This study aims to examine the effects of the banking sector (Sharia and Conventional) and inflation on reducing poverty and income disparity through economic growth in Indonesia. Secondary monthly time series data from January 2015 to December 2019 was used in this study. Poverty is represented by the Poverty Headcount Ratio (POV) and income disparity is represented by the Gini Ratio (GR), as dependent variables; economic growth is represented by the Industrial Production Index (IPI) as a mediating variable; Islamic banking is represented by the Total Financing (TF), Financing to Deposit Ratio (FDR), Non-Performing Financing (NPF), Return on Assets (ROA), and Third Party Funds (TPF); while conventional banking is represented by the Total Credit (TC), Loan to Deposit Ratio (LDR), Non-Performing Loan (NPL), Return on Assets (ROA), and Third Party Funds (TPF), as independent variables; and inflation is represented by the Consumer Price Index (CPI) as a control variable. This study showed several results by using the Autoregressive Distributed Lag (ARDL) as a data analysis method. First, in the case of Sharia banking, the variables TF, FDR, ROA, and TPF have a significant effect on reducing poverty, and TF, TPF, and CPI have a significant effect on reducing income disparities, in the long and short term. Economic growth is also able to mediate the effects of Islamic banking on poverty (TF, FDR, and NPF) and income disparities (TF, FDR, NPF, and TPF) both in the long and short term. Second, in the case of conventional banking, the variables TC, LDR, ROA, and CPI have a significant effect on reducing poverty, and TC, NPL, and TPF have a significant effect on reducing income disparities, in the long and short term. Economic growth is also able to mediate the effects of conventional banking on poverty (TC, LDR, ROA, TPF, and CPI) and income disparities (TC, LDR, ROA, TPF, and CPI) both in the long and short term. Third, a comparison of Sharia and conventional banking revealed that, in terms of credit or financing, Sharia banking contributes more to poverty reduction in the long and short term than conventional banking. Meanwhile, in reducing income disparities, it showed that the contribution of all conventional banking indicators is better than Sharia banking in the long run. According to the findings of this study, banks are expected to channel credit or financing to the MSME sector so that it can be effectively utilized and benefit the poor. Furthermore, the monetary authority is expected to be able to create a conducive environment and harmonize the conventional and sharia banking systems in order to maximize profits and increase public livelihood.