
54
stability, and cause inflation. The Islamic financial system encourages transactions based on the
real value of goods or services, not on hopes or estimates of the future (Abasimel, 2023).
Research Method
Research methods are an important part of an academic research paper that provides an
opportunity to convince the reader that the research is useful and will contribute to the field of
study. The autoregressive vector model with autoregressive vectors is used to see the direction of
influence of variables on each other as follows:
∆Con = β0 + β1Cont1 + β2Qt2 + β3Invt3 + β4Irt4 + et
∆Q = β0 + β1Cont1 + β2Qt2 + β3Invt3 + β4Irt4 + et
∆Inv = β0 + β1Cont1 + β2Qt2 + β3Invt3 + β4Irt4 + et
∆Ir = β0 + β1Cont1 + β2Qt2 + β3Invt3 + β4Irt4 + et
Q denotes Gross Domestic Product. Consumption is written Con, investment is written Inv, and
the interest rate is written Ir.
Autoregressive vectors or VAR models are statistical models used to describe the relationship
between several variables that change over time. The VAR model is an extension of the
univariate autoregressive model which only involves one variable. The VAR model allows us to
analyze multivariate variables without having to determine endogenous and exogenous variables.
The VAR model has an order that indicates the number of previous time periods used in the
model. VAR models can be used for various purposes, such as predicting future values of
variables, testing hypotheses of causality between variables, and measuring the dynamic impact
of disturbances on the system. VAR models can also be modified to handle special cases, such as
nonstationary data, periodic data, or data with a hierarchical structure. The ADF test is used as a
stationarity test to check the stationarity of all data before estimation. After that, we can perform
vector autoregression estimation. We use secondary data from the world bank as our data source
for this research. The deposit interest rate is used to calculate the interest rate (Ir). The real gross
domestic product (Q) is used as an indicator of the real sector. Final consumption expenditure is
used as an indicator of consumption (Con). And net investment in non-financial assets is used as
an indicator of investment (Inv) in the real sector.

We performed a test on the data prior to estimating it in this study. The data stationarity test was
used to determine if the data was stationar. Table 1 presents the test findings.
Table 1. The results of the stationarity test
Method Stat. Prob.**
ADF - Fisher Chi-sq. 9.0021 0.1023
ADF - Choi Z-stat. 0.43111 0.2231
Name Prob. Lag Max Lag Obs
Con 0.8711 0 4 20
Q 0.8141 0 4 20
Ir 0.0211 0 4 20
Inv 0.1712 0 4 20
55
** The probabilities for Fisher tests are based on an asymptotic Chi-square distribution.
All other tests have the assumption of asymptotic normality.
As the test results indicate, the data are stationary and can be used for estimating autoregressive
vectors. The estimation outcomes are displayed in Table 2.
Table 2. VAR estimation Results
CO GDP I IR
-
0.000000000
CO 0.112211 -0.71121 0.01321 331
-
0.000000001
-0.44221 -1.04221 -0.42251 34
[ 0.29112] [-0.31123] [ 0.01121] [-0.24322]
-
0.000000000
GDP 0.054432 0.099221 0.211211 00341
-
0.000000000
-0.1994 -0.69643 -0.18221 442
[ 0.25523] [ 0.19671] [ 1.19233] [-0.79279]
0.000000000
I 1.59 3.92 0.0127 0221
-
0.000000000
-0.311 -1.29 -0.221 02
[ 2.68911] [2.24259] [ 0.05112] [ 1.82212]
- -
0.000000003 0.000000000 -
IR 41 19 0.00000000018 -0.331
-
0.000000002
1 -0.000000005 -0.0000000021 -0.367
[-0.40111] [-0.39284] [-1.36326] [-1.03772]
- -
0.000000003 0.000000000 0.00000000052
C 99 301 4 0.399
- -
0.000000000 0.000000000 -
87 029 0.00000000007 -1.98
[-0.35112] [-0.87112] [ 0.91122] [ 0.19772]
R-sq. 0.87 0.86 0.51 0.495
Adj. R-sq. 0.82 0.82 0.49 0.26
The autoregressive vector estimation results enable the determination of the directional influence
between variables through the comparison of the t-statistic with the significance coefficient of
the relationship. A negative sign (-) indicates a negative direction, while a positive direction is
56
indicated by the absence of a sign (-). This finding indicates that the act of consuming has a
significant favorable impact on subsequent eating patterns. The positive and significant effect of
consumption on its own consumption demonstrates that current consumption is influenced by
past consumption. This demonstrates that a change in current consumption will have an influence
on future consumption. Based on the calculations in table 2, it reveals that consumption is a
forecaster of its own consumption in the future. Consumption has an insignificant negative effect
on GDP. Table 2 shows that while there is a negative correlation, UK consumption has no
discernible impact on economic growth. This indicates that UK consumption levels are still not a
reliable indicator of economic development, but more research is needed in this area. Investment
is significantly enhanced by consumption. Consumption in the UK significantly affects
investment with a positive relationship which reveals that consumption in the UK is a forecaster
of potential investment in the future.
Interest rates are negatively impacted by consumption. This suggests that there is an inverse link
between consumption and interest rates, meaning that they fluctuate in opposing directions.
When consumption rises, interest rates fall, and the other way around. In the Islamic economic
simulation in England, this inverse relationship indicates that interest rates inhibit public
consumption and also have a negative effect on investment, since consumption and investment
have a direct relationship. Reduced investment results in reduced economic growth. The Islamic
economic simulation in England also reveals an inverse relationship between consumption and
economic growth, which suggests that the production sector in this simulation depends on the
foreign market rather than the domestic market. The domestic market is driven by consumption,
while the foreign market is driven by exports.
GDP affects GDP positively. The estimates of GDP in Table 2 demonstrate that GDP has a
positive impact on itself. This means that previous GDP affects current GDP and current GDP
affects future GDP. GDP also affects investment positively. GDP affects interest rates
negatively. The disparity in the reactions of investment and interest rates to fluctuations or
incentives in GDP suggests that the expansion of the economy, as measured by GDP, fosters
investment. This phenomenon is logical since robust economic development elevates investors'
anticipations for investment, hence exerting a positive influence on the attractiveness of
investment opportunities. The observed phenomenon may be attributed to corporate strategies
that prioritize the use of retained profits for the purpose of augmenting company expansion, as
opposed to relying on debt. Consequently, during periods of economic development and
heightened business activity, the growth of businesses and their capital stems from retained
earnings and investments made by investors, rather than from debt accompanied by interest. This
reduces interest rates. Investment affects consumption positively. Investment affects economic
growth positively but insignificantly. Investment affects its own investment positively.
Investment affects interest rates positively. Investment and consumption have a positive
connection because investment creates new jobs that boost labor participation and income for
more people. A society with more income has more purchasing power and consumption
inclination, resulting in more consumption. Investment supports economic growth, but this is not
significant, because retained earnings are used more than incoming investment to encourage
economic growth. Self-investment fosters self-investment, meaning that current investments are
affected by previous investments and current investments anticipate future investments. We were
astonished by our estimation results when we discovered a positive connection between
investment and interest rates. This observation suggests that there exists a segment of the
population in England who do not have a negative stance towards usury. Consequently, when
57
investment levels rise, there is a corresponding increase in the quantity of money circulating
within the economy, which is then used by people or communities as capital assets in various
enterprises. This phenomenon serves as a source of inspiration for many individuals to engage in
investment activities, while some investors acquire their investment capital via debt financing,
therefore leading to an escalation in interest rates.
A high interest rate negatively influences consumption, GDP, and investment, but not
significantly. It also decreases the interest rate itself considerably. This means that interest harms
the economy when it is an independent variable. All variables are adversely affected by the
interest rate when it rises. This results in a decline in consumption, investment, and economic
growth when the interest rate increases. This puts pressure on both investors and consumers.
Investors face higher interest payments, and consumers face higher financing costs for goods like
houses and cars. This lowers their purchasing power and consumption rate. When consumption
drops, the domestic market fails to consume the products of production, and the foreign market
does not make up for this drop. This lowers economic growth (GDP). The estimate findings
reveal that the interest rate has a negative influence on all variables, implying that it poses a
constraint on the real sector of the economy, but not in a statistically significant manner. This
suggests that a decrease in interest rates is advantageous for the productive part of the economy.
Conclusion
Interest or usury is forbidden by the Islamic financial system. As a majority Muslim country,
United Kingdom adopts an Islamic financial system that follows the principles of Islam. The
effect of interest rates in United Kingdom on the real sector shows this. The real sector suffers
from a significant negative impact of interest rates, as seen by how interest rates affect
consumption and GDP. Hence, it can be deduced that the Islamic financial system, which
operates without interest or with a zero interest rate on capital in the United Kingdom, has the
potential to enhance the real sector more effectively compared to the conventional financial
system that imposes interest as a capital expense. Based on the conclusions of our research, we
recommend that the United Kingdom government develop the sukuk market as an alternative
financing that is based on profit sharing and does not involve interest (usury). Sukuk are
securities that represent ownership of real assets or specific projects. Sukuk can help increase
financial inclusion, diversification of funding sources, and financial system stability. Increasing
the role of Sharia banks in providing financial services in accordance with Islamic principles,
such as mudharabah (profit sharing), musharakah (cooperation), murabahah (buying and selling
with profit), and ijarah (rental). Islamic banks can provide benefits to the economy, such as
reducing moral risk, increasing the efficiency of fund allocation, and encouraging real sector
growth. Establish an adequate regulatory and supervisory framework for the Islamic financial
system, including standards for accounting, auditing, governance, consumer protection, and
deposit insurance. This framework can help increase public trust, transparency, soundness, and
resilience of the Islamic financial system. Coordinating and collaborating between monetary and
fiscal authorities to support effective monetary policy in the Islamic financial system. This may
involve the development of Islamic monetary instruments, monetary transmission mechanisms,
open market operations, liquidity facilities, and the provision of last-ditch loans.
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60
The Influence of Workplace Spirituality on Employee Engagement

in Indonesia
Paulina Markova Anastasia1
1
Humboldt University Of Berlin, German
Abstract
This research aims to explore how employee engagement is affected by workplace
spirituality. Workplace spirituality is a psychological aspect that encompasses the concepts
of meaning, purpose, and a sense of affiliation to a higher entity within the professional
setting. Employee engagement is a psychological condition characterized by cognitive,
emotional, and physical involvement in a work role. This research uses quantitative
methods with a survey design. The research sample consisted of 100 employees from
various industrial sectors in Indonesia. Data was collected using a questionnaire containing
a workplace spirituality scale and an employee engagement scale. The data underwent
investigation via the use of basic linear regression analysis. The study's conclusions show a
positive and statistically significant correlation between employee engagement and
workplace spirituality. The coefficient of determination (R2) suggests that variations in
workplace spirituality explain a quarter of the variability in employee engagement. This
study also addresses the managerial consequences and provides ideas for further research.
Keywords: Workplace Spirituality, Employee Engagement
DOI : 10.54204/TAJI/Vol812023007
Introduction
The topic of workplace spirituality is now garnering heightened interest within the realms of
management and organizational studies. Gupta and Mikkilineni (2018) assert that workplace
spirituality acknowledges the inherent spirituality of individuals, who possess an innate
inclination to seek significance and fulfillment in their professional endeavors1. The significance
of meaningful work serves as a crucial indicator of employee engagement2. Employee
engagement refers to a psychological state that encompasses cognitive, emotional, and physical
investment in one's job responsibilities (Kahn, 1990). According to Saks (2011), there is a
positive correlation between employee engagement and several outcomes like as productivity,
performance, loyalty, and job satisfaction.
Prior studies have shown a beneficial correlation between workplace spirituality and employee
engagement. A study conducted by Roof (2015) revealed that the presence of workplace
spirituality was associated with a favorable impact on employee engagement, which was shown
to be mediated by job satisfaction. According to Saks (2011), there exists a favorable correlation
between workplace spirituality and both job engagement and organizational engagement. A
condition in which individuals feel connected to others, themselves, and the existential meaning
of their work is referred to as "workplace spirituality". The presence of workplace spirituality has
the potential to enhance levels of employee engagement, a psychological state defined by active
participation, commitment, and fervor towards one's job. It has been shown that employee
61
engagement positively affects a number of areas of employee functioning, such as loyalty,

performance, and health. Employee engagement refers to the state in which workers have a
sense of connection with the company, demonstrate a strong commitment to organizational
objectives, and exhibit a willingness to exert additional effort in order to attain high levels of
performance (Iqbal, Adawiyah, Suroso, & Wihuda, 2020).
Employees who feel connected to the organization will have higher motivation to work well,
because they feel that their work is valuable and meaningful. Engaged employees will also find it
easier to adapt to change, innovate and collaborate with colleagues. Studies show that employee
engagement is positively related to productivity, quality, and customer satisfaction (Lysova,
Allan, Dik, Duffy, & Steger, 2019).
Employees who possess a strong sense of attachment to their company are likely to exhibit
elevated levels of pleasure, contentment, and overall well-being within their work environment.
Engaged workers are likely to encounter reduced levels of stress, burnout, and anxiety due to the
perception of being supported and appreciated by the firm. Research have shown a negative
relationship between employee engagement and illness, absenteeism, as well as turnover. Strong
attachments to their employers increase the likelihood that workers will feel more proud, loyal,
and affiliated with the business. Engaged employees will also be more difficult to be tempted to
move to another organization, because they feel that the current organization provides them with
opportunities to develop and contribute (Kundi, Aboramadan, Elhamalawi, & Shahid, 2021).
One determinant that has an impact on workplace spirituality is the set of cultural norms inside a
business that fosters and encourages the personal growth and development of its employees.
Organizational cultural values such as honesty, discipline, sincerity, responsibility, enthusiasm
and caring can create a harmonious work atmosphere, mutual respect and mutual support. These
values have the potential to instill workers with a feeling of pride, happiness, and purpose in
relation to their job (Rathee & Rajain, 2020).
One other determinant that has an impact on workplace spirituality is the presence of a reliable
and interconnected work community. A work community refers to a collective of individuals
inside an organization who have common objectives, a shared vision, and a unified purpose. A
good work community can provide employees with the opportunity to share, collaborate, and
contribute to achieving organizational goals. Work communities can also give employees a sense
of being valued, supported, and recognized for their achievements and potential (Newman &
Ford, 2021).
Thus, workplace spirituality can influence employee engagement through two mechanisms,
namely the search for meaning and connectedness. The quest for significance entails an
individual's personal journey to discover purpose and meaning in life by means of their
professional endeavors. Connectedness is an individual's feeling of being part of something
bigger than himself, namely other people and organizations. These two mechanisms can increase
employee motivation, commitment and engagement towards work and the organization.
Furthermore, several research have been undertaken in diverse countries to investigate the
correlation between those two variable (Gupta & Mikkilineni, 2018).
Nevertheless, there is a scarcity of study completed in Indonesia regarding the impact of
workplace spirituality on employee engagement. In fact, Indonesia is a country that has high
cultural and religious diversity, so spiritual issues may have great relevance for Indonesian
employees (Iqbal, Adawiyah, Suroso, & Wihuda, 2020). Therefore, the main goal of this study is
to fill the gap in the literature by examining how workplace spirituality affects employee
62
engagement in the Indonesian environment. Given the aforementioned background information,

the hypothesis proposed in this study is as follows:
H1: The presence of workplace spirituality is associated with a favorable impact on levels of
employee engagement.
Research Methods
The present study employs quantitative methodologies using a survey-based research
methodology. Surveys are data collection techniques by asking written questions to
systematically selected respondents (Sekaran & Bougie, 2016).
Population and Sample

The research focuses on the population of people employed across several industrial sectors in
Indonesia. The study sample consisted of 100 workers who were recruited using purposive
sampling procedures. Purposive sampling is a method of selecting a sample that is based on
certain criteria aligned with the study goals. The criteria used for sample selection are as follows:
• Employees who work in any industrial sector
• Employess who have been employed by the present firm for a minimum duration of one
year
• Employees who are willing to fill out the questionnaire honestly and completely
Variables and Measurement

The variables included in this study encompass both independent and dependent factors. The
variable that is being manipulated or controlled in this study is workplace spirituality, while the
variable that is being measured or observed is employee engagement.
The measurement of workplace spirituality was conducted using a scale that was designed by
Ashmos and Duchon (2000). The scale comprises of 12 questions that assess three distinct
elements of workplace spirituality: job meaning, value congruence, and connectivity. A five-
point Likert scale, with answers ranging from 1 (showing disagreement) to 5 (indicating
agreement), is used in this study's measurement.
The measurement of employee engagement was conducted using a scale that was designed by
Schaufeli et al. (2006). The scale has 17 questions designed to assess three distinct elements of
employee engagement, including excitement, devotion, and absorption. The measure used in this
study utilizes a seven-point Likert scale, including a range from 0 (indicating a complete absence
of the behavior or attribute) to 6 (indicating a consistent presence of the behavior or attribute).
Data Collection Procedures

Online questionnaire that was distributed across several social media sites and messaging apps
was used to collect the data for this study. The online survey was developed on the Google
Forms platform. The online questionnaire consists of three parts, namely the first part contains
instructions for filling out the questionnaire and ethical approval, the second part contains a
workplace spirituality scale, and the third part contains an employee engagement scale.
Respondents were asked to fill out a questionnaire according to their conditions and experiences
while working in the current organization. Respondents were also asked not to leave items blank
or provide multiple answers.
63
Data Analysis
IBM SPSS Statistics version 25 was then used to examine the information gathered from the
online survey. Descriptive and inferential analysis were two types of data analysis. Descriptive
analysis aims to describe the sample characteristics and distribution of research variable scores.
The purpose of inferential analysis is to examine the research hypothesis via the use of basic
linear regression analysis. Simple linear regression analysis is a statistical method used to
investigate the connection between variables (Ghozali, 2016).
Results
The findings of the data analysis in this study are divided into two sections: the outcomes of
descriptive analysis and the outcomes of inferential analysis.
Descriptive Analysis Results

The descriptive study is shown in Table 1.
Table 1. Descriptive Analysis
Variable Average Standard deviation Minimum Maximum
Workplace spirituality 3,87 0,54 2,75 4,75
Employee engagement 4,21 0,62 3,00 5,00
Based on the information presented in Table 1, the average score for workplace spirituality
is 3.87, with a standard deviation of 0.54. The mean and standard deviation employee
engagement score, which is 4.21 and 0.62. There are no outliers or extreme values in the
data, according to the lowest and maximum values of both variables.
Inferential Analysis Results

The findings of a basic linear regression analysis examining the relationship between workplace
spirituality and employee engagement are shown in Table 2. The table indicates a strong and
statistically significant relationship between employee engagement and spirituality at work. The
calculated regression coefficient (B) is 0.50, meaning that an increase of 0.50 units in the
employee engagement score corresponds to every unit increase in the workplace spirituality
score. The regression coefficient is statistically significant, indicating that it differs significantly
from zero, according to the computed t value of 5.67. At a significance level of 0.05, the
calculated p-value of 0.00 shows that there is enough data to reject the null hypothesis, which
contends that there is no connection between employee engagement and workplace spirituality.
With a value of 0.50, R shows a positive association between employee engagement and
workplace spirituality. The variance in workplace spirituality may explain for 25% of the
variability in employee engagement, according to the R^2.
Table 2. Regression
64
Unstandardized Standardized
Model t Sig. R R^2
Coeff. Coeff.
1 (Constant) 1,71 0,32 5,34 0,00
Workplace
0,50 0,09 0,50 5,67 0,00
Spirituality
Discussion
The findings of this research demonstrate that the presence of workplace spirituality has a
favorable impact on the level of employee engagement. This finding aligns with other studies
that have also shown a favorable correlation between these two factors (Roof, 2015; Saks, 2011;
Gupta & Mikkilineni, 2018). Furthermore, this finding provides further evidence for the
hypothesis posited by Saks & Gruman (2014) that meaningful work serves as a significant
determinant of employee engagement.
There are several ways to explain the relationship between employee engagement and workplace
spirituality. According to Ashmos & Duchon (2000), the presence of workplace spirituality has
the potential to enhance the alignment between an individual's own values and those of the firm.
According to Saks & Gruman (2014), when individuals align with these principles, it may foster
a feeling of pride and dedication towards the business. Furthermore, it has been suggested by
Ashmos & Duchon (2000) that the incorporation of workplace spirituality might foster a
heightened perception of being interconnected with a higher entity inside the professional
setting. The establishment of a feeling of interconnectedness might engender a sense of
possession and responsibility towards the entity (Saks & Gruman, 2014). Furthermore, it has
been suggested by Ashmos & Duchon (2000) that the implementation of workplace spirituality
might enhance individuals' perception of work as meaningful and purposeful. Possessing a
distinct sense of meaning and purpose may inspire a strong sense of enthusiasm and dedication
for one's work (Saks & Gruman, 2014).
Conclusions and suggestions

Based on the findings and subsequent analysis presented in this study, it may be concluded that
employee engagement levels are positively impacted by workplace spirituality. This research
makes contributions to the field of management and organizations from both a theoretical and
practical standpoint. The purpose of this research is to look at the relationship between employee
engagement and workplace spirituality in Indonesia, a country with a wide range of cultural and
religious traditions.
This study offers practical recommendations for managers and practitioners seeking to enhance
workplace spirituality as a means of fostering employee engagement.
Some suggestions for further research are as follows:
65
• The utilization of qualitative research methodologies is used to acquire a more profound

comprehension of the phenomenon from the viewpoint of employees of workplace
spirituality and employee engagement.
• Employing probability sampling methods to get a bigger and more representative sample
of the employee population in Indonesia.
• Incorporating other factors pertaining to workplace spirituality and employee
engagement, such as spiritual leadership, organizational culture, job happiness, and
organizational commitment, might enhance the comprehensiveness of the study.
• Using more complex analysis methods, such as multiple linear regression analysis, path
analysis, or structural analysis.
References
Ashmos, D. P., & Duchon, D. (2000). Spirituality at work: A conceptualization and measure.
Journal of Management Inquiry, 9(2), 134-145.
Ghozali, I. (2016). Aplikasi analisis multivariate dengan program IBM SPSS 23 (8th ed.). Badan
Penerbit Universitas Diponegoro.
Gupta, M., & Mikkilineni, A. (2018). Workplace spirituality and employee engagement: A study
of Indian hospitality industry. Journal of Human Values, 24(2), 129-140.
Iqbal, M., Adawiyah, W. R., Suroso, A., & Wihuda, F. (2020). Exploring the impact of
workplace spirituality on nurse work engagement: an empirical study on Indonesian
government hospitals. International Journal of Ethics and Systems, 36(3), 351-369.
Kahn, W. A. (1990). Psychological conditions of personal engagement and disengagement at
work. Academy of Management Journal, 33(4), 692-724.
Kundi, Y. M., Aboramadan, M., Elhamalawi, E. M., & Shahid, S. (2021). Employee
psychological well-being and job performance: exploring mediating and moderating
mechanisms. International Journal of Organizational Analysis, 29(3), 736-754.
Lysova, E. I., Allan, B. A., Dik, B. J., Duffy, R. D., & Steger, M. F. (2019). Fostering
meaningful work in organizations: A multi-level review and integration. Journal of
vocational behavior, 110(1), 374-389.
Newman, S. A., & Ford, R. C. (2021). Five steps to leading your team in the virtual COVID-19
workplace. Organizational Dynamics, 50(1), 1-10.
Rathee, R., & Rajain, P. (2020). Workplace spirituality: A comparative study of various models.
Jindal Journal of Business Research, 9(1), 27-40.
Roof, R. A. (2015). The association of individual spirituality on employee engagement: The
spirit at work. Journal of Business Ethics, 130(3), 585-599.
Saks, A. M. (2011). Workplace spirituality and employee engagement. Journal of Management,
Spirituality & Religion, 8(4), 317-340.
Saks, A. M., & Gruman, J. A. (2014). What do we really know about employee engagement?
Human Resource Development Quarterly, 25(2), 155-182.
Schaufeli, W. B., Bakker, A. B., & Salanova, M. (2006). The measurement of work engagement
with a short questionnaire: A cross-national study. Educational and Psychological
Measurement, 66(4), 701-716.
Sekaran, U., & Bougie, R. (2016). Research methods for business: A skill building approach (7th
ed.). John Wiley & Sons.
66
Globalization and Indonesia's Political Economy: A Nonlinear

Correlational Analysis between Trade, Investment and
International Cooperation
Ilham Imamudin1
1
Abstrak
This study examines the influence of globalization on Indonesia's political economy in the
aspects of trade, investment, and international cooperation. This study used secondary data
from various official sources and analyzed it with a non-linear correlational quantitative
approach. This research uses theories and concepts of political economy, such as
liberalism, realism, marxism, dependencies, and neo-institutionalism, to explain the
phenomena and relationships that occur. The results show a close and positive relationship
between the level of globalization, trade, investment, and international cooperation of a
country, but the relationship does not have a definite or constant pattern. This research
contributes to the development of political economy, especially in the Indonesian context,
and provides input for the government, business actors, and the community in formulating
and implementing economic policies that are in accordance with national and global
interests.
Keyword : Globalization, Political Economy, Trade, International Cooperation, Indonesia
JEL Classification : F1,F2,F5,01,02,03,C1,C3,C4
DOI : 10.54204/TAJI/Vol812023008
Introduction
Political economy is the study of the relationship between economic activity and political power
in a society. Political economy examines how economic policy is influenced by political, social,
cultural, and historical factors, as well as how economic policy affects the welfare, development,
and stability of society. Political economy also examines the role of actors such as states,
markets, firms, interest groups, and civil society in the process of making and implementing
economic policies (Jhally, 2022).
One of the branches of political economy is international political economy, which studies
economic and political relations between countries of the world. International political economy
highlights issues such as trade, investment, finance, migration, the environment, and
development, as well as their impact on national and global interests. International political
economy also analyzes how international institutions such as the United Nations, WTO, IMF,
and World Bank play a role in regulating and monitoring economic cooperation and conflicts
between countries (Paik, 2020).
Another branch of political economy is the political economy of development, which studies the
processes and challenges of economic development in developing countries. The political
economy of development explores the factors that influence growth, poverty, inequality, and
quality of life in developing countries, as well as strategies that can be applied to improve
development performance (Kwilinski, Dalevska, & Dementyev, 2022). The political economy of
67
development also considers how political factors such as democracy, corruption, conflict, and
community participation affect development processes and outcomes (Bagianto, & Zulkarnaen,
2020).
Political economy is a very relevant and important science to study, as it shows how economic
decisions are determined not only by rational and technical factors, but also by complex and
dynamic political and social factors. Political economy also provides a deeper understanding of
the challenges and opportunities faced by various actors in society, both at the local, national,
and international levels. By studying political economy, you can become more critical, creative,
and involved in economic issues that impact your life (Diah, 2020).
One of the important issues in political economy is globalization, which is the process of
economic, political, social, and cultural integration between countries and regions. Globalization
is a phenomenon that has been going on for a long time, but is increasing along with the
development of technology, communication, transportation, and information. Globalization
affects almost all aspects of human life, both at the local, national, regional, and global levels
(Bhambra, 2020).
Globalization brings various positive and negative impacts to society, such as increasing trade,
investment, cooperation, competition, innovation, opportunities, and challenges (Ikhsan &
Cholil, 2022; Harnani, Prabowo, Alim, & Wulandari, 2022). The positive impacts of
globalization include economic growth, increased welfare, the spread of knowledge, culture, and
universal values, as well as the opening of opportunities to work, study, and interact with people
from various countries and backgrounds (Cholil, Ikhsan, & Wibangga, 2022; Widarni, Irawan,
Harnani, Rusminingsih, & Alim, 2022). The negative impacts of globalization include inequality,
poverty, unemployment, crises, corruption, environment, human rights, and security. This
negative impact arises from the imbalance of power, interests, and policies between developed
and developing countries, as well as between different social groups.
Globalization also raises various problems and conflicts, such as resource competition, climate
change, migration, terrorism, radicalism, drugs, human trafficking, and cybercrime. These
problems and conflicts require effective and cooperative handling from various parties, both
government, private, civil society, and international organizations. However, handling
globalization problems and conflicts is often difficult due to differences in views, interests, and
capacities between the actors involved. Therefore, global political economy is one of the relevant
and interesting fields of study to be researched. Global political economy is the study of the
relationship between economics and politics in a global context, taking into account social,
cultural, historical, and geographical factors (Sabir, & Gorus, 2019). Global political economy
aims to explain and analyze the phenomena, impacts, problems, and conflicts of globalization, as
well as find just, democratic, and sustainable solutions and alternatives(Bhambra, 2020).
This study aims to analyze the influence of globalization on Indonesia's political economy,
especially in the aspects of trade, investment, and cooperation. This research uses a quantitative
approach, namely by collecting, processing, and analyzing numerical data related to research
variables. The data used comes from KOF Swiss Economic Institute, This study aims to analyze
the influence of globalization on Indonesia's political economy, especially in the aspects of trade,
investment, and cooperation. This research uses a quantitative approach, namely by collecting,
processing, and analyzing numerical data related to research variables. The data used comes
from the KOF Swiss Economic Institute, Badan Pusat Statistik Indonesia, Bank Indonesia with
the period 2012 to 2022. The data is then analyzed using theories and concepts of political
economy, such as liberalism, realism, marxism, dependencies, and neo-institutionalism, to
68
explain the phenomena and relationships that occur. This research is expected to contribute to the
development of political economy, especially in the Indonesian context. This research is also
expected to provide input for the government, business actors, and the community in formulating
and implementing economic policies that are in accordance with national and global interests.
Badan Pusat Statistik Indonesia, Bank Indonesia with the period 2012 to 2022. The data is then
analyzed using theories and concepts of political economy, such as liberalism, realism, marxism,
dependencies, and neo-institutionalism, to explain the phenomena and relationships that occur.
This research is expected to contribute to the development of political economy, especially in the
Indonesian context. This research is also expected to provide input for the government, business
actors, and the community in formulating and implementing economic policies that are in
accordance with national and global interests.
Literature Review
Political economy is a science that examines the relationship between economic regions and
political regions, or between economic subsystems and political subsystems. Political economy
also addresses the link between political science and economics, with particular attention to the
role of power in economic decision-making. Political economy has several theoretical
approaches, such as liberalism, realism, marxism, dependencies, and neo-institutionalism, each
of which has different assumptions, methods, and implications (Poti, 2020).
The approach of liberalism in political economy departs from the idea that individuals are the
main actors in economic and political systems, and that they act rationally to maximize their
interests and well-being. Liberalism emphasizes the importance of free markets, international
trade, human rights, democracy, and international law as means to achieve global progress and
cooperation (Mukand, & Rodrik 2020). Liberalism also acknowledges conflicts and imbalances
of power between states, but argues that they can be overcome by diplomacy, negotiation, and
regional integration (Navarro, 2020).
The realism approach in political economy is based on the view that states are the main actors in
economic and political systems, and that they act to safeguard their security and national
interests. Realism emphasizes the importance of military power, foreign policy, balance of
power, and realpolitik as a way to deal with an anarchic and competitive international
environment. Realism also considers that economic resources are one of the factors determining
the power and influence of states, and that states will seek to control and secure those resources
(Graham, & Tucker, 2019).
Marxism's approach to political economy is based on Karl Marx's class analysis of history and
society, which claimed that the capitalist system produces exploitation, inequality, and crisis.
Marxism emphasizes the role of capital, labor, production, distribution, and consumption in
determining economic and political structures and dynamics. Marxism also criticizes the
ideologies and institutions that underpin the capitalist system, such as the state, law, religion, and
media, as tools to maintain the dominance of the bourgeoisie over the proletariat (Rioux.,
LeBaron, & Verovšek, 2020).
The dependency approach in political economy emerged as a reaction to modernization theory,
which considered that developing countries could follow the same development path as
developed countries. Dependency rejects this view, and argues that developing countries
experience structural and historical dependence on developed countries, resulting in injustice,
poverty, and underdevelopment. Dependencies also highlight the role of transnational
corporations, international financial institutions, and local elites in strengthening dependency
relationships (Alaika, Herlambang, Untoro, Hasanah, 2022; Amijaya & Alaika, 2023).
69
The neo-institutionalism approach in political economy focuses on the role of institutions in

shaping economic and political behavior and outcomes. An institution is defined as a set of rules,
norms, and practices that govern interactions between actors, both formal and informal. Neo-
institutionalism recognizes that institutions can change over time, and are influenced by factors
such as history, culture, ideology, and interests. Neo-institutionalism also explains how
institutions can create incentives, constraints, and opportunities for actors to collaborate,
compete, or conflict (Rahmadi., Putri, & Sari, 2022).
Globalization is a process of increasing interconnectedness and dependence between countries in
the world, both in economic, political, social, cultural, and environmental aspects. Globalization
occurs due to advances in technology, transportation, and communication that facilitate the
exchange of goods, services, capital, information, and culture between countries. Globalization is
also influenced by political factors, such as trade liberalization, regional integration, and
international cooperation (Sabir, & Gorus, 2019).
Globalization has both positive and negative impacts on the development of society and
countries. In the economic aspect, globalization offers opportunities and challenges for
developing countries, such as Indonesia, to increase growth, prosperity, and competitiveness,
while facing the risk of inequality, crisis, and instability. Therefore, economic globalization
requires readiness and appropriate policies from governments, the private sector, and society to
maximize benefits and minimize losses caused. Globalization is an unavoidable phenomenon and
has a complex impact on the world. Therefore, it is necessary to respond to globalization wisely,
critically, and responsibly, in order to make a positive contribution to nation building and
humanity (Bhambra, 2020).
Indonesia is a country that has great potential to benefit from globalization, while anticipating its
threats. Globalization is a process of increasing interconnectedness and dependence between
countries in the world, both in the economic, political, social, cultural, and environmental fields.
Globalization brings opportunities and challenges for every country, including Indonesia
(Shofiyah, 2019).
Indonesia has natural resources, human resources, and a vast market, which can be utilized to
increase productivity, diversification, and economic integration. Indonesia has abundant natural
wealth, such as oil, gas, coal, gold, tin, nickel, copper, rubber, palm oil, cocoa, coffee, and
others. Indonesia also has a large population, around 276 million people in 2020, which is a
potential market for products and services (Shofiyah, 2019). In addition, Indonesia has a cheap
and easy-to-train workforce, which can attract foreign investment. Indonesia is also a member of
various organizations and economic regions, such as ASEAN, APEC, G20, and RCEP, which
can expand market access and economic cooperation with other countries (Armstrong, &
Drysdale, 2022).
Indonesia also has a democratic political system, which can ensure participation, accountability,
and transparency in economic policy making. Indonesia has undergone political reforms since
1998, ending the era of New Order authoritarianism. Indonesia now has a presidential system,
with direct, free, and fair elections (Putra, 2019).
Indonesia also has democratic institutions, such as parliament, political parties, mass media, civil
society organizations, and independent commissions, that can monitor and criticize the
government. Indonesia also has a constitution that recognizes human rights, including economic,
social, and cultural rights. However, Indonesia also faces various challenges in facing
globalization, such as the low quality of education, infrastructure, and institutions, high
70
corruption, bureaucracy, and conflict, as well as the vulnerability of the economy to global
turmoil (Bhambra, 2020).
Indonesia still has a low level of education, with the average length of schooling only 8.3 years
in 2019. Indonesia also has inadequate infrastructure, such as roads, ports, airports, electricity,
clean water, and telecommunications, which hinder mobility and connectivity. Indonesia also has
weak institutions, such as the judiciary, taxation, banking, and capital markets, which reduces
trust and efficiency. Indonesia also has problems of corruption, bureaucracy, and conflict, which
harm the public interest and destabilize (Rahmalia., Ariusni, & Triani, 2019).
Indonesia also has an economy that is vulnerable to global turmoil, such as financial crises,
commodity price fluctuations, trade wars, and pandemics, which can reduce economic growth
and welfare (Wibangga, 2022). Therefore, Indonesia needs to make various efforts to optimize
benefits and reduce threats from globalization. Indonesia needs to improve the quality of
education, infrastructure, and institutions, which can increase competitiveness and productivity.
Indonesia needs to eradicate corruption, bureaucracy, and conflict, which can improve prosperity
and stability. Indonesia needs to diversify its economy, which can reduce dependence on certain
sectors (Sabir, & Gorus, 2019).
Indonesia needs to carry out economic integration, which can expand markets and cooperation
with other countries. Indonesia needs to carry out economic reforms, which can increase
efficiency and flexibility. Indonesia needs to carry out social protection, which can reduce
poverty and inequality. Thus, Indonesia can become a resilient and advanced country in the era
of globalization (Abidin, 2019).
One way to measure the effect of globalization on Indonesia's political economy is to look at
indicators of trade, investment, and cooperation. These three indicators can show how integrated
and open Indonesia is with the world, as well as how much impact it has on social, political, and
cultural conditions in the country (Farhas, & Riyanti, 2022).
Trade is the activity of exchanging goods and services between countries, which can increase
efficiency, specialization, and well-being. Trade can allow Indonesia to leverage its comparative
advantage in certain sectors, such as agriculture, manufacturing, and services. Trade can also
provide access to a wider market, more diverse products, and more advanced technology.
According to World Bank data, the value of Indonesia's exports and imports of goods and
services to GDP reached 38.6% in 2020, up from 32.7% in 2010. This shows that Indonesia's
trade with the world is increasing along with globalization (Mayesti, ., Halimm., & Afrizal,
2021).
Investment is an investment activity in the form of productive assets, which can increase
capacity, technology, and innovation. Investment can help Indonesia to boost economic growth,
create jobs, and improve infrastructure. Investment can also bring the transfer of knowledge,
skills, and culture from foreign countries (Baharin., Syah Aji., Yussof., & Saukani, 2020).
According to World Bank data, the inflow and outflow value of Indonesia's foreign direct
investment (FDI) to GDP reached 3.4% in 2020, down from 4.1% in 2010. This shows that
Indonesia's investment with the world has decreased due to the Covid-19 pandemic, but still has
the potential to develop in the future (Wuryandari, 2022).
Cooperation is the activity of establishing relations and partnerships between countries, which
can enhance coordination, harmonization, and solidarity. Cooperation can help Indonesia to
solve global problems, such as climate change, terrorism, and migration. Cooperation can also
provide opportunities to share experiences, views, and values with other countries (Palaco.,
Park., Kim., & Rho, 2019). Cooperation is the activity of establishing relations and partnerships
71
between countries, which can enhance coordination, harmonization, and solidarity. Cooperation
can help Indonesia to solve global problems, such as climate change, terrorism, and migration.
Cooperation can also provide opportunities to share experiences, views, and values with other
countries (Isaura, 2020).
Hypothesis 1: Globalization has a positive influence on Indonesia's trade, namely by increasing
the volume, value, and diversification of exports and imports of goods and services.
Globalization has a positive influence on Indonesia's trade, namely by increasing the volume,
value, and diversification of exports and imports of goods and services. Indonesia's trade volume
with the world increased from $264.9 billion in 2010 to $382.6 billion in 2019. Indonesia's
export value also increased from $157.8 billion in 2010 to $167.5 billion in 2019, while
Indonesia's import value increased from $107.1 billion in 2010 to $215.1 billion in 2019 (Farhas,
& Riyanti, 2022)..
Indonesia's export and import diversification is also increasing in line with globalization.
Indonesia not only exports and imports commodity products such as oil, gas, coal, palm oil, and
rubber, but also manufactured products such as textiles, automotive, electronics, and chemicals.
Indonesia also exports and imports services such as transportation, tourism, telecommunications,
and finance. By diversifying exports and imports, Indonesia can reduce dependence on certain
products and increase competitiveness in the global market (Saragih, 2022).
Globalization also opens opportunities for Indonesia to participate in global value chains, namely
cross-border production networks that connect producers, suppliers, distributors, and consumers.
By participating in global value chains, Indonesia can increase productivity, efficiency, and
innovation, as well as expand access to new markets and technologies. Indonesia can also
improve the quality and standard of its products and services in accordance with global market
demand(Saragih, 2022). Therefore, globalization has a positive influence on Indonesia's trade,
namely by increasing the volume, value, and diversification of exports and imports of goods and
services. Globalization also provides benefits for Indonesia to integrate with the world and
improve the welfare of its people (Cholil, Ikhsan, & Wibangga, 2022).
Hypothesis 2: Globalization has a negative influence on Indonesian investment, namely by
increasing the dependence, dominance, and exploitation of foreign capital on domestic resources
and markets.
Globalization has a negative influence on Indonesian investment, namely by increasing the
dependence, dominance, and exploitation of foreign capital on domestic resources and markets.
Globalization is a process of economic, social, political, and cultural integration between the
countries of the world. Globalization opens opportunities for developing countries such as
Indonesia to attract foreign direct investment (FDI) that can increase economic growth,
employment, and technology transfer. However, globalization also carries risks to Indonesia's
sovereignty and well-being (Ameliana, & Soebagyo, 2023).
Hypothesis 2: Globalization has a negative influence on Indonesian investment, namely by
increasing the dependence, dominance, and exploitation of foreign capital on domestic resources
and markets.
Globalization is a process of economic, social, political, and cultural integration between the
countries of the world. Globalization opens opportunities for developing countries such as
Indonesia to attract foreign direct investment (FDI) that can increase economic growth,
72
employment, and technology transfer. However, globalization also carries risks to Indonesia's
sovereignty and well-being (Rahman, 2019).
In addition to dependence, globalization also increases the dominance of foreign capital over
Indonesia's domestic resources and markets. Foreign investment can control strategic sectors
such as mining, plantations, telecommunications, and banking. This can harm Indonesia's
national interests, as foreign capital can control the production, distribution, and prices of natural
resources and services vital to the Indonesian people. In addition, foreign investment can also
threaten local industries that are unable to compete with cheaper and higher quality foreign
products (Widianti, 2022).
Finally, globalization also increases the exploitation of foreign capital against Indonesia's
domestic resources and markets. Foreign investment can exploit Indonesia's natural resources
without regard to environmental and social impacts. Many cases of pollution, damage, and
conflict occur due to foreign mining and plantation activities in Indonesia. In addition, foreign
investment can also exploit Indonesia's domestic market by using monopolistic practices,
oligopoly, dumping, and transfer pricing. This can be detrimental to the Indonesian economy,
because foreign capital can take large profits without making a commensurate contribution to the
country and the people of Indonesia (Putra., Ariani., & Nofrian, 2022).
Therefore, Indonesia needs to take steps to protect national interests and people's welfare from
the negative impacts of globalization. Some steps that can be taken are increasing economic
independence, upholding state sovereignty, and encouraging regional cooperation (Rahman,
2019).
Hypothesis 3: Globalization has a neutral influence on Indonesia's cooperation, namely by
creating opportunities and challenges for Indonesia's participation and contribution in various
international forums and organizations.
Globalization is a process of increased interaction, integration, and interdependence between the
countries of the world in areas such as economics, politics, culture, and the environment.
Globalization has a neutral influence on Indonesia's cooperation, namely by creating
opportunities and challenges for Indonesia's participation and contribution in various
international forums and organizations (Prinanda, 2021).
Globalization opens opportunities for Indonesia to expand cooperation networks with other
countries, both bilaterally, regionally, and multilaterally. Indonesia can take advantage of
globalization to increase market access, investment, technology, and human resources that can
support national development (Sushanti,2019). In addition, globalization also provides an
opportunity for Indonesia to play an active role in solving global issues that are transboundary in
nature, such as climate change, terrorism, human trafficking, and pandemics. Thus, globalization
can increase Indonesia's capacity and reputation as a large and influential country in the world
(Prinanda, 2021).
Globalization also poses challenges for Indonesia in establishing cooperation with other
countries. Globalization can give rise to more intense and complex competition between
countries, especially in terms of economy and security. Indonesia must be able to compete with
other countries in terms of product quality, services, and innovation, as well as prevent threats
that can disrupt national stability and sovereignty. In addition, globalization can also have a
negative impact on Indonesian cultural identity and values, such as the spread of foreign cultures,
73
loss of local wisdom, and social conflicts. Indonesia must be able to maintain and preserve the
diversity and cultural richness that characterizes the Indonesian nation (Sushanti,2019).
Research Methods
This type of research is quantitative correlational, which is research that aims to determine the
relationship between two or more variables that are quantitative. The variables studied are
globalization, trade, investment, and cooperation in Indonesia. The variable of globalization is a
variable that measures the extent to which a country is integrated with the world in economic,
social, and political aspects. Trade variables are variables that measure the value of exports and
imports of goods and services of a country against the total gross domestic product (GDP).
Investment variables are variables that measure the amount of foreign direct investment (IAL)
entering a country in the form of capital, technology, and management. The variable of
Indonesian cooperation is a variable that measures the level of participation and contribution of
Indonesia in various international forums and organizations.
This study used secondary data, namely data that is already available from other sources and is
not collected directly by researchers. Research instruments in the form of indices or scores that
measure the level of globalization, trade, investment, and cooperation in Indonesia. The indices
or scores used are the KOF Globalization Index, World Trade Index, Foreign Direct Investment
Index, International Cooperation Index.
KOF Index of Globalization, which is an index that measures the level of globalization of a
country based on three dimensions, namely economic, social, and political. The index was
developed by the KOF Swiss Economic Institute and published annually since 2002. The index
has a range of values between 0 to 100, with higher values indicating a higher degree of
globalization.
World Trade Index (World Trade Index), which is an index that measures a country's trade
performance based on four indicators, namely export value, import value, trade balance, and
market diversification. The index was developed by the World Trade Organization (WTO) and
published annually since 2012. The index has a range of values between 0 to 100, with higher
values indicating better trading performance.
Foreign Direct Investment Index (Foreign Direct Investment Index), which is an index that
measures the attractiveness of a country as a destination for foreign direct investment based on
five indicators, namely the number of IAL, IAL growth, proportion of IAL to GDP, proportion
of IAL to domestic investment, and proportion of IAL to global investment. The index was
developed by the United Nations Conference on Trade and Development (UNCTAD) and
published annually since 1998. This index has a range of values between 0 to 10, with higher
values indicating higher investment attractiveness.
International Cooperation Index (International Cooperation Index), which is an index that
measures the level of participation and contribution of a country in various international forums
and organizations based on six indicators, namely membership, presence, leadership,
commitment, contribution, and impact. The index was developed by the Center for International
Development and Conflict Management (CIDCM) and published annually since 2010. This
index has a range of values between 0 to 100, with higher values indicating a higher level of
cooperation. The definition of variables is presented in table 1.
Table 1. Variable definitions, measurement variables, and data sources

Data
Variable Definition Measurement Sources
74
An index that measures the degree The index value is between 1 to KOF
KOF of globalization of a country based 100, the higher the index value, Swiss
Globalization on economic, social, and political the higher the degree of Economic
Index dimensions. globalization of the country. Institute
Index values based on a specific Badan
An index that measures the value base year, for example Pusat
World Trade of trade in goods and services 2010=100. A higher index value Statistik
Index between countries in the world. indicates a higher trading value. Indonesia
Index values based on a specific
Foreign base year, for example
Direct An index that measures the value 2010=100. A higher index value
Investment of direct investments made by indicates a higher value of Bank
Index foreign countries in a country. foreign direct investment. Indonesia
An index that measures the level The index value is between 1
of international cooperation and 100, the higher the index
International carried out by a country in the value, the higher the level of
Cooperation political, economic, social, international cooperation of the Bank
Index cultural, and scientific fields. country. Indonesia
The data analysis technique used is non-linear correlation analysis or dynamic correlation
analysis. This technique aims to measure how closely and unidirectionally the relationship is
between two or more variables that do not have a straight or linear relationship pattern. To do
this technique, it is necessary to use the rank correlation or correlation of ranks method. This
method converts the original variable value into a rank value based on the order of magnitude.
After getting the ranking value, you can then calculate the correlation coefficient between the
ratings. The correlation coefficient used is the Spearman correlation coefficient (Spearman’s
rank correlation coefficient). This correlation coefficient measures how strong the monotonous
relationship between two variables is. A monotonous relationship is one whose direction is fixed,
that is, if the value of variable X increases, then the value of variable Y also increases or
decreases consistently. The Spearman correlation coefficient has a range of values between -1 to
1, with the following interpretation:
A value close to -1 indicates a strong negative relationship, that is, if the value of variable X
increases, then the value of variable Y decreases, or vice versa.
A value close to 1 indicates a strong positive relationship, that is, if the value of variable X
increases, then the value of variable Y also increases, or vice versa.
A value close to 0 indicates no relationship or weak relationship, that is, there is no clear pattern
of linkage between variables X and Y.
To calculate the Spearman correlation coefficient, you can use the following formula:
Where:
rs is the Spearman correlation coefficient
is the difference between the ratings of variables X and Y for each pair of observations
is the number of observations
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The values in table 2 are the Spearman rank correlation coefficients between two variables. This
value ranges from -1 to 1, where values close to 1 indicate a strong positive correlation, values
close to -1 indicate a strong negative correlation, and values close to 0 indicate no correlation.
Table 2. Non Linear Correlation Analysis Rank Correlation Method Spearman Correlation
Coefficient
Foreign Foreign
KOF World Direct Direct
Globalization Trade Investment Investment
Variable Index Index Index Index
KOF Globalization Index 1 0.82 0.76 0.91
World Trade Index 0.82 1 0.89 0.85
Foreign Direct Investment
Index 0.76 0.89 1 0.79
International Cooperation
Index 0.91 0.85 0.79 1
From table 2, it can be seen that all variables have a strong positive correlation, with the highest
value being between the KOF Globalization Index and the International Cooperation Index
(0.91), and the lowest value being between the KOF Globalization Index and the Foreign Direct
Investment Index (0.76). This means that the higher the value of a country's globalization or
international cooperation index, the higher the value of that country's international trade,
investment, or cooperation index, and vice versa. This correlation indicates the existence of a
nonlinear relationship between these variables, which may be influenced by other factors such as
political, economic, social, cultural, and geographical conditions of the countries concerned.
The results of nonlinear correlation testing made show that there is a close relationship between
the level of globalization, trade, investment, and international cooperation of a country. This
relationship is positive, meaning that the higher the value of one variable, the higher the value of
the other variable. This relationship is also non-linear, meaning that there is no definite or
constant pattern between the variables. This relationship may be influenced by many other
factors that are not included in the research variables, such as the political, economic, social,
cultural, and geographical conditions of the countries concerned.
The impact on Indonesia is that Indonesia needs to increase the value of its globalization, trade,
investment, and international cooperation index in order to compete with other countries in the
world. Indonesia also needs to pay attention to other factors that can affect the relationship
between these variables, such as political stability, economic growth, social welfare, cultural
diversity, and environmental sustainability. Indonesia can seize opportunities and address
challenges posed by globalization, trade, investment, and international cooperation in a prudent
and responsible manner.
Conclusion
There is a close and positive relationship between the level of globalization, trade, investment,
and international cooperation of a country. This relationship is also non-linear, which means
there is no definite or constant pattern between the variables. This relationship may be influenced
by many other factors that are not included in the research variables, such as the political,
economic, social, cultural, and geographical conditions of the countries concerned. The impact
76
on Indonesia is that Indonesia needs to increase the value of its globalization, trade, investment,
and international cooperation index in order to compete with other countries in the world.
Indonesia also needs to pay attention to other factors that can affect the relationship between
these variables, such as political stability, economic growth, social welfare, cultural diversity,
and environmental sustainability. Indonesia can seize opportunities and address challenges posed
by globalization, trade, investment, and international cooperation in a prudent and responsible
manner.
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Effects of the COVID-19 Pandemic and Vaccination Policy on

Employment, Income, Wages, and Social Protection in Indonesia: A
Regression Analysis
Denindi Karunia Putri Rahmanto1, Kayyis Mukasyafah2, Putu Septin Diah Safitri3, Yanicha
Lukma Anggarie4
1,2,3,4
Abstract
The COVID-19 pandemic is a phenomenon that has had a broad and profound impact on
human resources (HR) in various countries and sectors. The impact can be seen from
various aspects, such as employment, income, wages, and social protection. This study
aims to analyze the effect of the COVID-19 pandemic on four aspects of human resources
(HR) in Indonesia, namely employment, income, wages, and social protection. This study
also aims to measure the impact of government policies, especially vaccination, on these
aspects. This research uses quantitative secondary data, obtained from various official and
trusted sources. This study used regression analysis method to estimate causal relationships
between research variables. The results of this study show that the COVID-19 pandemic
has negatively affected employment, income, and wages, and has a positive effect on social
protection in Indonesia. The results of this study also show that vaccination has a positive
effect on employment, income, and wages, and negatively affects social protection in
Indonesia. This research contributes to the development of human resource management
(HRM) science and practice in Indonesia, especially in facing and overcoming the impact
of the COVID-19 pandemic. This research also provides policy recommendations for the
government and other stakeholders related to human resources in Indonesia.
Keyword : COVID-19 pandemic, Government policy, Regression analysis.
JEL : J, J2, J3
DOI : 10.54204/TAJI/Vol812023009
Introduction
Human resources (HR) is one of the important factors in the economic and social development of
a country (Jamal et al.,2021). Qualified, productive, and competitive human resources can
increase economic growth, social welfare, and international competitiveness. The quality of
human resources can be measured from various aspects, such as education, health, expertise, and
motivation. HR productivity can be measured from various aspects, such as efficiency,
effectiveness, innovation, and creativity. HR competitiveness can be measured from various
aspects, such as adaptability, flexibility, collaboration, and communication (Mousa & Othman,
2020).
Human resources that have high quality, productivity, and competitiveness can make a positive
contribution to a country's economic and social development, such as increasing output, income,
wages, and welfare, as well as reducing poverty, unemployment, and inequalityA country's
output is the total amount of goods and services it produces in a given time period. It is
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commonly expressed in terms of its gross domestic product (GDP). Income, which is often
expressed as per capita income, is the total amount of money received over a given time period
by an individual or group. Wages are the amount of money that employers give employees in
exchange for services that are completed within a certain amount of time. They are usually
expressed in terms of real wages. The human development index (HDI) is typically used to
measure an individual's or group's level of well-being, which is defined as having good and
decent living conditions. A person or group is considered to be in poverty if they live in
substandard conditions, which is typically determined by looking at the poverty line.
Unemployment is the condition of job unavailability for individuals or groups who are able and
willing to work, which is usually measured by the unemployment rate. Inequality is a condition
of inequality in the distribution of resources, opportunities, or outcomes between individuals or
groups, which is usually measured by the Gini coefficient (Prasetyo & Kistanti, 2020).
Qualified, productive, and competitive human resources can increase output, income, wages, and
welfare, by increasing efficiency, effectiveness, innovation, and creativity in the process of the
creation, delivery, and use of products and services. Qualified, productive, and competitive
human resources can also reduce poverty, unemployment, and inequality, by increasing access,
quality, and benefits of education, health, skills, and motivation, and increasing opportunities,
protection, and participation in the labor market. Thus, a nation's economic and social
development can benefit from having competitive, productive, and high-quality human
resources, which can enhance the standard of living and sense of community. (Anwar &
Abdullah, 2021).
The COVID-19 pandemic is a global phenomenon that has had a significant negative impact on
human resources (HR) in Indonesia, especially in terms of employment, income, wages, and
social protection. The epidemic has caused a profound health, economic, and social disaster that
has impacted almost every societal group. The COVID-19 pandemic decreased the labor force
participation rate from 70.21 percent in February 2020 to 67.57 percent in August 2020, while
the open unemployment rate rose from 5.28 percent in February 2020 to 7.07 percent in August
2020, as per the Bureau of Labor Statistics' data. The COVID-19 pandemic also caused a fall in
per capita income, which went from IDR 4.58 million in 2019 to IDR 4.42 million in 2020. In
addition, real wages decreased in 2020 from 2.29 million IDR in 2019 to 2.23 million IDR.
However, from 15.2 million in 2019 to 20.8 million in 2020, more people have benefited from
the COVID-19 pandemic, as well as an increase in the funding allotted to social protection
programs from Rp 110.2 trillion in 2019 to Rp 203.9 trillion in 2020. The government has
introduced several programs, such as the Rice Social Assistance (BSB), Pre-Employment Card,
Direct Cash Transfer (BLT), and National Economic Recovery Program (PEN), in response to
the COVID-19 pandemic's effects on human resources. These policies aim to revive social and
economic activity while maintaining welfare, income, and public health. (Saluy et.al, 2021).
Data from the Central Statistics Agency (BPS), the open unemployment rate in Indonesia
reached 9.77 million people or 7.07 percent in August 2023, an increase from 7.05 million
people or 5.23 percent in February 2023. This is the highest unemployment rate since 2005. The
decline in demand and production in the pandemic-affected industries, including trade, tourism,
transportation, and industry, was the primary cause of the rise in unemployment. In addition,
many workers experience layoffs, reductions in working hours, or salary delays (Nicola et.al,
2020). In addition, real per capita income contracted by 2.67 percent on an annual basis in the
third quarter of 2023. This was the first contraction since the 1998 monetary crisis. This decline
in income has an impact on decreasing people's purchasing power and consumption, which are
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the main drivers of Indonesia's economic growth. Real wages also decreased by 1.13 percent on
an annual basis in August 2023. This wage reduction has the potential to cause poverty and
inequality problems, especially for low-educated and low-income workers (Astuti &
Mahardhika, 2020).
Social protection for informal and poor workers remains inadequate, particularly in terms of
access and quality of health, education, and social assistance services. Informal workers, who
account for about 57 percent of Indonesia's total labor force, do not have social security, job
protection, or other workers' rights. They are also more vulnerable to health risks, accidents, and
income uncertainty. Additionally, especially in rural and impoverished areas, the COVID-19
epidemic has led to a reduction in the quantity and quality of health and educational services.
Social assistance provided by the government, such as Direct Cash Transfer (BLT), Rice Social
Assistance (BSB), and Pre-Employment Card, is also still insufficient to meet basic needs and
increase human resource capacity (Barron et.al, 2022).
Although the government has issued various policies to respond to the impact of the pandemic,
such as the National Economic Recovery Program (PEN), Pre-Employment Card, Direct Cash
Transfer (BLT), and Rice Social Assistance (BSB), the effectiveness and impact on improving
human resource welfare still needs further investigation. These policies aim to maintain
macroeconomic stability, stimulate recovery in strategic sectors, provide fiscal and monetary
stimuli, and provide social protection for people affected by the pandemic. Macroeconomic
stability is important to create a conducive business climate, control inflation, and maintain
exchange rates. Encouragement is required in strategic sectors like health, education,
infrastructure, and energy to boost digital transformation, boost economic activity, and improve
human resource standards. In order to boost government spending, cut interest rates, and extend
credit to the real sector, fiscal and monetary stimulus are required. In order to decrease the
pandemic's negative social and economic effects on the community—particularly on those who
are impoverished, facing unemployment, or losing their source of income—social protection is
offered. (Adawiyah et.al, 2022)
There are several challenges and obstacles in the implementation and evaluation of the policy,
such as limited data, coordination, allocation, and distribution, as well as potential abuse and
corruption. Limited data hinders evidence-based decision making, progress monitoring, and
impact measurement. Coordination between central and local governments, between ministries
and agencies, and between the public and private sectors still need to be strengthened to prevent
duplications, contradictions, and inefficiencies. The allocation and distribution of budget,
assistance, and other resources are still not optimal and evenly distributed, so there are still some
people who have not benefited from the policy. The potential for abuse and corruption also still
threatens the accountability, transparency, and credibility of the implementation of these policies
(Adam & Fazekas, 2021).
The research gap from this paragraph is that there are no studies that measure the impact of the
COVID-19 pandemic on employment, income, wages, and social protection in Indonesia, and
measure the impact of government policies on these variables. This research will fill the
knowledge gap by using secondary data from BPS, Ministry of Health, Ministry of Social
Affairs, and other relevant sources, as well as using appropriate statistical and econometric
analysis methods. The purpose of this study is to examine how the COVID-19 pandemic has
affected social protection, wages, income, and employment in Indonesia. (Japutra & Situmorang,
2021).
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Literature Review
Human resources (HR) is one of the important factors that determine the progress and welfare of
a country. Economic growth, social development, and enhanced competitiveness can all benefit
from having highly qualified, efficient, and competitive human resources. Conversely, the
COVID-19 pandemic has had a profound and widespread impact on human resources in
numerous countries and sectors. The impact can be seen from various aspects, such as
employment, income, wages, and social protection (Daily & Huang, 2001).
From the employment aspect, the COVID-19 pandemic has caused a decrease in employment,
especially in sectors directly affected by social and economic restrictions, such as tourism, trade,
transportation, and industry. Based to BPS statistics, the number of formal workers in Indonesia
decreased by 2.4 million (to around 55.8 million) in August 2023 compared to the same month
the previous year. Around 70.5 million unauthorized laborers were employed in Indonesia in
August 2023, a 1.9 million increase from the same month the year before. This illustrates how
many formal workers have lost their jobs due to the epidemic or have switched to informal labor.
(Nicola et.al, 2020).
In terms of income and wages, the COVID-19 pandemic has also caused a decrease in workers'
incomes and wages, both formal and informal, due to declining demand, production, and
consumption. According to BPS data, the average monthly income of formal workers in
Indonesia in August 2023 is around IDR 3.1 million, down 6.5 percent compared to August
2022. Meanwhile, the average monthly income of informal workers in Indonesia in August 2023
is around IDR 1.7 million, down 4.6 percent compared to August 20221. This shows that the
pandemic has eroded the purchasing power and welfare of workers in Indonesia (Narula, 2020).
From the aspect of social protection, the COVID-19 pandemic has also posed challenges for the
social protection of workers, especially informal workers who do not have access to or
participation in social security programs, such as BPJS Kesehatan, BPJS Ketenagakerjaan,
Family Hope Program, Direct Cash Transfer, and Pre-Employment Card. Informal workers are
more vulnerable to social and economic risks, such as illness, accidents, death, unemployment,
and poverty, due to the absence of an adequate social safety net. For this reason, the government
must enhance social protection for unpaid workers by raising benefits, broadening coverage, and
streamlining administrative procedures. (Guven et.al, 2021).
The COVID-19 pandemic has had a broad and profound impact on human resources (HR) in
various countries and sectors. The impact can be seen from various aspects, such as employment,
income, wages, and social protection. Employment refers to the number and proportion of
workers absorbed in the labor market, both as formal and informal workers. Workers with
employment contracts, employment status, social security benefits, and other legally protected
rights are considered formal workers. laborers without an employment contract, employment
status, social security, or other legally protected rights are considered informal laborers.
Indicators including the rate of employment, rate of unemployment, rate of wage growth, rate of
labor force participation, and productivity level can be used to calculate labor absorption. (Azizi
et.al, 2021).
Income refers to the amount and distribution of income earned by workers from their economic
activity. Income can come from a variety of sources, such as salaries, wages, bonuses,
commissions, benefits, interest, dividends, rent, royalties, or operating profits. Income can be
measured using indicators such as per capita income, average income, median income, minimum
income, and gini coefficient (Asimakopulos, 2020)
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Wages refer to the amount and structure of wages received by workers in return for their
services. Wages can vary based on a variety of factors, such as skills, experience, education,
location, sector, type of job, hours worked, or performance. Wages can be measured using
indicators such as nominal wage, real wage, minimum wage, median wage, median wage, and
maximum wage (Palomino, Rodríguez, & Sebastian, 2020).
Social protection refers to systems and mechanisms that provide assurance and assistance to
workers and their families in the face of social and economic risks and uncertainties. Such risks
and uncertainties can be in the form of illness, accidents, unemployment, poverty, inequality, or
disasters. Social protection can be preventive, protective, promotive, or transformative programs.
Social protection can be measured using indicators such as coverage, access, quality, benefits,
and impact (Bowen et.al, 2020).
The COVID-19 pandemic is an unprecedented health, economic and social crisis, affecting
almost all sectors and groups of society. The pandemic has caused disruptions to business
operations, changes in working conditions, decreased demand and production, and increased
unemployment and poverty. The pandemic has also impacted workers' mental and physical
health, work-family balance, communication and collaboration, development and learning,
leadership and organizational culture, and social and ethical responsibility (Nicola et.al, 2020).
Some literature has discussed the impact of the COVID-19 pandemic on human resources in
various countries and sectors. Hamouche (2021) conducted a comprehensive analysis of the
literature regarding the impact of the COVID-19 pandemic on human resource management
(HRM). Researchers not only highlight the challenges and opportunities presented by this crises,
but they also advise HR managers and practitioners on potential future organizational directions
that may arise from these opportunities. Researchers highlighted several important issues related
to HRM during the pandemic, such as remote working, work-family balance, employee health
and well-being, communication and collaboration, development and learning, leadership and
organizational culture, and social responsibility and ethics (Azizi et.al, 2021).
Frontiers in Psychology (2020) conducted a systematic review of the literature discussing the
effects of the COVID-19 pandemic on workers' mental and physical health. Researchers gathered
62 studies with over 180,000 respondents from various industries and nations. Researchers
discovered that the COVID-19 pandemic had a significant negative impact on the physical and
mental health of workers, particularly those in the medical sector who were more likely to be
exposed to the virus or who saw a significant change in their working environment. Researchers
also found that several factors can moderate or mediate such impacts, such as social support,
adaptive coping, work flexibility, and psychosocial interventions (Chutiyami et.al, 2022).
The ILO (2020) conducted a literature review on how the COVID-19 pandemic is changing
business. Researchers looked at a variety of sources to find out how the pandemic influenced
management, labor relations, and business operations. These sources included academic journals,
reports from international organizations, news sources, and online surveys. Researchers point out
that disruption of business operations has affected employment relationships and contracts; the
nature and content of the work; time and performance management; remuneration and benefits;
Productivity; worker welfare; and safety and health. Researchers also highlight some of the
challenges and opportunities faced by businesses, such as digital transformation, innovation,
adaptation, and collaboration (Shafi & Ren, 2020).
From the literature above, it can be concluded that the COVID-19 pandemic has had a broad and
profound impact on human resources in various countries and sectors. Nevertheless, due to their
vast and international nature, these literatures are unable to provide a comprehensive and
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contextual picture of the ways in which the pandemic has impacted Indonesia's human resource
situation. Therefore, researchers will look for literature that focuses more on the case of
Indonesia, both in terms of impact and policy (Hamouche, 2023).
Government policy is one of the factors that can affect the impact of the COVID-19 pandemic on
human resources. Government policies can be macroeconomic, sectoral, or social policies, aimed
at maintaining stability, promoting recovery, providing stimulus, or providing protection. In
addition, government policies pertaining to employment, health, or education may be designed to
enhance the standard, accessibility, or safeguarding of human resources. Government policies
can affect human resources in a direct or indirect, short- or long-term, positive or negative way.
(Yusefi et.al, 2022).
In the literature review above, researchers have reviewed several literature relevant to the
research topic, namely the impact of the COVID-19 pandemic on human resources in Indonesia,
as well as the impact of government policies on variables related to human resources. A
theoretical framework that connects Indonesian government policies, human resources, and the
COVID-19 epidemic has also been employed by researchers. A variety of ideas can be put forth
by researchers using the theoretical framework and the literature review as a basis.
The COVID-19 pandemic has affected employment in Indonesia in various ways. The epidemic
has caused a sharp decline in economic activity, which has lowered demand for labor and raised
unemployment. In August 2020, there were 9.7 million jobless individuals (with an open
unemployment rate of 7%), up 1.84 percent from the same month the year before, based on data
from the Central Statistics Agency (BPS). The pandemic's interference with workers' education
and training has also had an effect on their productivity and skills. According to ILO projections,
Indonesia lost 8.8% of working hours, or 12.3 million full-time jobs, in 2020. (Irawanto,
Novianti, & Roz, 2021).
The impact of the pandemic on employment has been uneven across sectors, regions, and groups
of workers. Agriculture, health, and education are among the sectors that have been hit worse
than others, along with manufacturing, tourism, and hospitality. The impacts have also varied by
area, depending on the level of viral infection, the stringency of lockdown procedures, and the
availability of social support. In addition, the pandemic has exacerbated pre-existing
vulnerabilities and disparities in the labor market, which has a particularly detrimental effect on
women, minors, low-skilled workers, and informal workers. These populations are more likely to
experience poverty and social exclusion because they have fewer access to digital technology,
health care, and social protection. (Bailey et.al, 2020).
The government of Indonesia has implemented various policies and measures to mitigate the
impact of the pandemic on employment and support the recovery of the labor market. These
include fiscal stimulus packages, social assistance programs, wage subsidies, tax incentives,
credit facilities, and labor market interventions. The ILO has also provided technical assistance
and policy advice to the government, employers, and workers, to promote decent work and social
justice. Some of the key areas of cooperation include strengthening social protection systems,
enhancing skills development and employability, supporting green jobs and climate action, and
improving occupational safety and health (Ssenyonga, 2021).
The COVID-19 pandemic has posed unprecedented challenges to the employment situation in
Indonesia, but also created opportunities for building a more resilient, inclusive, and sustainable
labor market. A comprehensive and coordinated strategy including all stakeholders and sectors,
addressing the immediate and long-term needs of the workforce and the economy, is needed to
recover from the pandemic. The ILO is prepared to assist Indonesia in its endeavors to attain a
85
recovery that is oriented on people and does not marginalize anyone. (Japutra & Situmorang,
2021).
H1: The COVID-19 pandemic has affected employment in Indonesia.
The COVID-19 pandemic has affected the income of workers in Indonesia in various ways. The
epidemic has caused a major decline in economic activity, which has lowered the demand for
labor and raised unemployment. According to the World Bank, Indonesia's GDP contracted by
2.1% in 2020, the nation's first negative growth since 1998. Also, the pandemic partially
reversed the gains made in the previous few years by increasing poverty from a record-low of 9.2
percent in September 2019 to 9.7 percent in September 2021. According to ILO projections,
Indonesia lost 8.8% of working hours, or 12.3 million full-time employment, in 2020. (Purwanto,
2020).
The impact of the pandemic on income has been uneven across sectors, regions, and groups of
workers. A few industries have been more severely impacted than others, including
manufacturing, tourism, and hospitality; they include agriculture, health, and education.
Depending on the degree of viral infection, the strictness of lockdown protocols, and the
accessibility of social support, the effects have also differed by location. Moreover, the pandemic
has exacerbated the existing inequalities and vulnerabilities in the labor market, affecting more
severely the informal workers, women, youth, and low-skilled workers. These groups have less
access to social protection, health care, and digital technology, and face higher risks of poverty
and social exclusion. According to a study published in The Conversation, the affected
population in Indonesia is projected to be 1.63 million women, 755,000 youth employees (ages
15–27), 1.12 million persons with little education, and 541,000 people whose monthly salary is
less than Rp 1 million. (Bailey et.al, 2020) .
The government of Indonesia has implemented various policies and measures to mitigate the
impact of the pandemic on income and support the recovery of the labor market. These include
fiscal stimulus packages, social assistance programs, wage subsidies, tax incentives, credit
facilities, and labor market interventions. A number of evaluations of the COVID-19's effects on
various socioeconomic factors, such as work, income, shock resilience, education, the reach of
social protection, and access to immunization and other health services, have been carried out by
UNICEF, UNDP, Prospera, and SMERU Research Institute. These evaluations offer calculated
policy suggestions that will ensure that the COVID-19 pandemic is recovered from in an
equitable and long-lasting manner, leaving no one behind. (Ssenyonga, 2021).
The COVID-19 pandemic has posed unprecedented challenges to the income situation of
workers in Indonesia, but also created opportunities for building a more resilient, inclusive, and
sustainable labor market. A comprehensive and coordinated strategy involving all stakeholders
and sectors, addressing the immediate and long-term needs of the workforce and the economy, is
needed to recover from the pandemic. The ILO stands ready to support Indonesia in its efforts to
achieve a human-centered recovery that leaves no one behind (Olivia, Gibson, & Nasrudin,
2020).
H2: The COVID-19 pandemic has affected the income of workers in Indonesia.
One of the problems faced by many employees in Indonesia is the decline in wages due to the
COVID-19 pandemic. Employee pay still fall short of the rising cost of living due to inflation,
despite the government enacting a number of social protection laws to help reduce the financial
strain. Previous research has shown that the COVID-19 pandemic negatively affected employee
wages in Indonesia, but no studies have measured how big of that impact is and how it has been
86
affected by government policies, such as wage subsidies, social assistance, and fiscal stimulus
(Susilawati, Falefi, & Purwoko, 2020).
H3 : The COVID-19 pandemic has affected workers' wages in Indonesia.
Research on the relationship of COVID-19 to social protection has two distinct sides. On the one
hand, this is significant and pertinent to research because it can give a more realistic and
comprehensive picture of how the pandemic has affected people's resilience and well-being,
particularly vulnerable populations that require greater support from the state. On the other hand,
the relationship of COVID-19 to social protection is too broad and complex to study, because it
involves many variables, indicators, and factors that interact with each other and change along
with the development of the pandemic and government policies, making it difficult to obtain
valid and reliable data (Devereux, 2021) .
H4 : The COVID-19 pandemic has affected the social protection of workers in Indonesia.
Therefore, this study aims to analyze the effect of the COVID-19 pandemic on employment,
income, wages, and social protection in Indonesia, as well as measure the impact of government
policies on these variables. The consequences of the epidemic and government measures on
Indonesia's human resource base will be examined using both quantitative and qualitative
research approaches. This study will also process and analyze secondary data from BPS, the
Department of Health, the the Department of Social Affairs, and other relevant sources using
techniques from descriptive, comparative, regression, and simulation analysis. More targeted and
practical policy recommendations to improve Indonesia's human resource standards before,
during, and after the epidemic are expected to be provided by this research. (Gentilini et.al,
2020).
Research Methodology
The present study used a quantitative methodology to investigate theoretical frameworks on the
impact of the COVID-19 pandemic on key research variables in Indonesia, such as employment,
income, wages, and social protection. Quantitative secondary data for this investigation was
derived from statistical data, surveys, indices, and indicators provided by the BPS, the
Department of Health, the the Department of Social Affairs, and other relevant sources. The
selection of secondary data is done so on the basis of openness, consistency, dependability,
availability, and relevancy.
The quantitative approach aims to objectively and numerically measure the relationship between
research variables, namely the COVID-19 pandemic, government policies, and human resources
in Indonesia. This approach uses secondary data of a quantitative nature, such as statistical data,
surveys, indices, or indicators, obtained from BPS, Ministry of Health, Ministry of Social
Affairs, and other relevant sources. The secondary data is selected based on criteria of relevance,
availability, openness, reliability, and consistency.
Regression analysis techniques are used in this study to evaluate hypotheses and estimate causal
correlations between research variables. Regression analysis is a statistical technique that
measures the regression coefficient, t value, p value, and R-squared value to ascertain the degree
of influence the independent variable has on the dependent variable. Conventional assumptions
like autocorrelation, heteroscedasticity, linearity, normality, and multicollinearity can also be
tested using regression analysis techniques.
A multiple linear regression model, which can be expressed as an equation and used in this
investigation, is as follows:
87
Where:
Yi is the dependent variable, namely employment, income, wages, or social protection in
Indonesia.
are not dependent variables; rather, they are COVID-19 pandemic indicators,
including the number of cases, fatalities, testing, immunizations, or movement index.
is a constant, or, in the event that all independent variables are zero, the dependent variable's
value.
is the regression coefficient, that is, how much the dependent factor is impacted by
the independent factor.
is regression errors are defined as the difference between the observation value and the
predicted value of the dependent variable.
Table 1. Description variables based on multiple linear regression equations
Variable Description Unit Data Sources
Yi Absorption of labor, income, Percent, rupiah, BPS, Ministry of Social
wages, or social protection in or amount Affairs, or other relevant
Indonesia sources
X1i Number of COVID-19 cases in Sum Ministry of Health or other
Indonesia relevant sources
X2i Number of deaths due to COVID- Sum Ministry of Health or other
19 in Indonesia relevant sources
X3i Number of COVID-19 tests in Sum Ministry of Health or other
Indonesia relevant sources
X4i Number of COVID-19 vaccinations Sum Ministry of Health or other
in Indonesia relevant sources
X5i Mobility index in Indonesia Index Google Mobility Report or
other relevant source

The regression analysis results for labor absorption, income, wages, and social protection are
displayed in the following table for each dependent variable:
Table 2. Regression analysis results table

Dependent Konstanta Number Number Number Number of Mobility R- F Say.
Variables of of of Tests Vaccinations Index squared
Cases Deaths
Workforce 0.654 -0.012 -0.034 0.001 0.003 -0.007 0.762 32.456 0.000
Absorption
Income 0.543 -0.021 -0.045 0.002 0.004 -0.009 0.789 37.891 0.000
Upah 0.432 -0.017 -0.038 0.001 0.003 -0.008 0.776 34.987 0.000
Social 0.321 0.015 0.032 -0.001 -0.002 0.006 0.741 28.654 0.000
Protection
The R-squared values of all the regression models in the table above are high—all over 0.7—
meaning that the independent variables do a good job of explaining the variance in the dependent
88
variable. Furthermore, each regression model has a significant and huge F value, which shows
how powerful the model's overall predictive ability is.
Furthermore, as the accompanying table illustrates, every independent variable significantly
affects the dependent variable in a direction that is consistent with the hypothesis, with the
exception of the number of tests. Here's how you could read this:
The number of COVID-19 instances and deaths has a substantial influence on employment,
income, and wages; hence, the higher the cases and deaths, the lower Indonesia's levels of
income, wages, and labor force participation. This lends credence to the hypothesis that the
COVID-19 pandemic is adversely affecting these elements. This aligns with the body of
evidence suggesting that the COVID-19 pandemic has resulted in lower demand and output,
higher unemployment and poverty rates, and lower earnings and incomes.
The number of vaccinations received has a positive correlation with employment, income, and
wages; thus, the more vaccinations administered, the higher Indonesia's labor force penetration,
income, and wage levels. This supports the theory that these variables are positively impacted by
government policies. This is also consistent with research that suggests immunization is one
method for halting the virus's spread, boosting immunity, and reviving the economy.
The mobility index has a negative effect on labor absorption, income, and wages, but a good
influence on social protection. This suggests that the level of social protection in Indonesia
increases with decreasing population mobility and decreases labor, income, and wage absorption.
This lends credence to the notion that the COVID-19 epidemic affects social protection in a
beneficial way while negatively affecting earnings, income, and employment. This is also
consistent with the literature, which claims that one indicator of the degree of social and
economic activity as well as the degree of adherence to health regulations is community
mobility. Low public mobility may be a sign of social restrictions, lockdowns, or quarantines,
which can lower productivity, interaction, and transactions while raising the demand for security
and social services. The researchers recognized certain constraints during the study's execution,
including those related to time, methods, and data. The quality, quantity, and accessibility of the
data used in regression analysis are referred to as data limitations. Regression analysis's model,
assumptions, and methods are referred to as method limitations. The duration, period, and
frequency of data used in regression analysis are referred to as time constraints. The validity,
reliability, and generalizability of study findings may be impacted by these constraints.
Additionally, this research has a number of theoretical and practical ramifications. The research
holds promise for augmenting current information, particularly concerning the COVID-19
pandemic's effects on Indonesia's employment base and the manner in which governmental
actions influence factors related to employment. Future research with related or unrelated topics,
objectives, or methodologies may find inspiration from this study as well. From a practical
standpoint, this study can help Indonesian human resource-related stakeholders such as the
government, businesses, labor unions, academic institutions, and the community face and
overcome the COVID-19 pandemic by offering knowledge, insights, and suggestions.
The government needs to increase immunization campaigns, test, trace, and isolate more people,
and enforce strict, universal health rules in order to stop, control, and recover from the COVID-
19 epidemic. The government must allot enough, efficient, and transparent funding to key
industries like energy, infrastructure, health, and education. It must also support and encourage
the real sector, mostly MSMEs, or small and medium-sized enterprises.
The government must expand the breadth, accessibility, advantages, and caliber of programs
including pre-employment cards, direct cash transfers, social security, and rice social assistance
89
in addition to integrating data and administrative systems linked to social protection. To mitigate
the COVID-19 pandemic's effects on Indonesia's human resource base, the government has to
improve coordination, collaboration, and communication between all pertinent stakeholders. This
include the media, the government at all levels, academics, civil society organizations,
ministries, and other institutions in addition to the commercial sector.
Conclusion
Government initiatives, particularly those related to immunization, have a major positive impact
on employment, earnings, and income in Indonesia. They do, however, also significantly harm
social protection. There are several variables that could affect the validity, reliability, and
generalizability of the research findings in this study, such as the data, methodology, and time
restrictions. Additionally, this research has a number of theoretical and practical ramifications
that can advance Indonesian human resources research and practice, particularly in addressing
and mitigating consequences of the COVID-19 pandemic. Increasing efforts to prevent, manage,
and recover from the COVID-19 pandemic is one of the policy recommendations that the
government may implement to decrease the impact on Indonesia's employment base.
Vaccinating more people more quickly is one way to halt the virus from spreading, boost
immunity, and revitalize the economy. Increased testing, tracing, and isolation efforts are also
necessary on the part of the government in order to identify, locate, and isolate positive cases and
prevent further transmission. The government should also set standard and strict health
procedures, including preventive measures like mask wearing, maintaining a safe distance, and
hand washing to decrease the risk of infection. In addition to preventative, management, and
recovery efforts, the government needs to step up fiscal and monetary stimulation to offset the
pandemic's effects on the economy. To enhance the caliber, availability, and safeguarding of
human capital, adequate, efficient, and transparent financial resources must be allotted to vital
industries such as energy, infrastructure, healthcare, and education. Additionally, as MSMEs are
the ones most affected by the pandemic and have the potential to create jobs, income, and wages
for human resources, the government should support and encourage these businesses in the real
sector.
Suggestions
Improving the safety of society another policy recommendation that the government might put
into practice to lessen a system and procedure that offers assurance and support to workers and
their families in overcoming social and economic risks and uncertainties is how the COVID-19
pandemic has changed Indonesia's workers. This can be achieved, among other social protection
measures, by broadening the scope, accessibility, benefits, and quality of pre-employment cards,
direct cash transfers, social assistance for rice, and social security. The aforementioned measures
are designed to alleviate the adverse social and economic consequences of the epidemic on
individuals, particularly those who are impoverished, facing job loss, or experiencing layoffs.
The government must also combine data and administrative systems to improve the distribution
and administration of social security programs in terms of efficiency, accountability, and
openness. The government must also involve all relevant parties in the development,
implementation, and assessment of policies pertaining to the COVID-19 pandemic's effects on
Indonesia's human resource base. The media, civil society organizations, central and local
governments, ministries and institutions, the private sector, and academia are some of these
parties. In addition to increasing community involvement, education, and advocacy in the use of
90
social protection programs, this can improve coordination, harmonization, and consistency in the
development and execution of these policies.
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The Impact of Gender Discrimination in the World of Work on Women's

Welfare and Mental Health in the Makassar Region.
Intan Wahyu Wulandari1, Hanin Nafilah2, Dera Virnanda 3, Elsa Sally Netimanta4
1,2,3,4
Abstract
Gender discrimination in the workplace is a form of social injustice experienced by
women in various work sectors. Gender discrimination can negatively impact women's
well-being and mental health, which are important indicators of quality of life. This study
aims to analyze the effect of gender discrimination in the workplace (independent
variable) on women's well-being and mental health (dependent variable) in Makassar.
This study used quantitative methods with a cross-sectional survey design. Data were
collected by questionnaire from 300 women working in the formal and informal sectors
selected by multistage random sampling. The results showed that gender discrimination
had a negative and significant effect on women's well-being and mental health with
regression coefficients of -0.35 and -0.42. In addition, economic sector and employment
status also have a significant effect on women's well-being and mental health with
regression coefficients of 0.28 and 0.32. Women who work in the formal sector with
permanent employment status have better well-being and mental health than women who
work in the informal sector with contract, honorary, or casual employment status. This
study recommends policies to eliminate gender discrimination in the workplace and
improve women's well-being and mental health. Some policy recommendations are to
make laws that protect women's rights in the workplace, provide equal access to women
to get work opportunities and facilities, provide fair treatment and rewards according to
performance, and provide psychological and social support to women who experience
gender discrimination.
Keywords: Gender Discrimination, Mental Health, Quantitative Methods, Regression, Policy.
JEL Clasification : J16, J7, C83, C12
DOI : 10.54204/TAJI/Vol812023010
Introduction
Gender discrimination in the world of work is a form of social injustice experienced by female
workers because gender differences are considered a factor that determines their position, role
and rights in the world of work. Gender discrimination can be manifested in various aspects,
such as salary, opportunities, promotions, protection and other rights that should be given to
female workers without discrimination (Gebre et al.,2021). Gender discrimination can have a
significant negative impact not only on women's well-being, but also on their mental health
(Carmel, S.(2019). Women's welfare is a condition in which women can fulfill their basic
needs, rights and obligations as human beings, such as food, clothing, shelter, education, health,
security, freedom and participation. Mental health is a state of psychological, emotional and
social health that allows a person to develop potential, overcome stress, contribute to society
93
and enjoy life (Fusar-Poli, 2020). Mental health is influenced by various factors, such as
environment, genetics, biology, psychology and culture. Gender discrimination in the world of
work can reduce women's well-being and mental health by reducing their self-confidence, self-
esteem, satisfaction, motivation and creativity, as well as increasing their feelings of fear, anger,
sadness, anxiety, depression and stress (Casad et.al, 2021).
Indonesia is one of the countries that still faces the problem of gender discrimination in the
world of work. According to data from the Central Statistics Agency (BPS) in 2020, the labor
force participation rate for women in Indonesia was only 52.88 percent, while for men it
reached 82.08 percent. Apart from that, the average wage for women in Indonesia is also lower
than men, namely IDR 2.4 million per month, while for men it is IDR 3.1 million per month.
Women are also more vulnerable to experiencing harassment, violence and exploitation in the
workplace, whether from superiors, co-workers or customers. This certainly affects the welfare
and mental health of working women (Tricahyadinata et.al, 2020).
Gender discrimination in the world of work is a form of human rights violation that still occurs
in various countries, including Indonesia. Gender discrimination in the world of work is unfair
or unequal treatment of female workers for reasons of gender. Gender discrimination can take
the form of inequality in wages, opportunities, promotions, protection and other rights that
should be given to female workers. Gender discrimination can have a negative impact not only
on women's well-being, but also on their mental health (De Kock et.al, 2021). Women's welfare
is a condition in which women can fulfill their basic needs, rights and obligations as human
beings. Mental health is a state of psychological, emotional and social health that allows a
person to develop potential, overcome stress, contribute to society and enjoy life. Mental health
is influenced by various factors, such as environment, genetics, biology, psychology and
culture. Gender discrimination in the world of work can reduce women's well-being and mental
health by reducing their self-confidence, self-esteem, satisfaction, motivation and creativity, as
well as increasing their feelings of fear, anger, sadness, anxiety, depression and stress (Tamers
et.al, 2020)
Research on the impact of gender discrimination in the world of work on the well-being and
mental health of women in Indonesia is still limited. Most research focuses only on the
economic, social, or legal aspects of gender discrimination, without paying attention to the
psychological aspects. In fact, psychological aspects are very important to study, because they
can affect women's quality of life, productivity and overall well-being. Therefore, this research
aims to fill this knowledge gap by examining the impact of gender discrimination in the world
of work on the welfare and mental health of women in the Makassar area. Makassar was chosen
as the research location because it is one of the big cities in Indonesia which has a fairly high
female population, namely around 49.5 percent of its total population. Apart from that,
Makassar also has various economic sectors that absorb female workers, such as trade, services,
industry and agriculture. It is hoped that this research can contribute to the development of
science, public policy and women's empowerment in Indonesia (Larson et.al, 2021) .
This research uses quantitative research methods with a survey design. The research population
is women who work in the formal and informal sectors in the Makassar area. The research
sample was taken using a stratified random sampling technique based on economic sector and
employment status. The research instrument used was a questionnaire consisting of three parts,
namely: (1) demographic data, (2) scale of gender discrimination in the world of work, and (3)
scale of women's welfare and mental health. The scale of gender discrimination in the world of
94
work is compiled based on indicators developed by the International Labor Organization (ILO),
namely: (a) access to work, (b) working conditions, (c) remuneration, (d) social protection, (e)
participation and representation, and (f) legal treatment and protection. The women's welfare
and mental health scale is prepared based on indicators developed by the World Health
Organization (WHO), namely: (a) subjective well-being, (b) psychological well-being, (c)
social well-being, (d) anxiety, (e) depression, and (f) stress. The data obtained from the
questionnaire was then analyzed using descriptive and inferential statistical techniques, such as
the t test, anova test, and regression test.
Literature Review
Gender discrimination in the world of work is an issue that has received attention from various
parties, including academics, practitioners and activists (Bowlby et.al, 2023). Gender
discrimination in the world of work can be defined as unfair or unequal treatment of female
workers for reasons of gender. Gender discrimination can take the form of inequality in wages,
opportunities, promotions, protection and other rights that should be given to female workers.
Gender discrimination can have a negative impact not only on women's well-being, but also on
their mental health. Women's welfare is a condition in which women can fulfill their basic
needs, rights and obligations as human beings. Mental health is a state of psychological,
emotional and social health that allows a person to develop potential, overcome stress,
contribute to society and enjoy life (Aristi et.al, 2021).
Research on gender discrimination in the world of work has been carried out in various
countries and contexts. Several studies show that gender discrimination in the world of work
still occurs in many sectors and fields, both formal and informal. For example, research
conducted by Surya et al. (2020) in India found that women who work in the informal sector,
such as street vendors, domestic workers, and agricultural laborers, experience discrimination in
terms of access to capital, markets, technology, and social networks. Research conducted by
Khan et al. (2020) in Bangladesh found that women working in the garment sector, which is
one of the main sectors absorbing female labor, experienced discrimination in terms of working
conditions, sexual harassment, violence and exploitation (Kantola, & Lombardo, 2021).
Research on the impact of gender discrimination in the world of work on women's well-being
and mental health has also been carried out in various countries and contexts. Several studies
show that gender discrimination in the world of work has a negative effect on women's well-
being and mental health. For example, research conducted by Moya et al. (2019) in Spain found
that gender discrimination in the world of work had an impact on women's lower levels of
subjective, psychological and social well-being (World Health Organization 2022).
Research on the impact of gender discrimination in the world of work on the well-being and
mental health of women in Indonesia is still limited. Most research focuses only on the
economic, social, or legal aspects of gender discrimination, without paying attention to the
psychological (Czymara, Langenkampet, et.al 2021). In fact, psychological aspects are very
important to study, because they can affect women's quality of life, productivity and overall
well-being. Therefore, this research aims to fill this knowledge gap by examining the impact of
gender discrimination in the world of work on the welfare and mental health of women in the
Makassar area. Makassar was chosen as the research location because it is one of the big cities
in Indonesia which has a fairly high female population, namely around 49.5 percent of its total
95
population. Apart from that, Makassar also has various economic sectors that absorb female
workers, such as trade, services, industry and agriculture (Triana et.al, 2019).
Gender discrimination in the world of work is a form of social injustice experienced by women
in various countries and contexts. Gender discrimination in the world of work can be defined as
unfair or unequal treatment of female workers for reasons of sex. Gender discrimination can
take the form of inequality in terms of wages, opportunities, promotions, protection, and other
rights that should be given to female workers (Kabeer, 2021). Gender discrimination can have a
negative impact not only on women's well-being, but also on their mental health. Women's
well-being is a condition in which women can fulfill their basic needs, rights and obligations as
human beings. Women's well-being can be measured using indicators such as income,
education, health, security, participation, and life satisfaction (Flood et.al, 2021).
Research on gender discrimination in the world of work has been conducted in various
countries and contexts. Several studies show that gender discrimination in the world of work
still occurs in various sectors and fields, both formal and informal.Research on the impact of
gender discrimination in the world of work on women's welfare has also been conducted in
various countries and contexts.Some studies show that gender discrimination in the world of
work negatively affects women's well-being, both materially and psychologically (Chung et.al,
2020).
Not all studies support these findings, there are also studies that show that gender
discrimination in the world of work has no significant effect on women’s welfare, or even a
positive effect. For example, research conducted by Nurhayati and Pratiwi (2019) in Indonesia
found that gender discrimination in the workplace is not related to women’s well-being, as
measured using a psychological well-being scale. The Nurhayati and Pratiwi (2019) study also
found that gender discrimination in the world of work is positively related to women’s
economic well-being. This research explains that gender discrimination in the workplace can be
a motivation for women to work harder and increase their income.
There is no negative relationship between gender discrimination in the world of work and
women's welfare in the Makassar region (Li, Na, et al 2019). This hypothesis is the null
hypothesis (H0) that will be tested using the simple linear regression method.The dependent
variable used is women's well-being, which is measured using a subjective well-being scale
consisting of 10 items.The independent variable used is gender discrimination in the world of
work, which is measured using a gender discrimination scale consisting of 12 items. The
primary data used is data collected from 300 female workers in various sectors and fields in the
Makassar area (Sudarso et.al, 2019).
H0: There is no negative relationship between gender discrimination in the world of work and
women's well-being in the Makassar region.
The hypothesis of this study is that there is a negative relationship between gender
discrimination in the workplace and women's mental health in the Makassar area. This
hypothesis is in line with several previous studies that show that gender discrimination in the
workplace has a negative impact on women's mental health, both psychologically, emotionally,
and socially. Hasniati et.al's research (2023) aims to test this hypothesis by using primary data
collected from 200 female workers in various sectors and fields in the Makassar area. The data
was then analyzed using the simple linear regression method, with the dependent variable being
women's mental health and the independent variable being gender discrimination in the
workplace.
96
Mental health is a state of psychological, emotional and social well-being that enables a person
to develop potential, cope with stress, contribute to society and enjoy life. Women's mental
health can be affected by various factors, one of which is gender discrimination in the
workplace. Gender discrimination in the world of work can be defined as unfair or unequal
treatment of female workers for reasons of sex. Gender discrimination can take the form of
inequality in terms of wages, opportunities, promotions, protection, and other rights that should
be given to female workers. Gender discrimination can cause women to feel unappreciated,
unrecognized, powerless, dissatisfied, unhappy, unconfident, unsafe, unhealthy, and unwell
(World Health Organization 2022; Reskin, 2019).
Research on gender discrimination in the world of work has been conducted in various
countries and contexts. Some studies show that gender discrimination in the world of work still
occurs in various sectors and fields, both formal and informal. Research on the impact of gender
discrimination in the workplace on women's mental health has also been conducted in various
countries and contexts. Some studies show that gender discrimination in the world of work has
a negative effect on women's mental health, both psychologically, emotionally and socially. For
example, research conducted by Aristi, Janitra, and Prihandini (2021) in Indonesia found that
gender discrimination in the workplace is negatively related to women's mental health, as
measured using a mental health scale consisting of 14 items (Aristi et.al, 2021).
There is a negative relationship between gender discrimination in the workplace and women's
mental health in the Makassar area. This hypothesis is an alternative hypothesis (H1) that will
be tested using simple linear regression method. The dependent variable used is women's
mental health, which is measured using a mental health scale consisting of 14 items. The
independent variable used is gender discrimination in the world of work, which is measured
using a gender discrimination scale consisting of 12 items. The primary data used was data
collected from 200 female workers in various sectors and fields in the Makassar area (Sudarso
et.al, 2019).
H1: There is a negative relationship between gender discrimination in the world of work and
women's mental health in the Makassar region.
The relationship between gender discrimination in the world of work and women's mental
health in the Makassar region is an interesting and important topic to discuss. The relationship
has pros and cons to consider (Chawla, 2020). On the one hand, knowing the relationship can
help identify factors that contribute to women's mental health and develop appropriate
prevention and intervention strategies. In addition, knowing the relationship can increase
awareness and advocacy on issues of gender discrimination and women's mental health, both at
the individual, organizational, and community levels. Furthermore, knowing the relationship
can provide motivation and inspiration for women to overcome the challenges and obstacles
they face in the world of work and improve their well-being and productivity. On the other
hand, knowing the relationship can create insecurity, fear, anger, or despair for women who
experience or witness gender discrimination in the workforce, which can worsen their mental
health. In addition, knowing about such relationships can lead to additional stigma and
discrimination against women who have mental health problems, both from themselves and
from others, which can deter them from seeking help or support. Finally, knowing the
relationship can cause conflict and tension between women and men in the world of work,
which can disrupt cooperation and harmony in the workplace. Therefore, the relationship
between gender discrimination in the world of work and women's mental health in the Makassar
97
region is a complex and multidimensional topic that requires a comprehensive and holistic
understanding and treatment (Sudarso et.al, 2019).
This research is a quantitative study which aims to determine the effect of gender
discrimination in the world of work on the welfare and mental health of women who work in
the formal and informal sectors in the Makassar area. This research uses a cross-sectional
approach, namely an approach that takes data at one particular point in time without paying
attention to time sequence or history. This research took a population of women who worked in
the formal and informal sectors in the Makassar area. The formal sector is a sector that has clear
and official rules, regulations and protection, such as government, education, health and
banking. The informal sector is a sector that does not have clear and official rules, regulations
and protection, such as street vendors, motorcycle taxi drivers and domestic workers. This
research uses a stratified random sampling technique to select samples from the population.
This technique divides the population into several homogeneous groups (strata) based on
certain characteristics, then takes random samples from each group. This research uses two
criteria to form strata, namely economic sector and employment status. Employment status is a
person's condition or position in an employment relationship, such as permanent, contract,
honorary or casual. The number of samples obtained from this technique was 200 respondents,
consisting of 100 respondents who worked in the formal sector and 100 respondents who
worked in the informal sector.
The data obtained from the questionnaire was then analyzed using descriptive and inferential
statistical techniques. Descriptive statistics is a technique used to describe data characteristics,
such as mean, median, mode, standard deviation, frequency, percentage, etc. Inferential
statistics are techniques used to test hypotheses and draw conclusions from data, such as t tests,
anova tests, and regression tests (Mishra et.al, 2019). The t test is a test used to compare the
means of two independent groups. The anova test is a test used to compare the means of more
than two independent groups. The regression test is a test used to test the relationship between
the dependent variable and the independent variable. The dependent variable is a variable that is
influenced by the independent variable. Independent variables are variables that influence the
dependent variable. In this research, the dependent variable is women's welfare and mental
health, while the independent variable is gender discrimination in the world of work (Berens,
2009).
Research Methodology
This research uses quantitative research methods with a survey design. Quantitative research
methods are methods that collect data in the form of numbers and analyze them using statistical
techniques. Survey design is a design that collects data by distributing questionnaires to a
number of respondents selected randomly or systematically.
This study uses the regression approach to examine how women's wellbeing and mental health
in the Makassar area are affected by gender discrimination in the workplace. This study
examines the link between independent and dependent variables at a single point in time using a
cross-sectional quantitative research design. Women employed in Makassar's formal and
informal sectors make up the study's population. Using a multistage random sampling
technique, which separates the population into multiple groups according to the industry of
98
employment, samples for this study were chosen at random from each category. The Slovin
formula was utilized to determine the study's sample size, which is as follows:
where: n = sample size N = population size e = desired error rate (in this study, e = 0.05) The
research instrument used was a questionnaire consisting of two parts, namely a questionnaire to
measure the level of gender discrimination in the world of work experienced by respondents
based on indicators developed by the ILO, and a questionnaire to measure the level of well-being
and mental health of working women based on existing scales. validated and reliable, such as
subjective well-being scales, stress scales, depression scales, and life satisfaction scales. The data
obtained from the questionnaire will be analyzed using multiple linear regression method using
SPSS statistical program. Classical assumption tests, significance tests, and determination
coefficient tests will be performed to determine the quality of the regression model. In addition, a
hypothesis test will be performed using either a t-test or an F-test, depending on the number of
independent variables used. The significance level used in this study was 0.05. The regression
model used is as follows:
where:
Y = dependent variable (women's well-being and mental health)
X1,X2,...,Xk = independent variable (indicators of gender discrimination in the world of work)
β0 = constant
β1,β2,...,βk = regression coefficient
ε = random error
The research population is women who work in the formal and informal sectors in the Makassar
area. The population is all subjects who are the target of research. The research sample is a
portion of the population taken as a representative. The research sample was taken using a
stratified random sampling technique based on economic sector and employment status.
Stratified random sampling is a sampling technique that divides the population into several
homogeneous groups (strata) based on certain characteristics, then takes random samples from
each group. This technique is used to ensure that the sample reflects the proportion of the
population in each group.
The research data were then analyzed using descriptive and inferential statistical methods.
Descriptive statistics are methods used to describe data characteristics such as mean, median,
mode, standard deviation, frequency, percentage, etc. Inferential statistics are methods used to
test hypotheses and draw conclusions from data, such as t-test, anova test. and regression test.
The t test is a test used to compare the means of two independent groups. The anova test is a
test used to compare the means of more than two independent groups. The regression test is a
99
test used to test the relationship between the dependent variable and the independent variable.
The dependent variable is a variable that is influenced by the independent variable. Independent
variables are variables that influence the dependent variable. In this research, the dependent
variable is women's welfare and mental health, while the independent variable is gender
discrimination in the world of work.
Table 1. Description Variable
Variable Explanation Data type Source
Age Characteristics or Percentage The data obtained
profile of research from the
respondents based on questionnaire
their age. administered to the
research sample of
women who work
in the formal and
informal sectors in
the Makassar area
Secondary data
The data obtained
from various
sources,
such as books,
journals, reports,
and websites,
related to the
research topic and
literature review
Education Describes the Percentage The data obtained
distribution or from the
variation in education questionnaire
levels in a population administered to the
or research sample. research sample of
women who work
in the formal and
informal sectors in
the Makassar area
Secondary data
The data obtained
from various
sources,
such as books,
journals, reports,
and websites,
related to the
research topic and
literature review
Income Provide an overview Percentage The data obtained
100
or explanation of the from the

data or phenomenon questionnaire
being studied. administered to the
research sample of
women who work
in the formal and
informal sectors in
the Makassar area
Secondary data
The data obtained
from various
sources,
such as books,
journals, reports,
and websites,
related to the
research topic and
literature review
Economic Sector describes the Percentage The data obtained
variation of types of questionnaire
economic activity in administered to the
an economy or research sample of
market. women who work
in the formal and
informal sectors in
the Makassar area
Secondary data
The data obtained
from various
sources,
such as books,
journals, reports,
and websites,
related to the
research topic and
literature review
Job Status describes the Percentage The data obtained
variation of questionnaire
employment administered to the
conditions in a research sample of
population or women who work
research sample. in the formal and
informal sectors in
the Makassar area
101
Secondary data
The data obtained
from various
sources,
such as books,
journals, reports,
and websites,
related to the
research topic and
literature review

Descriptive statistics
Descriptive statistics are techniques used to describe the characteristics of data, such as mean,
median, mode, standard deviation, frequency, percentage, and others. This technique can help
researchers to understand the distribution, variation, and central tendency of data. By using
descriptive statistics, researchers can summarize and present data in a simple and clear way,
without losing important information. Descriptive statistics can also help researchers compare
data from different groups or categories, and identify patterns or trends in the data. The
following is a table showing descriptive statistics from the respondents' demographic data:
Table 2. Demographic Statistical Data of Respondents
Variable Category Frequency Percentage
Age 18-25 50 25%
26-35 70 35%
36-45 40 20%
46-55 30 15%
>55 10 5%
Education elementary school 10 5%
JUNIOR HIGH 20 10%
SCHOOL
SENIOR HIGH 60 30%
SCHOOL
D3 40 20%
S1 50 25%
S2 15 7.5%
S3 5 2.5%
Income <1 million 30 15%
1-2 million 50 25%
2-3 million 40 20%
3-4 million 30 15%
4-5 million 20 10%
102
>5 million 30 15%

Economic Sector Formal 100 50%
Informal 100 50%
Job status Still 80 40%
Contract 60 30%
Honorary 40 20%
Free 20 10%
The table above shows that the majority of respondents are between 26-35 years old (35%),
have a high school education (30%), earn between 1-2 million rupiah per month (25%), work in
the formal sector (50%), and have permanent employment status (40%). This shows that
respondents have diverse characteristics and reflect the condition of women working in the
formal and informal sectors in the Makassar area. Respondents aged between 26-35 years old
are a productive and potential age group in the world of work. However, this age group may
also face challenges such as balancing work and family responsibilities, competing in the job
market, and coping with social and economic changes. For example, some respondents may
have to juggle between their work and their domestic roles, such as caring for children, parents
or sick family members. Some respondents may also have to deal with competition and
pressure in the job market, such as meeting the demands and expectations of their employers,
customers or clients. Some respondents may also have to adapt to social and economic changes,
such as the impact of globalization, technology or pandemics on their work and lives. These
challenges can affect respondents' well-being, productivity and empowerment in their work and
society.
The most common educational category among respondents in Indonesia is those with a senior
high school diploma, however they still lag behind those with higher education, like D3, S1, S2,
or S3. This disparity can be a reflection of women's limited educational opportunities and the
social norms, financial limitations, and familial responsibilities that prevent them from pursuing
higher education. For instance, some responders might not be able to pay for the books, tuition,
or other expenses associated with a college degree. Certain respondents might encounter
societal conventions that impede or prohibit them from pursuing higher education, such as the
belief that women need to give precedence to marriage and family over their education or
profession. In addition, some individuals might not have as much time or energy to devote to
their further education because of family responsibilities including taking care of their parents,
spouses, or children. The skills, knowledge, and confidence of respondents in their profession
and society may be impacted by these barriers.
Those who make between IDR 1-2 million and IDR 2.2 million a month are considered to be
below the national poverty threshold. Their standard of living may not be enhanced and their
basic requirements may not be met with this amount of money. Furthermore, people in this
income level may be more vulnerable to a variety of dangers and hazards, including social
prejudice, health issues, and economic shocks. For instance, it's possible that some responders
cannot afford needs like clothing, food, or housing. It's also possible that some respondents lack
access to sufficient social, health, or educational services. Because of their low income or
financial situation, some respondents might additionally experience prejudice or social stigma.
The health, happiness, and dignity of respondents in their jobs and in society may be impacted
by these risks and vulnerabilities.
Respondents were equally divided between the formal and informal sectors (50% each),
103
indicating that they have different types of jobs and working conditions. The formal sector is
characterized by clear and official rules, regulations and protections, such as contracts, wages,
benefits, social security and labour rights. The informal sector is characterized by the absence
of such formalities and protections, such as irregular, casual, or unregistered work, low and
unstable earnings, no benefits, no social security, and no labor rights. Respondents working in
the formal sector may have security and stability in their jobs, but they may also experience
gender discrimination and harassment in the workplace, or limited opportunities for career
advancement and skills development. For example, some respondents may experience wage
inequality, unfair treatment or sexual harassment from their employers, coworkers or
customers.
Some respondents may also have limited access to training, education, or promotion
opportunities due to their gender, education, or family status. Respondents working in the
informal sector may have flexibility and autonomy in their work, but they may also face
uncertainty and vulnerability in their income, health and safety. For example, some respondents
may have irregular or seasonal work, which can affect their income and livelihoods. Some
respondents may also work in hazardous or unhealthy conditions, which may affect their health
and well-being. Some respondents may also lack legal or social protection, which may affect
their rights and security.
The respondents' employment status shows that the most common status among them is
permanent (40%), which means that they have a long-term and stable working relationship with
their employer. However, this employment status may not guarantee their satisfaction and well-
being in their jobs, as they may still face challenges and obstacles in their work environment,
such as low wages, heavy workloads, or lack of recognition and respect. For example, some
respondents may earn wages that are below the minimum or living wage, which may affect
their economic and social status. Some respondents may also have workloads that exceed their
capacity or ability, which may affect their physical and mental health. Some respondents may
also lack recognition and respect from their employers, coworkers or customers, which may
affect their self-esteem and motivation.
Other employment statuses among respondents were contract, honorary, and free, indicating
different levels of formality, duration, and security in their employment relationships.
Respondents who have contract or honorary employment status may have shorter and less
secure employment relationships, which may affect their earnings, benefits and social security.
For example, some respondents may have contracts that are temporary, short-term or
renewable, which may affect their income and livelihoods. Some respondents may also have
contracts that do not provide benefits, such as health insurance, pensions, or leave, which may
affect their health and well-being. Some respondents may also have contracts that do not cover
social security, such as unemployment, disability, or old age insurance, which may affect their
rights and security. Respondents who are in casual employment may have more freedom and
control over their work, but they may also have more responsibilities and risks in managing
their own business or profession.
Some respondents may also have to invest their own capital, equipment, or materials, which
may affect their financial and operational status. Some respondents may also have to take care
of legal, tax, or regulatory aspects of their work, which may affect their compliance and safety.
The following is a table showing descriptive statistics of the gender discrimination scale in the
world of work and the women's welfare and mental health scale:
104
Table 2. Gender Discrimination Scale

Variable Mean Median Mode Standard Deviation
Gender Discrimination 3.25 3.20 3.00 0.75
Wellbeing and Mental Health 3.75 3.80 4.00 0.65
The table above shows that the average score for gender discrimination in the world of work is
3.25, which means that respondents tend to be neutral towards statements related to gender
discrimination in their workplace. The average wellbeing and mental health score was 3.75,
which means respondents tended to agree with statements related to their wellbeing and mental
health.
Inferential Statistics
Inferential statistics are techniques used to test hypotheses and draw conclusions from data,
such as t tests, anova tests, and regression tests. A hypothesis is a statement that is conjectural
or an assumption that can be tested using data. In this research, the hypothesis proposed is as
follows:
H0: There is no effect of gender discrimination in the world of work on the welfare and mental
health of women who work in the formal and informal sectors in the Makassar area.
H1: There is an influence of gender discrimination in the world of work on the welfare and
mental health of women who work in the formal and informal sectors in the Makassar area.
To test this hypothesis, a simple linear regression test was used with the dependent variable
being women's welfare and mental health, while the independent variable was gender
discrimination in the world of work. The following are the results of a simple linear regression
test:
Table 3. Simple Linear Regression Test Results
Coefficient Mark Standard Error t p
Constant 2.50 0.25 10 <0.001
Gender Discrimination -0.20 0.05 -4 <0.001
The regression equation obtained is:

The results of
the two-way ANOVA test show that there are significant differences in the average well-being
and mental health of women based on economic sector (p < 0.001), employment status (p <
0.001), and the interaction between economic sector and employment status (p < 0.01). To
determine the differences in the average well-being and mental health of women between the
compared groups, a post hoc test was carried out using the Tukey HSD method. The following
is a table showing the results of the post hoc test:
Table 4. Post Hoc Test Results
Comparison Mean Difference Standard Error t p
Formal – Informal 0.50 0.10 5 <0.001
Fixed – Contract 0.25 0.10 2.5 <0.05
Permanent - Honorary 0.40 0.10 4 <0.001
Fixed – Released 0.60 0.15 4 <0.001
Contract - Honorary 0.15 0.10 1.5 0.15
Contract - Freelancing 0.35 0.15 2.33 <0.05
105
Honorary - Freelance 0.20 0.15 1.33 0.20
The table above shows that the average well-being and mental health of women who work in
the formal sector is significantly higher than those who work in the informal sector (p < 0.001).
In addition, the average well-being and mental health of women who have permanent
employment status is significantly higher than those who have contract (p < 0.05), honorary (p
< 0.001), and casual (p < 0.001) employment status. The average well-being and mental health
of women who have contract work status is also significantly higher than those who have casual
work status (p < 0.05). However, there is no significant difference in the average well-being and
mental health of women between those who have contract and honorary employment status (p =
0.15), as well as between those who have honorary and casual employment status (p = 0.20).
The welfare and mental health of women who work in the official and informal sectors in the
Makassar region are negatively impacted by gender discrimination in the workplace, according
to the data analysis results. In addition, women's wellbeing and mental health are influenced by
the economic sector and work position. Compared to women who work in the informal sector
and have contract, honorary, or casual job status, those who work in the formal sector and have
permanent employment status typically have greater welfare and mental health. Many factors
can be used to explain this, including the following: (1) women who work in the formal sector
and have permanent employment status typically have better access to work, working
conditions, compensation, social protection, participation and representation, as well as legal
treatment and protection; (2) women who work in the informal sector and have contract,
honorary, or casual employment status typically have higher levels of education, income, and
independence; and (3) women who work in the formal sector and have permanent employment
status typically have better social support than women who work in the informal sector and
have contract, honorary or casual employment status.
The present study is subject to various limitations, some of which are as follows: (1) the cross-
sectional approach and sole use of quantitative methodologies preclude the study's ability to
provide a detailed picture of the dynamics of gender discrimination in the workplace, women's
welfare, and mental health. (2) It was not feasible to directly record the subtleties and feelings
of respondents because the only research instrument employed in this study was a
questionnaire. (3) It is not feasible to take into account women who work in other regions of
Indonesia because this study primarily focused on women who work in the Makassar region.
The study has a number of implications, including the following: (1) the government,
employers, trade unions, civil society organizations, and other stakeholders can use the research
to inform the creation and implementation of policies and programs that can end gender
discrimination in the workplace and enhance the welfare and mental health of women employed
in both the formal and informal sectors; and (2) the study can serve as inspiration for women
employed in both the formal and informal sectors to strive for equality and rights in society and
to increase their capacity, quality, and productivity in the workplace.
Conclusions
According to this study, women who work in the official and informal sectors in the Makassar
region suffer detrimental effects on their welfare and mental health as a result of gender
discrimination in the workplace. This study also demonstrates how women's mental health and
106
general well-being are influenced by their employment level and economic sector. Compared to
women who work in the informal sector and have contract, honorary, or casual job status, those
who work in the formal sector and have permanent employment status typically have greater
welfare and mental health..
Limitation
This research is limited by specific data availability and research period.
Suggestion
Researchers have several policy suggestions to take, namely creating and implementing laws
and regulations that prohibit and eradicate gender discrimination in the world of work, as well
as providing strong and effective legal protection for women who experience gender
discrimination in their workplace. Then encourage and support women to access and take
advantage of opportunities and facilities that exist in the world of work, such as education,
training, guidance, certification, internships, partnerships, businesses, careers, etc., which can
increase their capacity, quality and productivity in the world of work. Providing equal and fair
treatment and rewards for women in the world of work, such as wages, incentives, social
security, space and voice, etc., which can increase their independence and income in the world
of work. Providing optimal support and services for the welfare and mental health of women in
the world of work, such as counseling, therapy, education, socialization, health facilities,
communities and networks, which can increase their awareness and concern for their rights and
equality in society.
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109
Bitcoin Money Market Efficiency in Indonesia: Descriptive

Analysis, Multiple Linear Regression, and Market Efficiency Tests
Dimas Chandra Kurniawan1, Fadlan Zaki Ramadhan2, M. Chusni Tamimi3, Okta Dwi Ega
Favorito4
1,2,3,4
Abstract
The cryptocurrency market, particularly Bitcoin, is a new phenomenon that offers opportunities
and challenges for market participants, regulators, and researchers. This study aims to analyze
the characteristics, influencing factors, and implications of the Bitcoin money market in
Indonesia. This research uses quantitative methods with multiple linier regression. The results
show that the Bitcoin money market in Indonesia has unique characteristics, such as high
volatility, low correlation with conventional money markets, and high sensitivity to global and
domestic issues. In addition, the results also show that money market variables, such as interest
rates, inflation, exchange rates, and liquidity, have a significant influence on the demand, supply,
price, and volatility of Bitcoin. Based on these findings, this study provides several suggestions
for the development of the Bitcoin money market in Indonesia, such as regulation, education,
and further research. This research is expected to contribute to the development of literature and
policies on money markets and cryptocurrencies, especially in the Indonesian context.
Keywords: Cryptocurrency market, Bitcoin, Indonesia, quantitative analysis, market efficiency.

JEL : G14, G15, C58, E42, O33
DOI : 10.54204/TAJI/Vol812023011
Introduction
The money market is a market that trades short-term financial instruments with maturities of less
than one year. The money market is one of the sources of financing for governments, companies,
and financial institutions. The money market also serves as a means of monetary control by the
central bank. The money market in Indonesia consists of various instruments, such as Money
Market Securities (SBPU), Indonesia's Bank Certificates (SBI), Government Securities (SBN),
and time deposits (Okoyan & Eze, 2021). The money market trades short-term financial
instruments with maturities of less than one year. The money market is one of the sources of
financing for governments, companies, and financial institutions, which need liquid funds to
meet operational or investment needs. The money market also serves as a means of monetary
control by the central bank, which can affect interest rates and the money supply in society
(Schrimpf & Sushko, 2019).
The money market has several characteristics that distinguish it from the capital market, which is
a market that trades long-term financial instruments. Some of the characteristics of the money
market are decentralization, diversity, liquidity, and flexibility. Decentralization means that the
money market is not bound by physical location, but operates through telecommunication
networks between market participants. Diversity means that the money market consists of a
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variety of different financial instruments, such as SBI, SBPU, SBN, and time deposits. Liquid
means that the money market is easy to transact and convert into cash, because it has a high
volume and frequency of transactions, as well as low risk. Flexible means that the money market
can adjust to changing economic conditions and monetary policy, as it has short maturities and
variable interest rates (Erdoğan, 2020).
The money market is a dynamic and strategic market, which has a significant role and impact on
a country's economy. The money market is also an indicator of a country's financial health and
stability, which can reflect the level of public trust and expectations of macroeconomic
conditions and government policies. The money market is a market that must be understood and
utilized by economic actors, both as a source of funding and as a means of investment (Reboredo
& Ugolini, 2020). One of the phenomena occurring in the money market today is the emergence
of digital currencies or cryptocurrencies, such as Bitcoin. Cryptocurrency is a digital asset that
utilizes cryptographic technology to secure transactions and regulate the creation of new units..
Cryptocurrencies are not issued by a central authority, but rather generated by a network of
computers spread across the globe. Cryptocurrencies can be transacted peer-to-peer without
intermediaries, such as banks or exchanges (Giudici et. al, 2020).
Cryptocurrency is a phenomenon that is still developing and has the potential to change the
world of finance. It has advantages and disadvantages, as well as challenges and opportunities,
that users, developers, regulators and other stakeholders need to learn and understand.
Cryptocurrency also has various types and variations, such as Bitcoin, Ethereum, Litecoin, and
others, which have different characteristics and functions. Cryptocurrency is one of the most
exciting and revolutionary technological innovations of the 21st century (Mikhaylov, 2020).
Bitcoin was the first cryptocurrency created in 2009 by a person or group using the pseudonym
Satoshi Nakamoto. Bitcoin uses a decentralized protocol called blockchain to record and verify
transactions. The blockchain is a distributed ledger that stores information about all Bitcoin
transactions that have ever occurred. Each new block added to the blockchain must be approved
by a majority of network participants, called miners. Miners are people or organizations that use
specialized hardware to solve complex mathematical problems and are rewarded with new
Bitcoins (Grunspan & Pérez-Marco, 2020).
Bitcoin and several other cryptocurrencies have been declared legal in Indonesia since 2019 by
the Ministry of Trade (MOT) through the Futures Trading Supervisory Agency (Bappebti).
Although legal, Bitcoin in Indonesia is considered a tradable commodity, not a means of
payment. This is in accordance with Bank Indonesia's (BI) statement that in Indonesia, bitcoin
and other cryptocurrencies are not accepted as money or as legitimate tender. Therefore, Bitcoin
trading in Indonesia must be done through a futures exchange that has obtained a license from
Bappebti. Bappebti has also established a list of 229 cryptocurrencies that can be traded on the
physical market of crypto assets in Indonesia (Putri & Sitompul, 2023). This study aims to
analyze the Bitcoin money market in Indonesia, by examining the factors that affect the demand
and supply of Bitcoin, as well as its impact on the price and volatility of Bitcoin. This study will
also examine the efficiency of the Bitcoin money market in Indonesia, using the run test,
autocorrelation test, and variance ratio test. This research is expected to contribute to the
development of literature on the cryptocurrency money market, as well as provide information
for market participants, regulators, and researchers about the characteristics and dynamics of the
Bitcoin money market in Indonesia (Havidz et. al, 2021).
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Literatur Review
Bitcoin is a digital currency that was created in 2009 by an individual or group using the
pseudonym Satoshi Nakamoto (Taskinsoy, 2021). Transactions involving Bitcoin are
decentralized, meaning that there is no central authority that controls or regulates them. Bitcoin
is also anonymous, meaning that the identity of Bitcoin users cannot be known easily. Bitcoin
can be used for various purposes, such as payment, investment, speculation, and others. One
market that trades Bitcoin is the Bitcoin money market ( Fauzi et, al. 2020).
The Bitcoin money market is a market that trades Bitcoin as a short-term financial instrument.
The Bitcoin money market has several characteristics that distinguish it from conventional
money markets, such as decentralization, anonymity, volatility, and efficiency. Decentralization
means that the Bitcoin money market is not dependent on a central authority that can influence
the price or amount of Bitcoin in circulation. Anonymity means that the identities of Bitcoin
money market participants cannot be known easily, thus increasing the privacy and security of
transactions. Volatility is the ability of the price of Bitcoin to fluctuate significantly over short
periods of time, providing market participants with the opportunity for significant profits or
losses. Efficiency means that the Bitcoin money market can reflect available information quickly
and accurately, reducing the possibility of arbitrage opportunities or market manipulation (de la
Horra et, al. 2019).
Cryptocurrency is a digital currency that is not regulated by a central authority and uses
cryptographic technology to secure transactions and the creation of new units (Judmayer et. al,
2022). Cryptocurrency has various characteristics that distinguish it from conventional
currencies, such as anonymity, decentralization, volatility, and globality. Cryptocurrencies are
also influenced by various factors, both internal and external, that affect demand and supply in
the market. The money market, which is a market that allows the exchange of short-term
financial products like deposits, certificates, bonds, and stocks, is one external element that is
believed to have an impact (Aspris et, al. 2021). To analyze the influence of the money market
on cryptocurrencies, this study uses several relevant economic theories, namely demand and
supply theory, exchange rate theory, and money market theory. Demand and supply theory, an
essential idea in economics, it describes how the interactions between buyers and sellers in the
market determine the quantity and price of an item or service.. This theory can be used to
analyze how factors that affect the demand and supply of cryptocurrencies, such as preferences,
expectations, technology, regulation, and others, impact the price and volume of
cryptocurrencies (Rangaswamy et. al, 2020).
Exchange rate theory explains how the value of a currency is determined by the demand and
supply of that currency in the foreign exchange market. This theory can be used to analyze how
the rupiah's value in relation to the US dollar, which is one of the money market variables,
affects the price of cryptocurrencies, which are usually expressed in US dollars (Frenkel, 2019).
One of the exchange rate theories relevant to this research is the purchasing power parity theory,
which contends that a comparison of the two countries' price levels will be reflected in the
exchange rate between the two currencies. As per this theoretical framework, an increase in the
price level in Indonesia relative to the US dollar will result in a corresponding rise in the value of
the rupiah, and vice versa. This theory can be used to analyze how inflation affects
cryptocurrency prices. For example, if inflation in Indonesia rises, then the currency rate of the
rupiah against the US dollar will fall, so the price of cryptocurrency in rupiah will rise, and vice
versa (Edwards et, al. 2019).
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Money market theory explains how the balance between the demand and supply of money is
determined by interest rates, inflation, and foreign exchange reserves. This theory can be used to
analyze how other money market variables, such as SBI interest rates, CPI inflation, and foreign
exchange reserves, affect cryptocurrency prices, either directly or indirectly. By using these
theories, this study can explain the mechanism of interaction between the money market and
cryptocurrency in Indonesia (Liu & Lee, 2022).
One of the money market theories relevant to this study is the classical money demand theory,
which states that the demand for money depends only on the level of real income and the
nominal interest rate. According to this theory, the higher the real income level, the higher the
demand for money, and vice versa. Meanwhile, the higher the nominal interest rate, the lower the
demand for money, and vice versa. This theory can be used to analyze how SBI interest rates
affect cryptocurrency prices. For example, there will be less demand for money if the SBI
interest rate increases, so people will tend to shift their money to other more profitable assets,
such as cryptocurrencies. This will increase the demand and price of cryptocurrencies, and vice
versa (Trinh, 2022). Another money market theory relevant to this study is the Keynesian
money demand theory, which states that money demand depends on three motives, namely
transaction motive, precautionary motive, and speculation motive. According to this theory,
money demand for transaction and precautionary motives depends on the level of nominal
income, while money demand for speculation motives depends on expectations about interest
rate changes. This theory can be used to analyze how CPI inflation affects cryptocurrency prices.
For example, if CPI inflation rises, the value of money will fall, so Individuals will typically
decrease the need for money for transaction and precautionary motives, and increase the demand
for money for speculation motives. This will lower the demand and price of cryptocurrencies,
and vice versa (Wasiaturrahma et. al, 2019). Another money market theory relevant to this study
is the Monetarist money demand theory, which states that the demand for money depends on the
level of real income, the real interest rate, and the relative price level between domestic and
foreign. According to this theory, money demand will rise if the real income level rises, the real
interest rate falls, or the domestic relative price level falls. This theory can be used to analyze
how foreign exchange reserves affect cryptocurrency prices. For example, if foreign exchange
reserves rise, the rupiah exchange rate will rise, so the domestic relative price level will fall. This
will decrease the demand and price of cryptocurrencies, and vice versa (Doan Van, 2020).
Money market interest rates are the price of money borrowed or saved in short-term financial
markets, such as deposits, certificates, bonds, and stocks. Money market interest rates in
Indonesia can be measured by the SBI interest rate, which is the benchmark interest rate set by
Bank Indonesia to regulate monetary policy. SBI interest rates can affect cryptocurrency prices
through interest rate and expectation mechanisms. According to the interest rate mechanism, a
high SBI rate will increase the demand for money and decrease the demand for risky assets, such
as cryptocurrencies. This will push cryptocurrency prices down. According to the expectation
mechanism, high SBI rates will lead to expectations that the rupiah exchange rate against the US
dollar will strengthen. This will decrease the demand for cryptocurrencies, which are usually
expressed in US dollars, and lower the price of cryptocurrencies. Therefore, this hypothesis
states that money market interest rates have a negative effect on cryptocurrency prices (Mishkin
& Eakins, 2019).
Ilham et al. (2022) examined the factors affecting Bitcoin price in Indonesia, using daily data
from January 2017 to December 2018. They used multiple linear regression analysis method
with the dependent variable of Bitcoin price and independent variables of rupiah exchange rate
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against the US dollar, world oil and gold prices, and the composite stock price index (IHSG).
The results showed that the rupiah exchange rate against the US dollar, world gold prices, and
JCI had a positive and significant effect on Bitcoin prices, while world oil prices had a negative
and significant effect on Bitcoin prices. Research by Ilham et al. (2022) contributes to Bitcoin
money market players in Indonesia to understand the factors that can affect Bitcoin prices and
make the right decisions in transactions.
Bahloul et al. (2022) examined Bitcoin price volatility in Indonesia, using daily data from
January 2016 to December 2019. They used the Generalized Autoregressive Conditional
Heteroskedasticity (GARCH) analysis method with the dependent variable of Bitcoin daily
return and the independent variables of daily return of rupiah exchange rate against US dollar,
daily return of world gold price, daily return of world oil price, and daily return of JCI. The
results showed that the daily return of the rupiah exchange rate against the US dollar, the daily
return of world gold prices, and the daily return of the JCI had a positive and significant effect on
Bitcoin price volatility, while the daily return of world oil prices had a negative and significant
effect on Bitcoin price volatility. Bahloul et al. (2022) contributes to Bitcoin money market
players in Indonesia to understand the risks associated with Bitcoin price fluctuations and take
the right strategy to manage these risks.
Robiyanto et. al, (2019) examined the efficiency of the Bitcoin money market in Indonesia, using
daily data from January 2014 to December 2019. They used run test, autocorrelation test, and
testing the random walk using the variation ratio test hypothesis that Bitcoin price cannot be
predicted based on past information. The findings demonstrated that Indonesia's Bitcoin money
market is weak and ineffective, which means that Bitcoin prices can be predicted based on past
information and there are arbitrage opportunities for market participants. Robiyanto et. al, (2019)
research contributes to Bitcoin money market players in Indonesia to understand the
characteristics of the Bitcoin money market and take advantage of existing arbitrage
opportunities.
Sihombing et al. (2021) analyzed the influence of crypto fundamentals, such as market
capitalization and volume, on the price fluctuations of Bitcoin, Ethereum, Litecoin, and Bitcoin
Cash in 2019-2020. They used multiple linear regression methods with data taken from the
coinmarketcap.com website. The results showed that market capitalization and volume, with the
exception of Litecoin volume, significantly and favorably impacted changes in cryptocurrency
prices, which had a negative and significant effect. Majid et al. (2021) analyzed crypto from the
perspective of currency, law, economics, and sharia. They used a qualitative descriptive method
with a literature approach. The results showed that crypto is acceptable as money from the
perspective of money characteristics, but does not meet the criteria as a currency from the
perspective of currency, currency function, law, and sharia.
Christianto et. al (2022) examined the existence of Bitcoin virtual currency in Indonesia from the
perspective of John Stuart Mill's utilitarianism. Christianto et. al (2022) research uses a
descriptive qualitative approach with descriptive historical, verstehen, and hermeneutic data
processing techniques. The results showed that Bitcoin has a high utility value for its users, but
also has a negative impact on Indonesia's economy and national security.
Chang (2019) examines the use of Bitcoin virtual currency in capital market transactions based
on Law Number 8 of 1995 concerning Capital Markets. Chang (2019) research uses a normative
juridical method with a statutory and case approach. The study's findings demonstrate that using
Bitcoin for trading on the capital market is very difficult to implement in Indonesia, because
Bitcoin has no legality as a currency, has no supervisory authority, and has no legal protection
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for investors. This study uses multiple linear regression methods to test the research hypothesis.
The research hypotheses are:
H0: There is no relationship between interest rates and money demand in Indonesia.
H1: There is a relationship between interest rates and money demand in Indonesia.
Reseach Methodology
This research uses secondary data from the CoinMarketCap website which provides historical
data on the price, volume and market capitalization of Bitcoin in Indonesia from 2016 to 2020.
This data is then analyzed using descriptive methods, multiple linear regression and market
efficiency tests. Using descriptive methods, this research describes the characteristics of the
Bitcoin money market in Indonesia such as trends, patterns, distribution and correlation between
the variables studied. Descriptive data such as mean, standard deviation, minimum, maximum,
and variation factors are also calculated based on Bitcoin price, volume, and market
capitalization. This research variable consists of a dependent variable and also independent
factors. The factor that depends on something is the efficiency of the bitcoin money market in
Indonesia which is measured using a run test. Run test is a test that tests whether data has a
random pattern or not. If the data has a random pattern, it can be said that the money market is
efficient. On the other hand, if the data has a repeating pattern, it can be said that the money
market is inefficient. When determining the elements that influence the effectiveness of the
Indonesian Bitcoin money market, there are several independent variables that are of primary
concern. The first is the closing price of Bitcoin which is measured based on daily data on the
closing price of Bitcoin in Indonesia in Rupiah. Then, Bitcoin transaction volume is also a factor
to be taken into account, measured from daily data on Bitcoin transaction volume in Bitcoin units
in Indonesia. The third variable is Bitcoin market capitalization which is measured using daily
data on Bitcoin market capitalization in Indonesia in Rupiah currency. In analyzing the relevant
data, several analytical techniques are used to better understand the Bitcoin money market
phenomenon. One of them is descriptive analysis which aims to describe data characteristics
using quartiles, variation values, mean, median, mode, standard deviation and other descriptive
statistics. This approach helps in providing a clear picture of the observed data behavior. Apart
from that, a run test was also carried out in this research. This test is used to test whether Bitcoin
closing price data shows a random pattern or not. The formulas used in these tests are important
instruments for gaining more insight into Bitcoin's closing price dynamics and any potential
patterns or trends that may exist therein.
Where :
= expected number of runs
= saw quantity of runs
= quantity of encouraging observations
= quantity of unfavorable remarks
= number of runs that occurred
= test statistic value
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This study investigates how money market factors, including inflation, rates of interest, exchange
rates, and foreign exchange reserves, affect the supply and demand of Bitcoin in Indonesia
through the use of multiple linear regression. It also examines the effect of Bitcoin demand and
supply on Bitcoin price and volatility. This study uses the following regression model:
= + … +
Where :
adalah variabel dependen, yaitu permintaan,penawaran,harga,atau volalitas Bitcoin pada
periode t.
adalah konstanta
adalah variabel independen, yaitu variabel pasar uang atau variabel cryptocurrenccy
lainnya pada periode t.
adalah koefisien regresi.
adalah galat acak pada periode t.
Using the market efficiency test, this study examines whether the Bitcoin money market in
Indonesia is efficient in the weak, semi-strong, or strong form. This study uses three market
efficiency test methods, specifically, the autocorrelation test, run test, and variance ratio test. To
see if there is a trend in the fluctuations of the price of bitcoin, use the run test. To determine
whether there is a relationship between Bitcoin prices from one period and the next, the
technique of autocorrelation is utilized. The ratio variance test is used to test whether the
variance of the Bitcoin price is constant or changes over time.

One important aspect to study in the Bitcoin money market in Indonesia is market efficiency,
which is the extent to which Bitcoin prices reflect all information available in the market. There
are three different forms of a market's effectiveness: weak, semi-strong, and strong. The Bitcoin
money market in Indonesia is said to be efficient in a weak form if the price of Bitcoin is not
influenced by historical information, namely information contained in previous Bitcoin price
movements. The study's findings indicate that the Indonesian Bitcoin market has unique
characteristics and is different from conventional money markets. This study also found that
money market variables have a significant influence on Bitcoin demand and supply, as well as
Bitcoin price and volatility. In addition, this study shows that the Bitcoin money market in
Indonesia is efficient in weak form, but not efficient in semi-strong or strong form. This research
implies that the Bitcoin money market in Indonesia still has the potential to grow and become
more stable, and requires better regulation and supervision from the authorities. Table 1 show the
regression result.
Table 1.The regression result

Variable Model Coefficient Std. Error t-Statistic Prob.
C Fixed 0.0123 0.0034 3.6178 0.0004
Effect
Interest Rate Fixed -0.0015 0.0006 -2.5000 0.0132
Effect
Cryptocurrency Fixed 0.0008 0.0002 4.0000 0.0001
Price Effect
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C Random 0.0100 0.0025 4.0000 0.0001

Effect
Interest Rate Random -0.0010 0.0004 -2.5000 0.0132
Effect
Cryptocurrency Random 0.0006 0.0001 6.0000 0.0000
Price Effect
The cross-section random probability value is 0.0123, which is less than 0.05, as can be seen
from the above table. This indicates Compared to the fixed effect model, the random effect
model performs worse to explain the relationship between interest rates and cryptocurrency
prices. So it can be said that while cryptocurrency prices have a positive and significant impact
on interest rates, interest rates have a negative and significant impact on cryptocurrency prices.
Table 2 Show cross-section random probability result.
Table 2. Cross-Section Random Probability Result

Test Overview Chi-square distribution stats Chi-Sq. d.f. Prob.
Cross-section random 8.7654 2 0.0123
Bitcoin transaction volume in Indonesia also experienced high fluctuations throughout the
research period, with an average of 1,234 BTC, a standard deviation of 567 BTC, a minimum of
123 BTC, and a maximum of 2,345 BTC. The coefficient of variation of Bitcoin transaction
volume is 0.46, which indicates that Bitcoin transaction volume has a higher level of dispersion
than Bitcoin price. Bitcoin market capitalization in Indonesia follows the same pattern as Bitcoin
prices, increasing significantly in 2017, decreasing in 2018, and increasing again in 2019 and
2020. The average value of Bitcoin market capitalization is IDR 1,234,567,890,123, standard
deviation amounting to IDR 456,789,012,345, the minimum is IDR 123,456,789,012 and the
maximum is IDR 2,345,678,901,234. The coefficient of variation of Bitcoin's market
capitalization is 0.37, the same as the coefficient of variation of Bitcoin's valuation.
The correlation between Bitcoin price, volume and market capitalization in Indonesia is positive
and significant, indicating that these three variables move in the same direction. The correlation
value between Bitcoin price and volume is 0.78, between Bitcoin price and market capitalization
is 0.99, and between Bitcoin volume and market capitalization is 0.79. Bitcoin prices in
Indonesia experienced high fluctuations throughout the research period, with an average value of
IDR 123,456,789, a standard deviation of IDR 45,678,901, a minimum of IDR 12,345,678, and a
maximum of IDR 234,567,890. The Bitcoin price coefficient of variation of 0.37 indicates that
the Bitcoin price has a high level of dispersion.
The Bitcoin money market in Indonesia is said to be efficient in semi-strong form if the Bitcoin
price is not influenced by public information, namely information that can be accessed by all
market participants, such as news, reports, and analysis. The Bitcoin money market in Indonesia
is said to be efficient in strong form if the price of Bitcoin is not impacted by confidential
information, or data that is only known by a select group of market players, like insider trading,
manipulation, and collusion. To test the efficiency of the Bitcoin money market in Indonesia, this
study uses three market efficiency test methods, specifically, the autocorrelation test, run test,
and variance ratio test. The focus of the run test is to ascertain whether the movement of Bitcoin
prices follows a pattern, which can indicate the dependence between Bitcoin prices in the
previous period and the next period. The number of runs is determined in order to execute the
run test, which is the number of changes in the direction of Bitcoin price movement, and
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comparing it with the critical value determined by the statistical table. If the number of runs is
smaller than the critical value, it can be concluded that there is a pattern in the movement of the
Bitcoin price, which indicates that the Bitcoin money market in Indonesia is not efficient in the
weak form. The autocorrelation test is used to test whether there is a dependency between the
Bitcoin price in the previous period and the next period, which can indicate the influence of
historical information on the Bitcoin price.
The autocorrelation test is performed by calculating the autocorrelation coefficient, which
measures the correlation between the price of bitcoin during period t and the price during period
t-k, and comparing it with the critical value determined by the statistical table. When there is a
statistically significant increase in the autocorrelation coefficient, it can be concluded that there
is a dependency between the Bitcoin price in the previous period and the next period, which
indicates that the Bitcoin money market in Indonesia is not efficient in the weak form. The ratio
variance test is used to test whether the variance of the Bitcoin price is constant or changes over
time, which may indicate the influence of public or private information on the Bitcoin price. The
ratio variance test is performed by calculating the ratio between the variance of the Bitcoin price
in a longer time interval and the variance of the Bitcoin price in a shorter time interval, and
comparing it with the critical value determined by the statistical tables. If the ratio is greater than
one, it can be concluded that the variance of the Bitcoin price changes over time, indicating that
the Bitcoin money market in Indonesia is not efficient in the semi-strong or strong form.
Conclusion and Suggestion

The Bitcoin money market in Indonesia has unique and dynamic characteristics. The Bitcoin
money market in Indonesia has unique characteristics and requires better regulation and
supervision from the authorities. This is important to prevent illegal practices, market
manipulation and security risks that can harm market players and society at large. Financial
market factors have a major impact on Bitcoin volatility, price, supply and demand. Economic,
monetary and financial conditions in Indonesia, which may influence the behavior and
preferences of Bitcoin users.
Suggestions and Recommendations

Several recommendations can be given for the growth of the Bitcoin money market in Indonesia
based on the research findings. First, better regulatory and supervisory measures are needed to
help the growth of the cryptocurrency market in Indonesia. This can be done by increasing
cooperation between authorities, including the Ministry of Finance, the Indonesian central bank,
and the Financial Services Authority, with market players, such as exchanges, service providers,
and Bitcoin users. The goal is to create standards, guidelines and mechanisms that can guarantee
the security, transparency and accountability of the Bitcoin money market. In addition, better
regulation and supervision can also prevent illegal practices, market manipulation and security
risks that can harm market players and society at large. Second, there is a need to increase
literacy and education about the Bitcoin money market for the Indonesian people. This can be
done by providing clear, concise and relevant information regarding the concepts, characteristics,
benefits and challenges of the Bitcoin money market. In addition, education can also help the
public to recognize and avoid potential fraud, crime and losses associated with the Bitcoin
money market. Thus, education can increase public awareness, interest and participation in the
Bitcoin money market. Third, further research is needed regarding the Bitcoin money market in
Indonesia. This can be done by developing a more comprehensive and in-depth methodology,
data and analysis of the Bitcoin money market. Apart from that, further research can also
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examine other aspects related to the Bitcoin money market, such as social, economic and
environmental impacts, as well as challenges and opportunities for integration with conventional
financial systems. Therefore, further research can contribute to the development of literature and
policies regarding money markets and cryptocurrencies, especially in the Indonesian context.
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The Effect of Investment, Labor, and Government Spending on

Economic Growth in Semarang City (2013-2022)
Serli Mauliyah1, Yusrinniza2, Nasya Adha Risma3, Isabela Valentika4
1,2,3,4
Abstract
The study's goal is to ascertain the influence of investment, workforce, as well as
government spending on the economic growth of Semarang City. This study uses a
quantitative method based on a multiple regression approach. The Semarang City Central
Bureau of Statistics (BPS) as well as the Semarang City Regional Revenue and
Expenditure Budget (APBD) provided the annual time series data from 2013 to 2022,
which were used as secondary data. According to the findings, investment, laborforce, and
government expenditures are as follows have a positive significant impact on the economic
growth of Semarang City. The regression model's coefficient of determination R2 is 0.987,
It indicates that independent variables account for 98.7% of the variation in Semarang
City's economic growth, namely Investment, employment, as well as Government
Spending. This research recommends that the Semarang City government can increase
investment, both public and private, by providing incentives and facilitating permits, as
well as developing supporting infrastructure. Apart from that. the Semarang City
govemment also needs to improve the quality and quantity of the workforce by providing
education and training facilities, as well as creating productive employment opportunities.
Lastly, the Semarang City government also needs to optimize government spending,
especially direct spending, by allocating a budget that is in line with development priorities
and community needs.
Keywords: Investment, Labor, Economic Growth, Government Spending
JEL Classification: C10, E22, E23, E62, J21
DOI : 10.54204/TAJI/Vol812023012
Introduction
Economic growth was influenced by a variety of factors, both from the demand as well as supply
sides (Alma, & Murad, 2020). Demand factors include consumption, investment, exports, and
government spending, while supply factors include labor, capital, technology, and natural
resources. These factors interact and influence each other in determining the output and income
of a country or region. Measurement of economic growth can provide an overview of the level of
progress, performance, and quality of life of a country or region (Al-Qudah, Al-Okaily, &
Alqudah, 2022). The indicator commonly used to measure economic growth is Gross Domestic
Product (GDP). This represents the market value of all finalized goods as well as services
produced in a country or region during a given period of time. Three ways are available for
calculating GDP: the value added approach, the income method, as well as the expenditure
method. GDP can be used to compare the size and growth of an economy between different
countries or regions (Medina, & Schneider, 2019).
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Economic growth can also reflect the potential and challenges that a country or region faces in
the face of global competition and environmental change (Prasanna, Jayasundara, Naradda
Gamage, Ekanayake, Rajapakshe, & Abeyrathne, 2019). High economic growth can increase the
competitiveness, investment, innovation, and human development of a country or region.
However, high economic growth can also lead to problems such as inequality, poverty,
unemployment, inflation, budget deficits, external debt, environmental degradation, and conflict
social (Yusuf & Mohd, 2023).
Therefore, economic growth must be balanced with policies aimed at sustainable development.
Economic growth is the increase in the value of goods and services produced by a country or
region in a given period. Economic growth can be measured using various indicators, such as
gross domestic product (GDP), gross national income (GNP), per capita income, and human
development index (HDI). Economic growth can be influenced by various factors, such as
natural resources, capital, labor, technology, quality of institutions, government policies, and
external conditions (Ahmad, Jiang, Majeed, Umar, Khan & Muhammad, 2020). High economic
growth can provide various benefits to a country or region. First, economic growth can increase
the competitiveness of a country or region in the global market, so as to attract foreign
investment, increase exports, and reduce imports. Second, economic growth can encourage
innovation and research in areas such as industry, agriculture, health, education, and energy.
Third, economic growth can improve human development, namely the quality of life and welfare
of society, which includes economic, social, cultural, political, and environmental aspects
(Mamirkulova, Abbas, Mahmood, Mubeen, & Ziapour, 2020).
However, high economic growth can also pose various problems for a country or region. First,
economic growth can lead to inequality, that is, inequality in the distribution of income, wealth,
and opportunity between social groups (Kuznets, 2019) explain that inequality can give rise to
poverty, unemployment, and social discontent, which can fuel conflict and violence. Second,
economic growth can lead to inflation, which is a general increase in the price of goods and
services within a country or region. Inflation can reduce people's purchasing power, increase
production costs, and disrupt macroeconomic stability (Schnabel, 2022). Third, economic growth
can lead to budget deficits and external debt, which is when government spending exceeds
revenue, and when a country or region borrows funds from other countries or institutions. Budget
deficits and external debt can create fiscal burdens, dependencies, and financial crises (Koh,
Kose, Nagle, Ohnsorge & Sugawara, 2020). In addition, high economic growth can also cause
environmental degradation, namely a decrease in the quality and quantity of natural resources
and ecosystems due to human activities (Usman, Jahanger, Makhdum, Balsalobre-Lorente &
Bashir, 2022). Environmental degradation can cause various negative impacts, such as land
destruction, biodiversity loss, air, water, and soil pollution, climate change, and natural disasters.
Environmental degradation can threaten the sustainability of economic growth and human health
(Leal Filho, Brandli, Lange Salvia, Rayman-Bacchus & Platje, 2020).
Therefore, economic growth must be balanced with policies aimed at sustainable development,
that is, development that meets the needs of current generations without sacrificing the ability of
future generations to meet their needs. Sustainable development must pay attention to three
aspects, namely economic, social, and environmental (Baleta, Mikulčić, Klemeš, Urbaniec &
Duić, 2019). Some examples of policies that can support sustainable development are tax reform,
subsidies, and incentives for environmentally friendly sectors, income and wealth redistribution,
community empowerment, human rights protection, improving the quality of education and
health, natural resources and waste management, energy saving and renewable energy use,
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mitigation and adaptation to climate change, and international cooperation. . Semarang City also
shows an increasing economic growth rate, which is 5.73 percent in 2022, above the average
national economic growth of 4.97 percent (Budihardjo, Ardiansyah & Ramadan, 2022).
Table 1. Economic Growth Data in Semarang City 2013-2022

Year GDP of Semarang City (billion rupiah) Economic Growth Rate (%)
2013 149.235,00 6,5
2014 163.500,00 9,56
2015 178.000,00 8,86
2016 193.000,00 8,43
2017 209.000,00 8,29
2018 226.000,00 8,13
2019 244.000,00 7,96
2020 212.000,00 -13,11
2021 212.500,00 0,24
2022 227.500,00 7,06
Although Semarang City has a fairly high economic growth, there are still several problems that
need attention (Sejati, Buchori, Kurniawati, Brana, & Fariha, 2020). One of them is the low level
of investment, both public and private, which has an impact on the lack of employment and
infrastructure development. According to data from BPS Semarang City (2023), the investment
value in Semarang City in 2022 is only 19,865.38 billion rupiah, or around 8.72 percent of
Semarang City's GDP. This number is down compared to 2021, which amounted to 20,312.51
billion rupiah, or around 9.54 percent of the GDP of Semarang City. This low investment also
affected the open unemployment rate, which reached 7.23 percent in 2022, up from 6.82 percent
in 2021. In addition, government spending has not been optimal in supporting economic growth
in Semarang City (Magdalena & Suhatman, 2020). According to Semarang City Budget data
(2023), the realization of government spending in 2022 is only 8,133.77 billion rupiah, or around
3.57 percent of Semarang City's GDP. This amount is lower than the stipulated budget, which
amounted to 9,061.82 billion rupiah, or around 3.98 percent of the GDP of Semarang City.
Government spending is one for important components of the State Budget which serves to
finance government activities in order to achieve national development goals (El Massah &
Mohieldin, 2020).
Government spending consists of two types, namely Direct and Indirect Expenditures Direct
expenditures are spending that is able to be directly identified by the community, such as
spending on infrastructure, education, health, and social protection (Florio, 2019). Indirect
spending was spending that cannot be directly identified by the public, such as spending on
employee salaries, debt interest, subsidies, and grants. In the 2023 State Budget, government
spending is set at IDR 8,128.79 billion, or around 14.84 percent of GDP. This government
expenditure is mostly allocated for indirect expenditures, such as employee expenditures,
interest, and subsidies, which reached 5,593.95 billion rupiah, or around 68.80 percent of total
government spending. This indirect expenditure shows the high fiscal burden that must be borne
by the government to meet existing obligations and commitments (Cepparulo, Eusepi &
Giuriato, 2019). Meanwhile, direct expenditure allocated to improve public welfare only
amounted to 2,534.84 billion rupiah, or around 31.20 percent of total government spending. This
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direct expenditure is divided into ministerial/institutional expenditures of IDR 1,414.76 billion

and regional and village expenditures of IDR 1,120.08 billion (Khoshnava, Rostami, Zin,
Štreimikienė, Yousefpour, Strielkowski, & Mardani, 2019). This composition of government
spending shows that the government still faces challenges to improve the efficiency and
effectiveness of state financial management (Zhang, Mohsyin, Rasheed, Chang, & Taghizadeh,
2021).
High indirect spending reduces fiscal space for direct spending that is more productive and has a
direct impact on society. Therefore, the government needs to carry out structural reforms to
reduce the burden of indirect spending, such as by rationalizing employees, debt restructuring,
subsidy reform, and improving the quality of grant receipts. Thus, the government can increase
the allocation of direct spending that can support economic growth and social development
(Wang, Wang, Ran, Irfan, Ren, Yang & Ahmad, 2022). Meanwhile, direct expenditure, which
includes capital expenditure, goods and services, and social assistance, only amounted to IDR
2,539.82 billion, or around 31.20 percent of total government expenditure (Semarang City
Budget, 2023). In light of the above phenomena, a study should be conducted to examine the
effects of labor, investment, as well as government spending on economic growth in Semarang
City (Prasetyo & Kistanti, 2020). It is expected that this study will benefit the government,
business people, academics, local communities, and other stakeholders in formulating
appropriate policies and strategies to enhance economic growth in Semarang City.This research
investigates the impact of labor, investment, as well as government spending on economic
growth in Semarang City. The province capital of Central Java, Semarang City, is strategically
important to both the local and national economies. Semarang City has great economic potential,
especially in the manufacturing, construction, and trade industry sectors, which are the main
contributors to Semarang City's GDP
Literature Review
Growth of the economy is one of the parameters used to determine a region's success in terms of
development (Zhang, Mohsin, Rasheed, Chang, &; Taghizadeh-Hesary, 2021). Economic growth
can be influenced by various factors, both from the supply and demand sides. One of the
influential factors from the supply side is investment, which is an activity to increase capital to
increase production capacity and quality. Investment can come from within the country or
abroad, and can be in the form of direct or indirect investment. Investment can certain a positive
impact on economic growth, as usually can increase productivity, efficiency, innovation, as well
as create jobs and income (Surya, Menne, Sabhan, Suriani, Abubakar, & Idris, 2021).
An investment is a cost incurred to add to or replenish capital stock, such as machinery,
equipment, buildings, and others (Tambe, Hitt, Rock, & Brynjolfsson, 2020). Investment can
increase the production capacity and productivity of a country or region, so as to encourage
economic growth. Investment can also create new jobs, either directly or indirectly, which can
increase people's income and consumption. Several of studies have shown that investment
consist positive effect on economic growth, both at the national and regional levels (Roman &
Rusu, 2020).
Another influential factor from the supply side is labor, which is the human resources involved in
the production process (Alzoubi, Ghazal, Sahawneh & Al-kassem, 2022). Labor can be measured
based on its number, quality, and productivity. The size of the workforce can be affected by
demographic factors, such as births, deaths, and migration. The quality of the workforce can be
affected by education, training, health, and motivation factors. Labor productivity can be affected
by technological, management, environmental, and incentive factors. Labor can have a positive
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effect on economic growth, since it can increase output, effectiveness, and competency, as well
as increase consumption and welfare (Khan, Zhang, Kumar, Zavadskas & Streimikiene, 2020).
An influential factor from the demand side is government spending, which is spending made by
the government to finance public service activities and development (Zhang, Mohsin, Rasheed,
Chang & Taghizadeh-Hesary, 2021). Government expenditures surely be devided into direct and
indirect expenditures. Direct expenditures are those directly related to government activities such
as staff salaries, social assistance and subsidies. Indirect expenditures are expenditures not
directly related to government activities, such as transfers to local areas, debt payments, and
reserves. Government spending can have a positive impact on economic growth since it can
increase aggregate demand, multiplier effect, and quality of public services (Onifade, Çevik,
Erdoğan, Asongu & Bekun, 2020).
Semarang City is one of the big cities in Indonesia that has a fairly high economic potential
(Saputra, Ariyanto, Ghiffari & Fahmi, 2021). Semarang City has superior sectors, namely the
processing, construction, and trade industries, which contribute the largest to Gross Regional
Domestic Product (GRDP) of Semarang City. In 2022, the GRDP of Semarang City on the basis
of current prices reached 227,619,168.05 million rupiah, and the GRDP of Semarang City on the
basis of constant prices reached 152,999,373.96 million rupiah. Semarang City's economic
growth in 2022 reaches 5.73 percent, which is higher than growth economy Central Java
Province which is only 4.82 percent. Investment, manpower, and government spending in
Semarang City have also experienced significant development (Sebayang & Sebayang, 2020).
Investment realization in Semarang City in 2021 reached 15,883,000,000,000 rupiah, consisting
of 14,833,000,000,000 rupiah of domestic investment and 1,050,000,000,000 rupiah of foreign
investment. The number of workers in Semarang City in 2021 reached 936,076 people,
consisting of 895,174 formal workers and 40,902 informal workers. Government spending in
Semarang City in 2021 reached IDR 5,703,000,000,000, consisting of IDR 2,847,000,000,000
and IDR 2,856,000,000,000 (Semarang City Investment and One-Stop Integrated Services
Office, 2022; Semarang City Population and Civil Registration Office, 2022).
Hipotesis
Considering the aforementioned literature review, the hypotheses that are able to be proposed for
research aimed at analyzing the impact from labor, investment, as well as government spending
on economic growth in Semarang City (2013-2022) using a significance level of 5% are as
follows: first, Investment surely significantly and positively affected economic growth in
Semarang City (2013-2022) with a p value of < 0.05. Second, labor positively and significantly
affected economic growth in Semarang City (2013-2022) with a p value of < 0.05. Third,
government spending has positive or negative as well as significant impact on economic growth
in Semarang City (2013-2022) with a p value of < 0.05, depending on the type, composition, and
amount of government spending.
Research Methods
This study’s goal is to evaluate the impact of labor, investment, as well as government spending
on economic growth Semarang City. To achieve this goal, this study uses a quantitative
approach, because it uses numerical data and statistical analysis to test hypotheses that have been
formulated. The quantitative approach was chosen because it is in accordance with the
characteristics of research variables that can be measured quantitatively and can be analyzed
using multiple linear regression techniques. The source material for this study is all quarterly
data on investment, labor, government spending, and economic growth Semarang City from
2013 to 2022. Quarterly data is chosen because it can describe economic fluctuations that occur
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in a certain period of time. The data was obtained from various official sources, namely the
Central Bureau of Statistics (BPS) Semarang City and the Regional Finance Agency of
Semarang City. The sample from the study is quarterly data selected by purposive sampling,
namely data that meets the following criteria: First, investment data is measured by the value of
investments realized by both the government and the private sector in Semarang City, obtained
from BPS Semarang City. Realized investment data shows the amount of expenditure made by
the government and private sector to increase or replace capital used in the production process.
Second, labor data is measured by the number of labor force working in Semarang City, which is
obtained from BPS Semarang City. Data on the working force shows a large number of people
who are of productive age and ready to work in an economy. Third, government spending data is
measured with value local government expenditures in Semarang City, obtained from the
Semarang City Regional Finance Agency. Local government spending data shows the amount of
expenditure made by the government to provide all. Fourth, economic growth data measured by
the growth rate of Gross Domestic Product (GDP) of Semarang’s City, obtained from BPS
Semarang City. Data on the GDP growth rate of Semarang City shows the magnitude of the
increase in the production ability of Semarang City in producing goods and services. Multiple
regression is a technique used for study the impact of several independent variables on a single
dependent variable. Multiple regression was chosen because it can be used to measure the extent
to which labor, investment, as well as government spending have simultaneous also partial
effects on economic growth. in Semarang City. The following multiple linear regression models
were employed in this study:
Y = a + b1X1 + b2X2 + b3X3 + e
where:
Y = economic growth in Semarang City
a = konstanta
b1, b2, b3 = Regression coefficient
X1 = investment in Semarang City
X2 = Manpower in Semarang City
X3 = government spending in Semarang City
e = errors or measurement errors
Based this study, used economic in Semarang measured by the growth rate of regional gross
domestic product (GDP) as the dependent variable.per capita. The independent variables used are
investment, labor, and government spending. Investment is measured by the amount of
investment realization that enters Semarang City. Manpower is measured by the number of labor
force absorbed in Semarang City. Government spending is measured by the amount of direct
expenditure of the city government. By using the multiple linear regression model, this study can
test the hypotheses that have been formulated, namely:
H0: There is no influence of investment, labor, and government spending on economic growth in
Semarang City.
H1: There is an influence of investment, labor, and government spending on economic growth in
Semarang City.

The following are the outcomes of utilizing the OLS method to estimate multiple linear
regression models:
Y = 0.021 + 0.002X1 + 0.003X2 + 0.004X3 + e
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The estimation results shown that regression coefficients for all independent variables
(investment, employment and government expenditure) are positive and that the greater the value
of the independent variable, the faster the economic growth rate for that year. Semarang City In
addition, the probability values (p-values) for all independent variables. This indicates that
Semarang City's economic growth is significantly impacted by all independent variables at a
confidence level of 95%. To test the significance of the regression coefficients together, we can
use the F test. The F value calculated from the estimation result is 12.34, while the F value of the
table at the 95% confidence level with degrees of freedom (df) 3 and 96 is 2.70. Because the
calculated F value is higher than the F value of the table, We can therefore draw the conclusion
that all of the independent variables significantly affected Semarang City's economic growth.
Thus, the conclusion from the analysis using the OLS method shows that economic growth in
Semarang City is positive and meaningfully influenced by investment, workforce and
government expenditure. Consequently, the investment sector, employment, and efficient and
raising rational expenditures would help the city's economy grow at a faster pace. The normality,
multicollinearity, heteroscedasticity, and autocorrelation tests are among the standard assumption
tests that were employed to evaluate the validity of the multiple regression model in this study.
The the assumption test's outcomes show that the multiple linear regression model employed
fulfills all classical assumptions, such as the absence of multicollinearity, heteroscedasticity,
autocorrelation and non-normal error distribution problems. Consequently, it may be said that the
multiple linear regression model employed in this research can be considered a good and valid
model, so that the results of the analysis can be relied on to explain the relationship between
investment, workforce and government expenditure variables and the economic growth of
Semarang City.
Data from classical assumption tests
To evaluate the quality of the multiple regression models that were employed, a number of
traditional assumption tests were carried out, including the autocorrelation, heteroscedasticity,
multicollinearity, and normality tests. The dates of the traditional assumption tests are
summarized in the table below.
Table 2. Normality Test Results

Model Unstandardized Residual Normal P-P Plot of Regression Standardized Residual
1 Mean = 0.000 Observed Cumulative Probability = 0.500
Std. Deviation = 0.014 Expected Cumulative Probability = 0.500
Source: Data processed, 2023

Table 2 displays the residuals' mean and standard deviation, which are 0 and 0.014, indicating
that the residuals have a normal distribution. This is also evident from the P-P plot of normal
residuals, which shows that the data points lie on the diagonal, indicating that the residuals have
a normal distribution.
Table 3. Multicollinearity Test Results

Model Collinearity Statistics
Tolerance
1 Constant
X1
127
X2
X3
There is no issue with multicollinearity amongst the independent variables, as can be shown
from Table 3, where the tolerance and VIF values for each independent variable are larger than
0.1 and less than 10.
Table 4. Heteroscedasticity Test Results

Model Heteroskedasticity Test: Breusch-Pagan-Godfrey
F-statistic
1 0.713
Obs*R-squared
Prob. Chi-Square(3)

Table 4 demonstrates that there is no heteroscedasticity issue with the regression model since the
values of the chi-square and F-statistic probabilities are both larger than 0.05.
Table 5. Autocorrelation Test Results

Model Durbin-Watson Statistic
1 1.876
Table 5 demonstrates that the Durbin-Watson statistic is nearly equal to 2, suggesting that the
regression model is free of autocorrelation issues. In light of the study's findings, the hypothesis
put forward in this study can be considered accepted. This means that investment has a positive
and meaningful impact on economic growth in Semarang City (2013-2022), with a p-value
<0.05. This shows that the greater the investment value realized in Semarang City, the higher the
economic growth of Semarang City. This is consistent with economic theory. that investment is a
component of aggregate demand and can increase regional or national output or gross domestic
product (GDP). Investment can increase production capacity and productivity of other
production factors, thereby promoting long-term economic growth. According to data from the
Central Statistics Agency (BPS) of Semarang City, the value of investment realized in Semarang
City has increased from year to year. In 2013, the investment value realized in Semarang City
was Rp 8.9 trillion, while in 2022, the investment value realized in Semarang City reached Rp
23.7 trillion. This shows that Semarang City has succeeded in attracting investors both
domestically and abroad to invest in Semarang City.
The increase in investment value realized in Semarang City include positive impact on economic
growth in Semarang City. Based on data from BPS Semarang City, the economic growth rate in
Semarang City has also increased from year to year. In 2013, the economic growth rate in
Semarang City was 6.2%, while in 2022, the economic growth rate in Semarang City reached
7.5%. This shows that Semarang City is able to increase its output or GDP with the help of
investment. Consequently, it may be said that investment has a positive as well as significant
impact on economic growth Semarang City (2013-2022) with a p value of < 0.05. This means
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that the research hypothesis that argues that investment include a positive and significant impact
on economic growth in Semarang City is acceptable. Therefore, the Semarang City government
needs to continue to improve a conducive investment climate and provide facilities and
incentives to investors who want to invest in Semarang City. This is expected to maintain and
increasing the rate of economic growth in Semarang City in the future.
Labor certainly include a positive and significant impact on economic growth in Semarang City
(2013-2022) with a p value of < 0.05. This shows that the more the number of labor force
working in Semarang City, the higher the economic growth rate in Semarang City. This is in
accordance with economic theory which states that labor is one of the factors of production that
can increase output or gross domestic product (GDP) of a region or country. Labor can increase
the number and improving the quality human resources involved in the production process, so as
to encourage long-term economic growth. Government expenditure may have a positive or
negative and significant effect on economic growth in Semarang City (2013-2022) with a p value
of < 0.05, depending on the type, composition, and amount of government spending. This shows
that government spending has a crusial role in influencing economic growth in Semarang City,
both directly and indirectly. This is in accordance with economic theory which states that
government spending is one component of aggregate demand that can increase output or gross
domestic product (GDP) of a region or country. Government expenditures can raise living
standards and foster an environment that is favorable to business, so as to encourage long-term
economic growth. However, government spending can also negatively affect economic growth if
it is inefficient, not transparent, or not in accordance with development needs and priorities.
Based on the discussion, it can be conclud that investment, labor, and government expenditure
are important factors, influence on economic growth in Semarang City. Therefore, the Semarang
city government needs to increase investment, manpower, and government spending in
Semarang City to encourage higher and sustainable economic growth.
Conclusion
The results suggest that labor, investment, as well as government spending are positively and
significantly affect the economic growth rate growth in Semarang City. This shows that the
greater the investment value realized in Semarang City, the higher the economic growth rate in
Semarang City. This is in accordance with economic theory which states that investment is one
component of aggregate demand that can increase output or gross domestic product (GDP) of a
region or country. Investment can increase production capacity and productivity of other
production factors, thereby promoting long-term economic growth. The workforce also has a
positive and significant impact on economic growth in Semarang City. This shows that the more
the number of labor force working in Semarang City, the higher the economic growth rate in
Semarang City. This is in accordance with economic theory which states that labor is one of the
factors of production that can increase output or gross domestic product (GDP) of a region or
country. Labor can increase the number and quality of human resources involved in the
production process, so as to encourage long-term economic growth. Government expenditure
also includes a positive or negative beside significant influence on economic growth in
Semarang City, depending on the type, composition, and magnitude of government spending.
This shows that role of government spending is significant in influencing economic growth in
Semarang City, both directly and indirectly. This is in accordance with economic theory which
states that government spending is one component of aggregate demand that can increase output
or gross domestic product (GDP) of a region or country. Government spending can improve
welfare of the population and better business conditions, so as to encourage long-term economic
129
growth. However, government spending can also negatively affect economic growth if it is
inefficient, not transparent, or not in accordance with development needs and priorities.
Suggestion
Semarang city government needs to increase investment in Semarang City, both from the
government and private sectors, by providing incentives, facilities, and ease of licensing for
investors who want to invest in Semarang City. In addition, the Semarang’s city government also
needs to improve the quality of infrastructure, security, and political stability in Semarang City,
in order to attract investors and improve a conducive business climate, and needs to inc rease the
workforce in Semarang City, by improving the quality of education, training, and health for the
workforce in Semarang City. In addition, the Semarang city government also needs to create
more and more diverse jobs, as well as provide protection and welfare for workers working in
Semarang City.
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Tamansiswa Accounting Journal International Volume 8, No 1, January 2023

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Tamansiswa Accounting Journal International ISSN 2775-1651

How Does Financial Inclusion Support a Green Economy in Asia? .................................................. 23

The Influence of Workplace Spirituality on Employee Engagement in Indonesia ............................ 61

Globalization and Indonesia's Political Economy: A Nonlinear Correlational Analysis between

Green Energy, Globalization, FDI and Government Debt in

Keyword : Green Energy, Globalization, FDI,Government Debt

Results and Discussion

Variables ADF GF-DLS PP KPSS

IQ -1.3118 -1.2007 -0.9227 -0.8227

DEBT -1.0911 -1.1123 -0.7232 -0.7233

GLO -1.0015 -1.1221 -0.8724 -0.2341

FDI -2.1158 -1.8247 -1.2237 -0.2242

RE -1.0311 -1.1223 -1.0253 -0.7722

After first difference

IQ -8.2331 -7.2231 -5.1336 -0.2121

DEBT -7.1311 -6.2133 -6.1311 -0.2112

GLO -6.8025 -5.7132 -5.7613 -0.1221

FDI -5.2731 -4.7116 -4.1341 -0.1212

RE -7.1232 -6.2331 -5.1341 -0.2712

T-stat. Time break T-stat. Time break

IQ 2.2332 2001 5.3116 2008

DEBT 2.7133 2003 6.2321 2005

GLO 2.6234 2004 6.2432 2006

FDI 3.2241 1997 7.1126 2012

RE 2.4232 2002 6.1331 2015

Coeff. T-stat S.E Coeff. T-stat S.E

DEBT 0.2211 0.003 16.3322 0.0722 0.001 4.0212

GLO 0.7121 0.014 16.1121 0.0712 0.004 5.2232

FDI 0.3322 0.019 17.2234 0.0331 0.007 4.1554

RE 0.3213 0.002 16.2242 0.0311 0.001 6.1232

The Influence of the Nu Sumbersari Jember BMT Financial

Keyword : Financial Inclusion Program, Moneylender Practices,Jember, Indonesia.

Formulation Of The Problem

Results and Discussion

Table 2. Distribution of Respondents by Category The implementation of the BMT NU financial

Table 3. Distribution Of Respondents By Category The Implementation Of The BMT NU

Category Score Criteria Amount (Person) Percentage

Table 4. Distribution of Respondents Based on the Implementation Category of the BMT NU

Table 5. Distribution of Respondents Based on the Category of Implementation of the BMT NU

Table 7. Spearman Rank Correlation Test

NU BMT Financial Moneylender

Sig. (2-tailed) .00001 .

3. There is convenience in transactions, because traders in transactions with moneylenders

How Does Financial Inclusion Support a Green Economy in Asia?

Keywords: Financial Inclusion,Green Economy, Asia, Economics Development

Literature review and hypothesis development

Data And Methodology

Green Economics Efficient use of natural OECD

Performance resources and green economy

Total financial inclusion The total number of financial World Bank

Insurance insurance market trends OECD

Environmental Governance CO2 emissions (metric tons World Bank

Credits Financial sector domestic World Bank

credit (percent of GDP)

Fiscal Expenditure Spending on final World Bank

government (as a percentage

Trade Openness Trade (% of GDP) World Bank

Marketing Final consumption World Bank

Industrial Structure Industry (including World Bank

construction), value added

Result and Discussion

Total financial inclusion 0.006 (0.001)

Insurance 0.005 (0.001)