Effectiveness of Musharakah Financing in Empowering Small Micro Enterprises

2021 ◽  
Vol 39 (10) ◽  
Author(s):  
Khusnul Hidayah ◽  
Dalila Daud ◽  
Nurazilah Zainal ◽  
Siti Sara Ibrahim
Keyword(s):  
Small Business ◽  
Critical Analysis ◽  
Easy Access ◽  
Microfinance Institutions ◽  
Analysis Method ◽  
Research Findings ◽  
Islamic Microfinance ◽  
New Perspective ◽  
Micro Enterprises ◽  
Special Region

The present study aims to analyse the effectiveness of musharakah financing for empowering micro-businesses in the perspective of entrepreneurs. This research is qualitative research using a critical analysis method.   This study uses interviews as a research instrument to find out what factors affect the effectiveness of musharakah financing in empowering micro small business of BMT entrepreneurs in the Special Region of Yogyakarta.  Entrepreneurs from two BMT in Yogyakarta had been interviewed. The results showed that BMT musharakah financing played an important role in the business development of Micro and Small Business, especially in terms of increasing business capital, easy access to take financing and a small amount of instalments. In addition, musharakah financing is effective in encouraging MSE empowerment, to increase the amount of merchandise inventory, add new types of products, expand businesses and add new equipment for business facilities. This study limits the ability to generate findings to a larger population of small-micro enterprises which obtain shariah financing from Islamic microfinance institutions (Baitul Maal Wat Tamwil) in Indonesia. The research findings can be used on how to empower small-micro enterprises with the Islamic financing and the development of Islamic microfinance institutions. This paper has contributed to the approach of empowering small micro-businesses with musharakah financing, which is considered to have a less contribution to BMT income. In addition, this study uses a critical analysis method to get a new perspective on the use of musharakah financing from the view of small entrepreneurs.

scholarly journals Prospective Customers’ Behavioural Intention towards Islamic Microfinance Services in Bangladesh

2020 ◽  
Vol 13 (2) ◽  
pp. 101-123
Author(s):  
Selim Ahmed ◽  
Rafikul Islam ◽  
Ahmed Al-Asheq
Keyword(s):  
Secondary School ◽  
Behavioural Intention ◽  
School Level ◽  
Survey Questionnaire ◽  
Microfinance Institutions ◽  
Policy Makers ◽  
Secondary School Level ◽  
Research Findings ◽  
Islamic Microfinance ◽  
To Receive

The present study investigates the behavioural intention of prospective customers towards Islamic microfinance services in Bangladesh based on demographic factors such as gender, age, education, and family size. This study uses a self-administered survey questionnaire to determine the intention of prospective customers towards Islamic microfinance services based on five variables, namely subjective norms, attitude towards behaviour, behavioural intention, normative belief, and behavioural belief. A total of 450 questionnaires were distributed, out of which 326 responses were received (72.44%). The findings of this study indicate that male respondents have a higher behavioural intention towards Islamic microfinance services than female respondents. On the other hand, female respondents have a higher behavioural belief towards Islamic microfinance services compared to their male counterparts. The findings also indicate that those respondents who studied up to secondary school level would like to receive opinions from family members and friends about the use of Islamic microfinance services. The present research findings have important implications for Islamic microfinance institutions, practitioners and policy makers. The findings of this study are expected to reflect suggestive steps to increase the behavioural attitude in the use of Islamic microfinance services.

scholarly journals The Role of Network Quality as Moderating Variable on the Performance Enhancement of Islamic Microfinance Institutions (Cases of Baitul Mal Wat Tamwil)

2018 ◽  
Vol 11 (2) ◽  
pp. 307 ◽  
Author(s):  
Muhamad Mutaqin ◽  
Widiyanto Bin Mislan Cokrohadisumarto
Keyword(s):  
Human Capital ◽  
Business Ethics ◽  
Performance Improvement ◽  
Performance Enhancement ◽  
Microfinance Institutions ◽  
Islamic Business Ethics ◽  
Network Quality ◽  
Islamic Microfinance ◽  
Micro Enterprises

<p>Islamic microfinance institutions (IMFI) -such as <em>Baitul Mal Wat Tamwil</em> (BMT)– have an important role in the development of micro-enterprises in Indonesia. Therefore, performance improvement BMT institutions should be carried out continuously in order to enhance its role in contributing to the development of the national economy, namely through the development of micro enterprises. The purpose of this study is to develop animprovement model the performance of BMT by involving the variables of human capital, Islamic business ethics, and moderation variable of network quality. Results of the study showed that the human capital and Islamic business ethics have a significant effect on the performance of BMT, and the network quality is able to strengthen the effect of human capital and Islamic business ethics in improving the performance of BMT. This result indicates that the network quality as moderation variable has an important role in improving the performance of BMT.</p>

scholarly journals Determinants of Financial Sustainability for Microfinance Institutions: Lessons for Islamic Microfinance Banks in Nigeria

2021 ◽  
Vol 8 (Special Issue) ◽  
pp. 301-320
Author(s):  
Abdurrahman Abdullahi ◽  
Anwar Hasan Abdullah Othman
Keyword(s):  
Capital Structure ◽  
Financial Services ◽  
Financial Sustainability ◽  
Microfinance Institutions ◽  
The Poor ◽  
Research Findings ◽  
Islamic Microfinance ◽  
Asset Size ◽  
Good Risk ◽  
Economic And Financial Crisis

Islamic microfinance institutions play a major role in the provision of financial services to the poor and underprivileged through non-interest, equity-based products and services. To achieve these critical objectives, however, they need to be financially sustainable, which is threatened by the current economic and financial crisis caused by the Covid-19 pandemic. The objective of this paper is to review the determinants of financial sustainability of microfinance institutions with a view to drawing lessons for Islamic microfinance banks in Nigeria. The paper utilized the literature review methodology to synthesize research findings in the area. The review revealed that the major determinants of financial sustainability of microfinance institutions are the capital structure, asset size, and financial innovation. Others are good risk management and corporate governance frameworks. The paper thus recommended that Islamic microfinance institutions in Nigeria should maintain a robust capital structure that relies more on equity, a lean but diversified Board, and utilize more technology-based services. Most importantly, they should emphasize profit and loss sharing principles in their operations.

Taking stock of the waqf-based Islamic microfinance model

2017 ◽  
Vol 44 (8) ◽  
pp. 1018-1031 ◽  
Author(s):  
Rose Abdullah ◽  
Abdul Ghafar Ismail
Keyword(s):  
Good Governance ◽  
Low Cost ◽  
Agency Conflicts ◽  
Microfinance Institutions ◽  
Analysis Method ◽  
Content Type ◽  
Good Corporate Governance ◽  
Content Analysis Method ◽  
Islamic Microfinance ◽  
The Right

Purpose The purpose of this paper is to explore two main aspects of waqf: the characteristics of waqf property and the management of waqf. This paper also discusses the governance of waqf management as a source of funds for Islamic microfinance institutions (MFIs). Design/methodology/approach This research uses content analysis method to examine various literatures that discuss the concept and management of waqf. Findings The characteristics of cash waqf such as permanence, irrevocability and perpetuity differentiate waqf from other type of donations. Therefore, cash waqf-based Islamic microfinance needs to be sustainable. Good corporate governance is vital to ensure the sustainability. As the donors of cash waqf do not aim to make financial profit, waqf-based Islamic MFIs will be able to provide low-cost capital to the poor entrepreneurs. Furthermore, to ensure the perpetuity of the waqf, it is suggested that only revenue from the waqf property should be used for microfinance fund. Social implications The cash waqf-based Islamic microfinance will help the micro entrepreneurs to get low-cost capital without collateral. At the same time, public can donate any amount they afford to contribute to cash waqf. Originality/value The creation of a cash waqf-based Islamic MFI must observe the issues of agency conflicts and the right of stakeholders to a transparent management. This paper emphasizes the importance of good governance in managing the waqf property as a source of fund for Islamic MFIs.

scholarly journals PENGARUH LEMBAGA KEUANGAN MIKRO SYARIAH (LKMS) BERKUALITAS TERHADAP PENINGKATAN KEUNTUNGAN USAHA MIKRO KOTA DEPOK

2020 ◽  
Vol 6 (5) ◽  
pp. 1086
Author(s):  
Aditya Hadid Riyadi ◽  
Jaenal Effendi ◽  
Tita Nursyamsiyah
Keyword(s):  
Development Process ◽  
Financial Institution ◽  
Profit Sharing ◽  
Least Square ◽  
Living Standards ◽  
Easy Access ◽  
Ordinary Least Square ◽  
Microfinance Institution ◽  
Islamic Microfinance ◽  
Micro Enterprises

Micro-enterprises generally have the potential to improve people's living standards and have contributed to economic growth in Indonesia. In its development process, capital is the biggest problem faced by micro enterprises due to the number of microbusinesses that are still unbankable. The existence of alternative financial institutions other than banks that can overcome these problems is needed. Islamic microfinance institution (LKMS) or commonly known as BMT is the best solution to solve the capital problem of micro enterprises. Easy access to financing for microenterprises and mutually beneficial profit sharing system, LKMS has become a solution for the development of member’s business. This study aims to analyze the effect of islamic micro financial institution (LKMS) on the increase of profit of microenterprises in Depok City using Ordinary Least Square (OLS) method. The result of research shows that there is a significant influence of the increase of profit of microenterprises after financing in LKMS.Keywords: Financing, LKMS, Microenterprises, OLS

scholarly journals Do Indonesian Islamic Microfinance Institutions Need Lender of the Last Resort?

2020 ◽  
Vol 4 (2) ◽  
pp. 235
Author(s):  
Imron Mawardi ◽  
Tika Widiastuti ◽  
Muhammad Ubaidillah Al Mustofa ◽  
Ari Prasetyo
Keyword(s):  
Significant Risk ◽  
Financial Intermediaries ◽  
Microfinance Institutions ◽  
Lender Of Last Resort ◽  
Reserve Requirements ◽  
Case Study Analysis ◽  
Excess Liquidity ◽  
Research Findings ◽  
Islamic Microfinance

Liquidity risk is one of significant risk managed by financial intermediaries including Islamic Microfinance Institutions (IMFIs). The financial intermediaries accept short-term deposits and disburse these deposits in the form of long-term loans. This situation makes IMFI desperately need a lender of last resort (LOLR). Nevertheless, there has been no formal LOLR for Indonesian IMFIs. This study intends to construct the LOLR model for IMFI in Indonesia. This qualitative study applies a case study analysis. This study's subjects are IMFIs in East Java Province that was selected purposively with thirty managers as the key informants. Research findings show that the best model of LOLR is developing a secondary cooperative since the majority form of IMFIs in Indonesia are cooperative entities. With all members of a secondary cooperative deposit for reserve requirements, they can place excess liquidity in the secondary cooperative and ask for financial support.

Assessment of small businesses activities in Ukraine

2019 ◽  
pp. 40-47
Author(s):  
Igor Ponomarenko ◽  
Kateryna Volovnenko
Keyword(s):  
Comparative Analysis ◽  
Statistical Analysis ◽  
Small Business ◽  
Small Businesses ◽  
Government Agencies ◽  
Small Enterprises ◽  
The Subject ◽  
Business Entities ◽  
The Impact ◽  
Micro Enterprises

The subject of the research is a set of approaches to the statistical analysis ofthe activities of small business entities in Ukraine, including micro-enterprises. The purpose of writing this article is to study of the features of functioningof small business entities in Ukraine. Methodology. The research methodology isto use a system-structural and comparative analysis (to study the change in thenumber of small enterprises by major components); monographic (when studyingmethods of statistical analysis of small businesses); economic analysis (when assessing the impact of small business entities on socio-economic phenomena andprocesses in Ukraine). The scientific novelty consists to determine the features ofthe functioning of small businesses in Ukraine in modern conditions. The influenceof the activities of the main socio-economic and political indicators on the activities of small enterprises in recent periods of time has been identified. It has beenestablished that there is flexibility in the development of strategies by small businesses in conditions of significant competition, which makes it possible to quicklyrespond to changing situations in specific markets. Conclusions. The use of acomprehensive statistical analysis of small businesses functioning in Ukraine willallow government agencies to develop a set of measures to optimize the activitiesof these enterprises, which ultimately will positively affect the strengthening oftheir competitiveness and will contribute to the growth of the national economicsystem.

ANALISIS PENGGUNAAN MEDIA SOSIAL FACEBOOK DALAM PERKEMBANGAN UMKM GULO PUAN DI DESA BANGSAL KECAMATAN PAMPANGAN

2021 ◽  
Vol 1 (2) ◽  
pp. 125-134
Author(s):  
Anggi Julianti ◽  
Fadilla Fadilla ◽  
Moh. Faizal
Keyword(s):  
Social Media ◽  
Small Business ◽  
Major Effect ◽  
Easy Access ◽  
Business Activity ◽  
Left Behind ◽  
Technological Developments ◽  
Use Of Social Media ◽  
The Village

Small Microcus Business (UMKM) is a small business activity but is able to provide a major effect for the economy in Indonesia. That is to expand employment, play a role in the process of equity and increase in community revenue, and encourage the realization of national stability. But to realize it is necessary to be able to compete globally, by utilizing technological developments at this time not to be left behind with the development of the age. Utilization of social media especially Facebook as a promotional tool to make it easy for marketing UMKM Gulo Puan in the village of Bangsal District of District Objective is one of the strategies that are currently used. With easy access, wide tissues, fast working methods and also costs that will be able to provide positive and profitable impacts for MSME. The results of this study show that the use and use of social media as a promotional tool can increase the competitiveness of UMKM-UMKM Gulo Puan in the village of Bangsal District District in January aspects of increased sales than compared to using social media. But when revisited still many non-MSMEs that have not used and utilize social media for marketing online caused by various things.

Financial and social efficiency analysis of Islamic microfinance institutions

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Marwa Fersi ◽  
Mouna Bougelbène
Keyword(s):  
Capital Structure ◽  
Credit Risk ◽  
Risk Taking ◽  
Negative Impact ◽  
Microfinance Institutions ◽  
Social Efficiency ◽  
Content Type ◽  
Islamic Microfinance ◽  
The Impact ◽  
The Relationship

PurposeThe purpose of this paper was to investigate the impact of credit risk-taking on financial and social efficiency and examine the relationship between credit risk, capital structure and efficiency in the context of Islamic microfinance institutions (MFIs) compared to their conventional counterparts.Design/methodology/approachThe stochastic frontier approach was used to estimate the financial and social efficiency scores, in a first step. In a second step, the impact of risk-taking on efficiency was evaluated. The authors also took into account the moderating role of capital structure in this effect using the fixed and random effects generalized least squares (GLS) with a first-order autoregressive disturbance. The used dataset covers 326 conventional MFIs and 57 Islamic MFIs in six different regions of the world over the period of 2005–2015.FindingsThe overall average efficiency scores are less than 50%, where CMFIs could have produced their outputs using 48% of their actual inputs. IMFIs record the lowest financial (cost) efficiency that is equal to 28% on average. The estimation results also reveal a negative impact of nonperforming loan on financial and social efficiency. Finally, the moderating effect of leverage funding on the relationship between credit risk-taking and financial efficiency was confirmed in CMFIs. However, leverage seems to moderate the effect of risk-taking behavior on social efficiency for IMFIs.Originality/valueThis paper makes an initial attempt to evaluate the effect of risk-taking decision and its implication on efficiency and MFIs' sustainability. Besides, it takes into consideration the role played by the mode of governance through the ownership structure. In addition, this research study sheds light on the importance of the financial support for the development and sustainability of these institutions, which in return, contributes to a sustainable economic development.

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