Abstract
This study calculates and analyzes the Islamic financial inclusion index which covers three dimensions; accessibility, availability, and usage of sharia banking. The results showed that the level of Islamic financial inclusion in Indonesia was classified as low during the study period and DKI Jakarta Province was the most inclusive province in Indonesia. Furthermore, this study analyzes the effect of the Islamic financial inclusion index on Islamic financing channeled to Micro, Small and Medium Enterprises (MSMEs) in Indonesia. Using the saturated sampling method, a total of 33 provinces in Indonesia were selected as samples with an observation period. The results show that the Islamic Financial Inclusion Index (IIK) has a significant positive effect on sharia financing channeled to the MSME sector, one of the regions that appears to be growing faster than other regions is Aceh. This research is different from previous financial sector inclusiveness studies that still see and study conventional (non-sharia) financial inclusion and find out the impact of sharia financial inclusion based on sharia financial inclusion indexes on sharia financing distributed to Micro, Small and Medium Enterprises in Indonesia and discuss comprehensively for MSME.
Highlights
Access to formal financial services is an important factor that supports poverty alleviation efforts.1The formal financial sector, especially 56 IQTISHODUNAJurnal Ekonomi IslamVolume 9 Issue1, April 2020 banking, plays an important role in providing access to the public to utilize financial services because banking is the financial sector that controls the financial industry in Indonesia
Due to a decline in every or giving sermons to their pilgrims dimension of financial inclusion not continuously and without except banking penetration evaluating whether the pilgrims, the highest have switched sharia sacrifices or nominal amount of Islamic financing still remain in conventional banks, is dominated by Java islands but for example related worshipers including DKI Jakarta, the highest whose prayers have not been good growth of financing channeled the cleric will monitor and Islamic banks in the MSME sector is evaluate through various ways so achieved by outside provinces Java that the prayer turns out to be good
The results of the study indicate that the level of Islamic financial inclusion in Indonesia falls into the low category with an average value of Inklusi Keuangan (IIK) Sharia in Indonesia during the 2015-2018 period only 0.139
Summary
Volume 9 Issue, April 2020 banking, plays an important role in providing access to the public to utilize financial services because banking is the financial sector that controls the financial industry in Indonesia. An inclusive financial system could be a solution for micro businesses that cannot access to obtain financing from banking institutions in order to develop their business Based on these data, the MSME sector has a large contribution to the country's economy. This study connects financial inclusion with Islamic financing at MSME based on the results of Fahmy et al which states that financial inclusion as measured by the dimensions of access and use has a positive and partially significant effect on credit extended to the micro, small and medium business sector, and together with the LDR control variable with the access variable and the use of banking service variables have a significant positive effect on distribution of MSME loans in Indonesia.. The author conducted this research to determine the Islamic financial inclusion index in Indonesia and to know the impact of Islamic financial inclusion based on the Islamic financial inclusion index on Islamic financing channeled to Micro, Small and Medium Enterprises in Indonesia and discuss comprehensively to increase inclusion and MSMEs
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