According to Chapra (1996), what is categorized as social value are all things that are not prohibited by Islam and have social value (zakat, infaq, waqf and shodaqoh) that affect the demand for money, i.e. other monetary instruments that proposed by Chapra for the Islamic economic system is the Islamic development goal of M1, which consists of currency and money in the clearing account, and Islamic M2, which consists of M1, added by mudharabah savings and investments in mudharabah deposits; Public share of demand deposit; Statutory reserve requirements and credit ceiling. From the above monetary instruments we can clearly see the essential differences from these two systems in which in the conventional economic system we recognize interest while in the Islamic economic system we recognize the system of profit share (mudharabah) and it must work. social value. The purpose of this research is to 1) analyze the demand function for Islamic money (M1 and M2) on a financial/banking system specializing in currency, wadi»ah clearing account, mudharabah savings and mudharabah investment deposit in Syariah banking and 2) analyze the impact of social values on the money demand function and to know whether there is a significant relationship or affinity between the number of money in circulation in the Islamic economic system with the instrument of social values.
The difference between capitalism, Marxism and the Islamic economic system There are several points of view in terms of the differences and opinions regarding the economic system, but in general we can distinguish the system that comes from Al-Quran and not from Al-Qur'an and Hadith. Karim (2004) explained that there are four economic systems developing in the world today, they are capitalism, socialism, communism and Islam. The economic system of capital is a system dominated by capital with a profit motive in which money is everything.
One of the socialism economic system features is central planning of the economy, fair income distribution establishment, and any essential assets belong to the public. The first and the most distinguishing difference is interest system in the conventional economic system, while the Islamic economic system offers profit sharing (profit and loss sharing), sharing system ensures justice and no party mutilated in a bear, losses when the shareholder cooperates with entrepreneurs to do business. While in the Islamic economic system there are 100% reserve banking systems, where this system does not provide opportunities for banks to create new money, because the entire backup must be stored at the central bank.
Through Figure 2.3, we can see that in the dual economic system in many Muslim countries, Islamic finance has become a strengthening element that balances the monetary sector and even strengthens the structure of the real economy.
Wisdom and Benefit of Zakat
Where no element in the transaction represents luxury consumption or indicates status or symbols and activities that are not useful. In addition, the investment must be productive, while the imports have done to meet the needs that cannot be met by the countries themselves. The speculative activity in the equation of the demand for Islamic money is an activity that is not allowed.
Rahmah (mercy) and being tender towards his brother, who did not have sufficient need fulfillment and contains aspects of the purification of morals. If we see the benefit ijtimaiyyah (social aspect), the Zakat is a way to help fulfill the lives of the poor who made up the majority of most countries in the world; Support to the Muslims' power and their upliftment. This can be seen in groups of recipients of zakat, one of which is the mujahidin fi sabilillah; Zakat can reduce social jealousy; zakat will encourage economic growth and the blessing will be abundant and paying zakat means expanding the circulation of property or money because when wealth is spent, the circulation will be expanded and more parties can benefit.
Himawan (2005) explained that zakat functions are a solution to inflation, as shown by the figure that zakat has a controlling and social function. If the investment flow is high, the purchase of goods and services will also increase, leading to lower prices. On the other hand, zakat and its social function gives subsidies to increase mustahik purchasing power which in turn will create wealth.
Thought Framework
The poor from power The price falls. from the level of return to the Islamic scheme. Then it will also show the influence of social values in the Islamic system, so it can be seen from each classification related to looking at the number of Islamic money demand for monetary management in Islam. Based on the above description, there are two main hypotheses developed in this paper, first, the Islamic money demand model which is divided into Kartal money element, wadi»ah clearing account, mudharabah and long-term investments, i.e. real GDP positively affects Islam. the demand for money and the return of Islamic Shariah negatively affect it.
Second, social values (zakat) affect the demand for money for unproductive activities in the Islamic system negatively on the side of muzakki and positive effect on the demand for money on the side of mustahik.
METHODOLOGY
Types and Sources of Data
Methods Data Processing and Analysis
VECM estimation is performed to see the long-term and short-term analysis, whereas if only it was performed up to VAR, we can see the short-term analysis.
RESULTS AND ANALYSIS
- VAR Estimation Results of Islamic Money Demand
- VAR Estimation Result of Demand for Fiat Money (UK)
- VAR Estimation Result of Wadi»ah Celaring Account (GW)
- VECM Estimation Result of Mudharabah Savings
- Response Impuls of The Demand for Mudharabah savings
- VECM Estimation Result of Demand for Mudharabah Deposits
This means that when GDP increases by one percent, the demand for real Islamic M2 balances has increased by 1.032118 percent. This means that if S increases by one percent, the demand for Islamic real M2 balances has increased by 2.023231 percent. Where if the Syari»ah return increased by one percent, the demand for Islamic real M2 balance increased by 0.014216 percent.
This means when GDP increases by one percent, the UK's real balance sheet demand will increase by 1.112937 percent. This means if S increases by one percent, the UK's real equilibrium demand will increase by 2.186456 percent, but this does not significantly affect the currency. Where if Syari»ah retun increases by one percent, UK real balance demand also increases by 0.014752 percent, can be seen in appendix 5.
Social calues variable (zakat) negatively impact real GW equilibrium demand by -0.232958 in the short term. It means that if S increases by one percent, real GW equilibrium demand decreases by -0.232958 percent. Where if the yield of Syari'ah increases by one percent, the demand for real GW equilibrium decreases by -0.582130 percent.
This means that when the GDP increases one percent, the demand for real Mudharabah savings balance decreases by 1.908627 percent. Social values variable (zakat) is significant and has a positive influence on the demand for real Mudharabah savings at 2.198949 in the long run. This means that if S increases by one percent, the demand for real Mudharabah savings balance also increases by 2.198949.
If the Syari»ah yield increases by one percent, the demand for the real Mudharabah savings balance decreases by one percent. Mudharabah savings demand response as shock effect, S and Syari»ah GDP in the long run. This means that if S increases by one percent, the demand for the actual Mudharabah savings balance also increases by 2.462457.
It means that when the GDP increases by one percent, the demand for real Mudharabah deposits decreases by 4.205416 percent. Where if the yield of Syari'ah increases by one percent, the demand for real Mudharabah deposits will decrease by 0.020466 percent.
CONCLUSION
The social value variable (zakat) has a significantly positive impact and the syariah return is positive and not significantly impacted. For the Wadi'ah clearing account, the GDP variable has a positive impact, social values are negative as well as syariah return. While social values (zakat) is significant and positively affects the demand for the mudharab savings balance.
Based on the IRF result, the demand for mudharab savings is quite stable in response to other variables”. There is a regulatory mechanism from the short term to the long term and through the result of the FEVD it can be seen that social values are not dominant in the response to the demand for mudharab savings. In the long-term mudharabi deposit demand model, social values (zakat) are significant and positively affect the demand for the mudharabi savings balance.
Based on the IRF results, the demand for mudharabah deposits is sufficiently stable in response to other variables. Through the results of the analysis of the influence of social values on the demand for money in Indonesia, so we can make a suggestion that we need more research related to social values, especially the variables that belong to them. We still need more data on social values to really prove it as a monetary instrument in an Islamic monetary system.
As an authority on the Islamic banking and economic system, Bank Indonesia is expected to re-examine the variable of social values to examine more its influence in the implementation of monetary policy. For the next research, we suggest observing the demand for money by extending the data set; again reduce the social values variable for all social activities with primary data, distinguish between Islamic and conventional currency and separate consumption without conscious consumption. Towards an integrated monetary policy under a dual financial system: the interest system versus the profit and loss sharing system.
APPENDIX
