The Sustainability of Sharia MSMEs in the Halal Industry of Indonesia: Funding, Protection, and Sharia Principles

Abstract

This study aimed to analyse the relationship between Islamic SME financing, sharia insurance protection, and the sustainability of Islamic SMEs in the East Java region, Indonesia, taking into account Sharia principles such as maisir, gharar, and riba. Within this framework, the importance of sharia-compliant financing for SMEs and asset protection as well as operations in accordance with sharia principles were emphasised as determinants of the sustainability of Islamic SMEs. This study employed a quantitative approach, sampling 244 respondents who were owners of Islamic SMEs in East Java, Indonesia. Data were collected through the Likert-scale questionnaire to measure respondents' perceptions of Islamic SME financing, sharia insurance protection, and the sustainability of Islamic SMEs. The results of data analysis were expected to reveal the relationship between financing, insurance protection, and the sustainability of Islamic SMEs, as well was identify the factors influencing this relationship. These included a better understanding of asset protection and operational aspects of Islamic SMEs and the importance of financing in line with sharia principles. This research integrated elements of financing, insurance protection, and the sustainability of Islamic SMEs within a strict sharia framework, which has not been previously widely explored. Therefore, this research contributes to knowledge in the field of Islamic economics and the development of Islamic SMEs.