Qard Al-Hasan Revitalization as a Financing Alternative for Micro, Small, and Medium Enterprises: An Analytic Network Process Approach

Abstract

Purpose: The purpose of this research is to explore aspects of the application of qard al hasan that support the successful implementation of qard al hasan as an Islamic crowdfunding instrument to finance Micro, Small, and Medium Enterprises (MSMEs). Theoretical framework: The proper financing model is required to minimize the risk of Non Performing Loan of qard alhasan financing, so it can serve as an alternative access to financing for MSMEs that are classified as feasible but unbankable businesses. Design/Methodology/Approach: This research utilized the Analytic Network Process (ANP) which is the result of a literature study, and the opinions of practitioners and experts. Findings: To successfully implement qard al hasan as a financing instrument, it must be supported by internal and external aspects of the institution providing qard al hasan financing. Internal aspects consist of system and institutional management sub-aspects. The system sub-aspect consists of the qard al hasan distribution system, fund collection system, revenue system, and internal control system. Institutional management sub-aspect consists of human resources, organizational structure, governance, and business segment of the institution. External aspects consist of customer and authority sub-aspects. The customer sub-aspect consists of customer business management, customer segments, and collateral provision. While the authority sub-aspect includes regulations imposed by the authority to regulate the implementation of qard al-hasan. Research, practical & social implications: The results will provide input to all qard alhasan stakeholders, so the quality of financing is sound and sustainable. As a result, there will be more MSMEs that can be financed. Originality/Values: The originality of the research is in the scope of the discussion of qard al-hasan which is focused on revitalizing the financing aspects of qard alhasan by using the principles of sound financing practices produced by the ANP method as an analytical tool with the aim of producing sound and sustainable financing quality. The results of this research are expected to contribute to the concept of a qard alhasan implementation model that can be used by all stake holders to improve qard al-hasan performance.