Islamic Micro Research Articles

Analisis Penerapan Islamic Social Reporting dan Tata Kelola Lembaga Keuangan Mikro Syariah dalam Mendorong Mobilitas Sosial Nasabah

This research aims to evaluate the implementation of Islamic Social Reporting (ISR) and governance in the Islamic micro-finance institutions in encouraging the movement of social mobility. The object of this study consists of two Islamic microfinance institutions: Islamic Micro Finance (BMT) BIF and Islamic Rural Bank (BPRS) BDW. The subjects of this research were staff and costumers of Islamic microfinance institutions. This research used qualitative descriptive method. Based on the analysis conducted both institutions provide funding for their costumers based on Islamic contract and mostly for working capital. The financing procedure was through collection of customer’s identity, conducting surveys and contract singing. The installment to BMT BIF and BPRS BDW was made by the customers in two ways: the customers pay to the marketing person who came to visit them or the customer comes to the office of BMT BIF and BPRS BDW. Social activities in both institutions are relatively similar such as scholarships, donations for orphans, sponsorship of the institutions related to Muhammadiyah. The social activity reporting format are different in both institution. BMT BIF social responsibility activities are reported specifically in the BMT Annuat General Meeting (RAT), mean while the BPRS BDW has not made specifif social responsibility reporting for their Annual General Meeting. From financing and social responsibility both institutions have been able to assist the movement of social mobility in society, especially in customers, it can be seen from costumers that initially did not have a business then now can have a business and still growing. Moreover, their costumers can survived from moneylenders trap. In terms of ISR compliance reporting for both institutions, the BMT BIF has met 70%-80% compliance, while BPRS BDW 50% compliance.

MODELING SUSTAINABILITY MODEL OF ISLAMIC MICROFINANCE INSTITUTIONS

Islamic microfinance institutions (IMFI) - such as the Baitul Maal wat Tamwil (with cooperative legal entities) that have been established in Indonesia - as part of the shariah-compliant financial industry sector (part of the halal sector) - need to be maintained their sustainability so as to encourage efforts to eradicate poverty and promote economic growth. In observing the sustainability of BMT, studies involving aspects of human quality that carry out internal activities are rarely examined in other studies. Therefore, the purpose of this stud is to create a model that is useful for predicting the sustainability of IMFI especially BMT based on variables that are considered important, namely; financing growth, Islamic human capital, fraud, and Islamic leadership. The model was analyzed using multiple regression analysis based on the stepwise method. Primary data (cross-sectional) taken in 2019 using questionnaires consisting of 105 respondents from the administrators and managers of BMTs in Semarang and Pekalongan Residency areas. We found that only two variables have a significant influence on the sustainability of Islamic microfinance institutions, these variables are financing growth and Islamic human capital. The results of the study can be used by practitioners to improve the performance of Islamic Micro Finance, especially BMT, through the distribution of funding in the context of economic improvement (especially micro-enterprise), spiritual strengthening for human resources owned, risk prevention, and appropriate leadership criteria. JEL Classification: G21, J24, Q01 Keywords: Islamic microfinance, Human capital, Sustainability, Model

KAJIAN PENERAPAN AKUNTANSI SYARIAH DENGAN POLA PEMBIAYAAN MURABAHAH DAN MUDHARABAH PADA KOPERASI JASA KEUANGAN SYARIAH-BAITUL MAL WAT TAMWIL (KJKS-BMT) DI KOTA PADANG

This paper examines the implementation of Syariah Acconting with murabah and mudharabah financing model at 81 KJKS-BMT, City of Padang. KJKS-BMT is an microfinance firms that is based on syariah rules. This research employs qualitative research method using interview with managers of KJKS-BMT and studying accounting documents. The main objective of the study is to describe and undertand how syariah acconting has been practiced at those islamic micro finance institutions. The results of this study shows that there is no KJKS-BMT that fully implement Syariah accounting for murabahah and mudharabah financing. However, this study found that 30 percent of KJKS-BMT has implemented it with 75% of level of implementation, 30% has implemented it with 50% of level of implementation. The remain, 40% of KJKS-BMT has just implemented it with less than 50% of level of implementation. In addition, majority of islamic microfinance organizations in Padang provide 80 percent murabahah financing and 20 percent mudharabah financing. This research suggests that capacity building is badly needed for KJKS-BMT to increase the quality of financial reporting and decision making process at KJKS-BMT

The Implementation of Good Corporate Governance to Develop Islamic Micro Insurance In Indonesia

<em>This study is aimed to find the best model in order to create Good Corporate Governance (GCG) for Islamic micro insurance development. The research methodology employed in this study was Analytic Network Process (ANP) using quantitative and qualitative approaches. The informants of this consist of practitioners, academia, and researchers who have good understanding of the problem. The finding of this study shows that the priority to embody good corporate governance principle in order to develop Islamic micro insurance in Indonesia namely, responsibilities, followed by equality and fairness, independences, accountability and transparency. In addition, the priorities of strategies that can be implemented to optimize GCG implementation are training and education for human resources, followed by focus on internal control mechanism, and the third is good corporate governance implementation in each level. The finding of this study also contributed to the best model of good corporate governance model to enhance Islamic micro insurance in Indonesia.</em>

BUSINESS NETWORK STRATEGY IN ISLAMIC MICRO FINANCE INSTITUTION OF ISLAMIC BOARDING SCHOOL

Purpose of the study: This study aims to explore the Sidogiri Islamic Boarding School (IBS) that have Islamic Micro Finance Institutions (IMFI) business portraits and strategies to develop the business model.
 Methodology: The paper using qualitative method using study case. It observation, interview, and review previous study.
 Main Findings: Pondok Pasentran (PP) Sidogiri has developed business network model that keeps part of social function. There are three business model that runs by PP Sidogiri; value chain, networking mode, operating model and value preposition . All the business model based on Islamic principles. There are three practical strategies includes the need for integration and awareness related to business models that involve all components of the business network owned by IBS Sidogiri.
 Implications of the study: This conceptual study highlights practical development strategies for Sidogiri IBS IMFI based on the potential, through business network, management and performance measurement model of PP Sidogiri.
 Novelty/Originality of this study: The paper suggests development strategies based on the network which involves all components of a large business network owned by PP Sidogiri, including santri, branch madrasa, UGT, alumni and sympathizers who form a unified whole as a business network.

Improving the Objective Well Being of Productive Zakat Recipients by Applying Islamic Micro Finance in Baitul Mal Aceh, Indonesia

Improving the Objective Well Being of Productive Zakat Recipients by Applying Islamic Micro Finance in Baitul Mal Aceh, Indonesia

The Role of Islamic Microfinance For Poverty Alleviation in Bandung, Indonesia

The emergence of Islamic micro financial institution becomes the alternative solution for the micro-entrepreneurs who need working capital assistance. However, the impact of Islamic microfinance institution in reducing poverty level is somewhat still debatable. In Indonesia, Islamic microfinance established through the presence of Baitul Mal wa Tamwil (BMT), the most popular type of Islamic microfinance institutions. BMT providing financing for the micro-entrepreneurs, as their potential clients, that operates their activities mostly at the traditional markets. The purpose of this study is to measure the impact of BMT for poverty alleviation in Bandung as the capital city of West Java as the biggest population province in Indonesia, not only based on material level but also on spiritual level. This study is looking at income variables of micro-entrepreneur’s household, as well as the spiritual level indicator of micro-entrepreneur before and after they received financing from BMT. The primary data obtained through in-depth questionnaires in Bandung, Indonesia.

Boosting The Welfare of Business Community: Implementing The Model of Islamic Micro Bank of Waqf in Pesantren

Purpose: The Paper is to study the Ability of micro waqf bank (BWM) in boosting The Welfare of Community Business Group at the Islamic Boarding School.Design/Method/Approach : This study uses a descriptive analysis. It intensively Implemented a qualitative approach to obtain information and collected the data needed through conducting interviews directly with informants. Both Observation and library study also applied to extent the secondary data. These methods were conducted to look at the Micro waqf bank model in Islamic boarding schools in Java of whether is able in boosting The Welfare of Business Community around the Islamic boarding school.Findings: The Islamic Boarding School-based Micro-Waqf Bank Model in Java that was applied for community empowerment was carried out a productive financing models in order to make communities able to manage the business--with a financing value of 1-3 million rupiah, within a maximum period of 1 year and payment per week with a maximum margin value equal to 3%. Building a Micro Waqf Bank in the Pesantren can perform through collecting a set of data of cooperative business entities in boarding schools, obtaining LKMS business licenses, obtaining funding for the establishment of BMW, selecting financing customers, and conducting training for selected customers of BWM financing.Originality/Values: The main contribution of this study concern on filling the gap of how the micro bank of waqf efectivelly boost the welfare the bussiness community in pesantren.

THE SHARIA MICROFINANCE AND THE COUNTER-HEGEMONIC MOVEMENT: EXAMINING THE LEGAL NORMS REGULATING ASPECTS OF INSTITUTIONAL AND BUSINESS ACTIVITIES IN SURAKARTA

Purpose of study: Research aims at the study of legal norms that are formed and used to regulate the institutional aspects and business activities of the Islamic Micro Finance (LKMS) as well as the counter-hegemonic movement that lies behind them.
 Methodology: This research employs qualitative approach, which based on secondary data in the form of written documents, collected through library studies and primary data from informants, collected through in-depth interviews and observations in four LKMS in Surakarta LKMS Al-Huda UNS, LKMS Al-Abidin, LKMS AmanahUmmahUMS, LKMS Al-Muayyad.
 Results: The Legal norms established and used to regulate the institutional and business aspects of the four Sharia Microfinance Institutions in Surakarta show that there are certain aspects in common, and differences on the other. The norms used in regulating the institutional and business aspects of Sharia Microfinance Institutions in Surakarta show a mixture of norms in Islamic law and the MUIs Fatwa, the Norms (in positive law) governing banks, financing institutions, partnerships, and cooperatives, with elements of the more prominent Islamic law.
 Applications: The existence of the equations of the norms used in the background by the existence of counter-hegemonic movement built by The Small Business Incubation Center (PINBUK), which has passed through the corporate phase but has not exceeded the hegemonic phase. While the differences of norms used, due to the different degrees of cultural penetration of each Sharia Microfinance Institutions against the hegemonic movement driven by PINBUK.

Analisis Faktor Yang Berpengaruh Terhadap Pertumbuhan Usaha Pelaku Usaha Kecil

The challenges of global business world will give impacts on enterprises in Indonesia, involving Micro Small and Medium Enterprises. The objective of this research is to find out the effect of Islamic micro finance towards the development of MSMEs in Sleman, Special Region of Yogyakarta. The 30 people of respondents are selected by using purposive random sampling method. Validity and reliability tests give a result in which each answered question is valid and reliable. Analytical regression result shows that Islamic micro finance variable has a siginificant impact on enterprises’ development. This is showed by the independent variable significance score that is lower than the used alpha (5%).

The Combine Synergies Between Islamic Micro Finance Portfolio and Various Structured Finance Solutions

The objective of this study is to combine the both Islamic micro finance portfolio and structured finance within the limits of Shariah. However, sustainability and access to traditional funding sources by micro finance institutions (MFI) have remained a pressing issue for the finance industry. The traditional sources of finance such as commercial banks have been unwilling and reluctant to join hands with micro finance institutions. A unique structured proposal for business model is suggested in this paper. It combines synergies of structured finance solution for Islamic banks to join hands with existing micro finance providers. The proposed business model will enhance the financing capacity of the existing micro finance Industry by a staggering two thirds, simply by bringing in matching funds from traditional sources. These funds are based on the strong business model using synergies and financially innovative structured solution proposed for risk management etc. It is a commercially viable solution which is capable of being replicated for the entire industry with a huge win-win for all. The results reveal that helping hands for relief development (HHRD) would be providing its share of Rs.115 Million (1045454.54 US dollars) to be matched on 60:40 ratios with Meezan Bank Limited (MBL). Furthermore, Rs.76.667 Million (696972.72 US dollars) and the total Rs.191.667 Million (1742427.27 US dollars) have matched on 30:70 bases between both HHRD and MBL regarding challenges of financial innovation. This study highlights the issue, why financial institutions of Pakistan especially government sector banks avoided to joint hands with micro finance providers for various reason. These reasons are discussed in detail with proper solution in the paper.

ROSCAs As an Islamic Micro Finance Vehicle: The Concept, Key Drivers and Valuation

This article empirically investigates the drives for participation in Jamey'ah (literally, Society) in Egypt as a kind of Rotating Savings and Credit Associations (ROSCAs) that agree in its general framework with Islamic principles. The article also evaluates the sample’s experience with it in order to understand the influence of gender and income on the motives behind Society sharing and their valuation. The findings show that the amounts raised by societies are allocated to essential expenses. The tough procedures in case of borrowing; and low return in case of saving were the drivers behind leaving banks to finance via Societies as the results strongly suggest. The valuation of Societies indicate apparent impressive positive trend as the results strongly suggest. There is considerable empirical evidence showing that Societies can be a substitute to banks in providing personal loans.

A Management Framework of Islamic Micro Financing for Sustainable Palm Oil Farming

The growth of demand and production in palm oil has increased rapidly from time to time, as this scenario has a positive impact on the development of economy. However, in the long run,the scenariomay give a negative impact if it is not closely controlled; like the issue of haze. Therefore, thisstudy is aimed to create a sustainable mechanism framework of palm oil farming among smallholders using Islamic micro financing.This is because; the position of smallholders is an issue in the sustainability debate in the palm oil industry at the global level. Using library research, this study discovered the constraints and the challenges faced by independent smallholders to create sustainable palm oil farming. Hence, the study was developed around the specific objectives that looked into the Islamic microfinance form and appropriate mechanisms for the implementation. In doing so, this study employed the qualitative method. From the results, it was concluded that Islamic microfinance is indeed a source of funding for a number of independent smallholders of oil palm. Later on, Islamic microfinance may contribute to sustainable palm oil production. Furthermore, by introducing a workable mechanism, more Islamic financial institutions should be involved in providing Islamic microfinancing to smallholders.

Role of Islamic Micro Credit Activities of Akhuwat in Poverty Alleviation in District Nowshera

Role of Islamic Micro Credit Activities of Akhuwat in Poverty Alleviation in District Nowshera

The combine synergies between Islamic Micro Finance Portfolio and various Structured Finance Solutions

AbstractPurpose: The objective of this study is to combine the both Islamic micro finance portfolio and structured finance within the limits of Shariah. However, sustainability and access to traditional funding sources by micro finance institutions (MFI) have remained a pressing issue for the finance industry. The traditional sources of finance such as commercial banks have been unwilling and reluctant to join hands with micro finance institutions.Design/methodology/approach A unique structured proposal for business model is suggested in this paper. It combines synergies of structured finance solution for Islamic banks to join hands with existing micro finance providers. The proposed business model will enhance the financing capacity of the existing micro finance Industry by a staggering two thirds, simply by bringing in matching funds from traditional sources. These funds are based on the strong business model using synergies and financially innovative structured solution proposed for risk management etc.Finding It is a commercially viable solution which is capable of being replicated for the entire industry with a huge win-win for all. The results reveal that helping hands for relief development (HHRD) would be providing its share of Rs.115 Million (1045454.54 US dollars) to be matched on 60:40 ratios with Meezan Bank Limited (MBL). Furthermore, Rs.76.667 Million (696972.72 US dollars) and the total Rs.191.667 Million (1742427.27 US dollars) have matched on 30:70 bases between both HHRD and MBL regarding challenges of financial innovation.Originality/valueThis study highlights the issue, why financial institutions of Pakistan especially government sector banks avoided to joint hands with micro finance providers for various reason. These reasons are discussed in detail with proper solution in the paper.

KOMPETENSI ACCOUNT OFFICER ANALISIS SYARIAH TERHADAP PERFORMANCE PEMBIAYAAN MUDHARABAH DENGAN RESIKO PEMBIAYAAN SEBAGAI INTERVENING (studi pada lembaga keuangan mikro syariah se pulau Lombok)

The objective of this study is to determine the influence of sharia account officers competence on the performance of mudharabah financing with the financing risk as intervening variable. Islamic microfinance institutions were selected as object of study in order to determine the extent of the theory related to the variables studied could be applied on the Islamic microfinance institutions. The data were obtained using a questionnaire distributed to the head of main office or branch office of sharia cooperative on the island of Lombok with requirements of sharia cooperative, BMT, boarding schools cooperative, and Islamic rural banks which had applied and have the authorization of mudharabah financing in lending decisions. The results showed that the sharia account officer competences have significant and negative influence on financial risk. Sharia officer competences also have significant and positive influence on the performance of financing. The results also showed that the risk of financing have significant and positive influence on the performance of financing. Generally, sharia account officer competence is important in minimizing the risk of financing and direct influence on the performance of financing. Thus, to improve the performance of Islamic micro financing with mudharabah can be done by increasing the competence of sharia account officer.

An Application of Generalized Moments Method to Examine the Management Behavior during Peak Season A Study in Islamic Micro Finance Industry

In the current highly competitive finance industry, it is important that any financial institution to develop a proper strategy to compete in the market. More specifically, the finance managers need to have an appropriate liquidity and stability strategy during the peak season where their customers have a high demand of cash. Finding such a strategy is challenging for micro finance institution due to their limited resources, in terms of finance and human resources. This study is aimed to (1) analyze the impact of liquidity risk to the stability of micro finance institutions and to (2) assess the relationship between liquidity risk and credit risk in the period of peak season by using Generalized Moments Method. The focus of this study is Islamic micro finance institutions in West Java for the period 2012-2017. Using monthly data, this study reveals that the risk of liquidity has a negative effect on the level of stability of micro finance institutions at peak season and has a positive influence on the level of stability at off peak season. Further, the study finds that the relationship between liquidity risk and credit risk is significant during the period of peak season and off peak season period. Therefore, it can be concluded that in general credit risk impacts on liquidity risk. The findings of this study provide significant contributions in terms of enlarging our understanding on the management behavior related to institution liquidity and stability during the peak and non-peak season. From managerial perspective, this study helps the Islamic micro finance institution to remain stable and competitive during the peak season.

MEMINIMUMKAN AGENCY PROBLEM DAN AGENCY COST DENGAN MENGGUNAKAN KONSEP ISLAM TENTANG PERUSAHAAN: ANTARA TEORI DAN PRAKTIK

Theoritically, a company based on the principles of Islamic law (profit and loss sharing/PLS) is believed to be able to minimize agency problems and agency cost than the conventional companies,either in the aspect of the business philosophy, contract design, and control. However, the implementation of PLS is still facing a lot of obstacles, Hence, it is not surprising that models of PLS is not predominantly used by Islamic financial institutions, both in Indonesia and abroad. The cclassic argument on  why the model is not dominant because it is considered more risky. In order to contribute to the agency problems in the Islamic perspective, this paper, firstly, will explain and explore the arguments which show advantages of Islamic concept on company in reducing agency problems and agency cost. Secondly, this paper will reveal the obstacles and problems faced in the implementation of such concept. Thirdly, this paper will offer an alternative solution framework to address various issues and constraints faced by them. Solutions offered here includes understanding aspects of the Islamic business draft, micro and macro benefits, human resources, regulatory and performance measurement indicators of  Islamic financial institutions.

Development Strategy of Microtakaful Institutions: Case Study Working Group Indonesia

Indonesia is becoming one of potential countries in microtakaful institutions development. One of the expert in microtakaful is Takmin Working Group. TWG is a group of initiators who have commitment to develop micro takaful in Indonesia. Its members consist ofexperts in Islamic insurance, micro finance and accounting. The research objectives of this study are to identify and analyze the problems faced by TWG in developing of microtakaful institutions and identify the solutions to solve those kinds of problems, by using AnalticHierarchy Process (AHP) method. The finding of this study shows the most priority solutions that can be undertake by Takmin Working Group to solve these both internal and external problem is information system development, and then followed by innovative product development. Communication & visitation to Islamic micro finance institutions and socialization about micro takaful product to society are being less priority on this matter.DOI: 10.15408/etk.v16i2.5267

EXPLORING THE UNTAPPED POTENTIALS OF ISLAMIC SOCIAL FUNDS IN ISLAMIC HOME FINANCING FOR LOW INCOME FAMILY

Islamic home financing in Islamic financial institution hitherto remains an arduous to resolve as it contains many issues. One of the main issues is interest benchmarking that inseparable part of banking system. Amid this reality, many Islamic financial institutions ignored the existence of Islamic social funds to mobilize the funds and hence ameliorate the affordability of low income family to purchase a house. This paper therefore aims to explore the untapped potentials of Islamic social funds such as waqf, Shodaqah and infaq to mobilize funds and create more affordable house for low income families. This paper undertakes library review as qualitative approach to strengthen the discussion. This paper concludes that the synergy between Nazir of social funds and Islamic micro finance institution able to produce Islamic social funds to be utilized to help low income family afford to purchase a house. This paper implies practically on the expected remarkable growth of Islamic micro finance institution offering Islamic home financing using Islamic social funds approach.