Abstract
Sharia-based BUMDes have a significant contribution in supporting the development of Micro, Small and Medium Enterprises (MSMEs). BUMDes savings and loans provide capital to MSME entrepreneurs to be used in running MSME businesses, and MSME actors as managers of this capital to improve MSME businesses. Based on this phenomenon, this research is intended to see the effectiveness of Islamic financing in improving the financial performance of SMEs in Pematang Serai Village, Tanjung Pura District, Langkat Regency. This type of research is a quantitative descriptive approach, with the data analysis technique used is the interactive model of Miles and Huberman. The results of this study indicate that the effectiveness of financing affects the financial performance of MSMEs with the Return On Equity is classified as very good in increasing MSME business income, and mudharabah financing improves MSME financial performance very effectively in the correct use of funds for asset purchases, business development, increased income. clean and generate high profits.
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