Dynamic circular causation model in poverty alleviation

Purpose This paper aims to unveil the impact of government policy, socio-economic variable, Zakat Infaq Shadaqah (ZIS) and financing of Baitul Maal wat Tamwil (BMT) toward severe problem of poverty in Indonesia. Design/methodology/approach The paper considers dynamic circular causation model to produce proper solution on Indonesian style of poverty that hitherto remain unresolved. Findings All variables including ZIS, government policy, socio-economic variable and BMT financing have an impact toward poverty reduction. Research limitations/implications This paper confined to the scope of poverty that occurred in Indonesia only, and therefore all variables and literatures derived from Indonesian pedigree on poverty. Practical implications This paper implies that government policy will be shifted toward focusing on extending subsidy for rural society to uplift their income by involving in more real sector. Originality/value This paper considered to be scarce as focusing only for Indonesian style of poverty by using dynamic circular causation model as a solution.