Abstract
This study provides an overview of the development of MSMEs from the perceptions of MSMEs, not from the perspective of Islamic financial institutions. The purpose of this study is to show the development model of MSMEs through a profit-loss sharing agreement that is applied to the type of bound investment. It is applied in the mudharabah muqayyadah contract through the principle of profit sharing distribution. The method used in this study is a survey of MSMEs. The results of this study indicate that the development of MSMEs can be carried out with a mudharabah muqayyadah agreement through the principle of profit sharing distribution. To develop MSMEs in order to gain increased revenue, enlarge business scale, and diversify businesses, there needs to be a fair distribution of profit-loss sharing with the principles of revenue sharing, profit sharing, and agreed risk builders despite restrictions in business management such as the type of business determined by the owner of the fund, there are limits in the management of funds, as well as restrictions in running a business or investment, where businesses run must be guided by sharia principles
Highlights
IntroductionMSMEs have a weak point in capital both in terms of resources and numbers, limited ability to manage businesses, and skills in organizing in terms of marketing (Suci, 2017)
MSMEs is Micro, Small, and Medium Enterprises
Indirect path coefficient values obtained by 0.192 with a p-value of 0.019 < 0.05. These results indicate that the development of MSMEs (Y2) is significantly influenced by the Mudharabah Muqayyadah contract (X) through the mediation of the Profit Sharing Distribution Principle (Y1)
Summary
MSMEs have a weak point in capital both in terms of resources and numbers, limited ability to manage businesses, and skills in organizing in terms of marketing (Suci, 2017). MSMEs are expected to be able to make a positive contribution to Indonesia's economic growth, even though the business competition climate with various digital and conventional marketing models continues. Capital financing has been provided by Islamic financial institutions through the concept of profit-loss sharing, but shows no contribution to the Islamic financial institutions (Afkar, 2017b). It is different from what is explained by (Faisol, 2017) that the financing provided has shown a positive contribution to the welfare of MSMEs
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