Optimization of sharia bank products for micro, small and medium enterprises (MSMEs) in Indonesia during COVID-19

Abstract

This study aims to show that the empowerment of MSMEs by Islamic banks is the key to the revival of the national economy after the COVID-19 pandemic. The reality of Micro, Small and Medium Enterprises (MSMEs) in Indonesia actually has two implications for shari'a banks. MSMEs are both an opportunity and a challenge. On the one hand, the dominant number of MSMEs is a very promising and potential market share for shari'a banks that want to expand market share and make profits at the same time. That way, the failure of shari'a banks to pursue a 10% market share in 2020 due to the pandemic can be achieved in 2022. On the other hand, because MSMEs are high-risk and lack the requirements to be financed due to all of their faults and restrictions, sharia banks are faced with the challenging task of financing them. The profit that can be expected from MSMEs is not proportional to the risk taken. The results of the study concluded that through product engineering methods, Islamic banks as ummat financial institutions are able to optimize their products for micro, small and medium enterprises (MSMEs).