Abstract:

This research aims to analyze the effect of pesantren (Islamic Boarding School) cooperatives toward economic growth compared to the number of informal workers, growth in interest rates, and growth in the inflation rate in East Java Province in 2013-2017. This research uses quantitative approach with panel data regression method in 38 districts/cities in East Java Province in 2013-2017. This research determines random effect model as he best model. The results shows that there were three variables with significant effects toward economic growth in East Java Province in 2013-2017, which were growth in the number of pesantren cooperatives, growth in interest rates, and growth in inflation rates. The growth in the number of pesantren cooperatives of 10% has a significant positive effect toward economic growth of 1.64118%. Interest rate growth and inflation rate growth of 10% had a significant negative effect toward economic growth respectively -10.22606% and -1.37082%. From the great potential of pesantren cooperatives in economic growth. The government needs to encourage the development of pesantren cooperatives through facilities of licensing and access for financial capital.