Microfinance Institutions In Indonesia Research Articles

Do Multifinance Institutions Matter for Poverty Reduction? Evidence from Indonesia

Microfinance Institutions (MFIs) can help reduce poverty by offering small loans to people who cannot get bank loans due to lack of collateral. However, in Indonesia, access to microfinance institutions is unequally distributed, as shown by the establishment of MFIs in Indonesia, which covers only 22 out of 34 provinces. This condition limits their impact on poverty reduction. This study examines how access to MFIs and the loans they provide affect poverty rates in Indonesia, using cross-sectional data from 22 provinces between 2016 and 2022. The results show that access to MFIs and the loans they provide do not significantly reduce poverty. This is due to poor infrastructure, low-quality MFI services, and insufficient loan amounts. The study also found that education lowers poverty, unemployment increases it, and agriculture helps reduce it. To improve poverty reduction, the government should improve infrastructure and extend MFI coverage to more provinces. Additionally, MFIs should increase their loan amounts to make a bigger impact.

Drivers Of Financial Performance for Microfinance Institutions in Indonesia: The Roles of Leadership, Business Models and Environmental Dynamism

Drivers Of Financial Performance for Microfinance Institutions in Indonesia: The Roles of Leadership, Business Models and Environmental Dynamism

Persepsi nasabah tentang kepuasan dan loyalitas terhadap kualitas layanan di BMT Sukosari

BMT is one form of microfinance institution in Indonesia, this institution is present to develop productive businesses of small and medium economic actors and improve the economic quality of the community in the context of poverty alleviation efforts and support the financing of economic activities, this study aims to determine customer perceptions of the quality of Islamic banking services, investigate the perceptions of Islamic bank users in Sukosari and the reasons they are interested or not Using Islamic banking whether because of sharia considerations or quality. The data collection technique was carried out by distributing questionnaires to 60 BMT Sukosari customers. The sampling technique uses purposive sampling. This research is a quantitative research with multiple linear regression data analysis tools with the help of SPSS software version 15.0. The results of this study show that there is a positive and significant influence of customer satisfaction and customer loyalty simultaneously on customer perceptions regarding the quality of service KSPSS BMT Sukosari Branch. Based on the results of simultaneous tests obtained fcalculate values of 46.349 > ftable 3.16 with significant results less than 0.005, which means proving Ha3 is accepted and HO3 is rejected. The results of the coefficient of determination (R2) test with an Adjusted R Square (R2) value of 0.606 or (60.6%) mean that the variables of customer satisfaction and customer loyalty have a significant effect on the perception of service quality of KSPSS BMT Sukosari Branch

Strategic alliances and social performance of microfinance institutions in Indonesia

AbstractThe objective of this study is to understand how strategic alliances and dynamic capabilities influence the performance of microfinance institutions (MFIs) in Indonesia. The research was conducted on a sample of 235 CEOs/top leaders of MFIs spread across all provinces in Indonesia. Data collection used survey questionnaires. Data testing used SPSS version 25, and structural modeling used Amos version 25. The findings show that strategic alliances significantly influence dynamic capabilities and dynamic capabilities significantly influence social performance. Social performance has a significant effect on financial performance. MFIs are important in establishing strategic alliance and strengthening their dynamic capabilities to improve social performance (depth and breadth of reach) and affect financial performance. Social performance includes the depth of the reach to contribute to improving the quality of life of people experiencing poverty around the MFI's operations and the social responsibility of MFIs to the community through scholarships, free medical assistance, basic food assistance, and building/renovating houses of worship and others.

The sustainability and performance of Bank Wakaf Mikro: waqf-based microfinance in Indonesia

PurposeThis study aims to empirically investigate the sustainability and performance of Bank Wakaf Mikro (hereafter called BWM), which is a waqf-based microfinance in the context of Indonesia.Design/methodology/approachThe authors use several model specifications. The specifications mainly take the BWM’s characteristics and governance into account. The authors use a standard-panel data approach with a fixed-effects model as the Hausman test result favors the fixed-effects model. The authors collected monthly data from the Indonesia Financial Services Authority for the period 2018–2020. The detailed data, 39 BWM enabling us to observe the financial, social and governance elements of BWMs.FindingsThe results reveal interesting findings. The authors find that BWM characteristics, governance and social capital are significant in shaping BWM’s sustainability, performance and risk. Furthermore, the authors find that BWM located in a province with higher lending density has lower performance than those located in a province with lower lending density. The results provide some evidence on how waqf-based microfinance could achieve both economic and social goals. It could provide perspectives for stakeholders in designing microfinance institutions.Originality/valueThis paper is the first to empirically study the waqf-based microfinance institutions in Indonesia by looking at the determinants of performance and sustainability of those institutions.

Entrepreneurial orientation and social performance of microfinance institutions in Indonesia

PurposeThe purpose of this research was to examine the influence of entrepreneurial orientation on social performance and the influence of social performance on financial performance of microfinance institutions (MFIs) in Indonesia. These tests use environmental dynamism as antecedents.Design/methodology/approachThe research was conducted on a sample of 235 CEOs/top leaders of MFIs spread across all provinces in Indonesia. Data collection used survey questionnaires. Data testing used SPSS version 25, and structural modeling used Amos version 25.FindingsThe findings show that entrepreneurial orientation significantly influences the social performance of MFIs in Indonesia. Entrepreneurial orientation does not influence financial performance but must go through social performance mediation. Social performance has a significant effect on financial performance. The importance of MFIs improves social performance (depth and breadth of reach) to improve financial performance.Practical implicationsMFIs need to increase social contribution and responsibility to improve social performance which will impact financial performance.Originality/valueEntrepreneurial orientation influence on financial performance goes through social performance. Social performance includes the depth of the reach to contribute to improving the quality of life of people experiencing poverty around the MFI's operations and the social responsibility of MFIs to the community through scholarships, free medical assistance, basic food assistance and building/renovating houses of worship and others.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-06-2023-0478

Customer Loyalty To The Sharia Microfinance Institution In Indonesia

Various studies have identified the correlates of customer loyalty including satisfaction, trust, commitment, involvement, perceived cost, and service quality. This paper aims to describe customer loyalty to the Sharia microfinance institution in Indonesia. The main question developed was whether the customers of this institution have similar drives in maintaining their loyalty in using its services. The study uses qualitative method with a phenomenological approach and descriptive analysis. Data were collected from a series of interviews and focus group discussions with the management and the customers of Bayt al Mal wa al Tamwil Maslahah (BMTM) Sidogiri Pasuruan Indonesia. The study found that customer loyalty to BMTM Sidogiri was characterized by a positive response to and the utilization of products. The positive attitude towards BMTM products was based on the motives of meeting daily needs, business development and the acceptance of sharia values in the form of blessing and economic justice when using the products. In addition, the customer loyalty to BMTM Sidogiri was driven by emotional connection among the alumni of Sidogiri pesantren even though there is no structural connection between BMTM and Sidogiri pesantren. In maintaining its customer loyalty, the BMTM Sidogiri attempts to bring its services closer to the community, opens BMTM branches in other cities and adds new counters to ease customer transaction services. This study suggests that the customer loyalty to the Islamic financial institution is determined by a combination of shariah values acceptance and the fulfilment of daily need as well as business development

Employee Loyalty Determinants at KSPPS BTM Pekalongan: Job Satisfaction as a Mediating Variable

Many Sharia Microfinance Institutions in Indonesia have the form of KSPPS. Employee loyalty is very important in financial institutions of any kind. Employee loyalty in financial institutions is not only expected to be able to produce satisfactory performance but also to prevent fraud. This research aims to analyze the effect of HR competency and quality of work life on employee loyalty with job satisfaction as a mediating variable in KSPPS BTM Pekalongan employees. This research is field research with a quantitative approach. The population in this research amounted to 192 employees from the entire office network of KSPPS BTM Pekalongan. The sample in this research amounted to 130 employees determined based on the results of the calculation of the Slovin formula with a margin of error of 5%. Sampling in this research uses a proportional random sampling technique. The data collection technique in this research used a questionnaire with a Likert scale. The data analysis technique used in this research is path analysis. The results showed that HR competency and quality of work life have a significant effect on job satisfaction. HR competency, quality of work life, and job satisfaction have a significant effect on employee loyalty. Job satisfaction mediates the effect of HR competency and quality of work life on employee loyalty.

Analisis Bibliometrik Arah dan Perkembangan Penelitian Bertema Lembaga Keuangan Mikro Syariah di Indonesia Tahun 2013-2022

This study aims to analyze the trends, and directions of research developments regarding Islamic microfinance institutions in Indonesia indexed in Google Scholar from 2013 to 2022. The data analysis method used is the bibliometric analysis, in which the data analysis will determine the most frequently researched topics which is still rarely investigated in research, especially in journals article on the role of Islamic microfinance institutions in poverty. The data analysis tool used is VOSviewer. The results show that the development of research for ten years has increased, the total number of researches from Google Scholar data is 353 studies, of which there are 137 research journal publications. The name of the author who has produced the most works is Edi Susilo; as many as five studies and the direction of development of keywords that are still rare and not yet diverse discussing the topic of Islamic microfinance institutions are capital, economic empowerment, micro small and medium enterprise (MSME), and ZIS.

Examining the Antecedents and Consequences of Adaptive Selling Capability: Study from Microfinance Institutions in Indonesia

In the heated business competition of today’s financial services sector, small conventional banks such as microfinance institutions (MFIs) must maintain superior salespeople with adaptive selling capabilities to increase sales performance. Therefore, it is critical to investigate the determinant factor and consequences of salespeople’s adaptive selling capability. This study proposed to examine the effect of psychological empowerment dimensions, namely: meaning, competence, self-determination, and impact, on adaptive selling capability. In addition, this research also scrutinises the link between adaptive selling capability and sales performance by examining innovative selling behavior as a mediating variable. A total of 205 salespeople from 34 MFIs in Central Java, Indonesia, participated in the survey. Based on structural equation modelling (PLS-SEM) analyses, this study found that psychological empowerment dimensions significantly affect adaptive selling capability. Findings also demonstrate that adaptive selling capability positively influences innovative selling behaviour. Finally, the results revealed that innovative selling behaviour mediates the relationship between adaptive selling capability and sales performance. This research provides insight for MFI managers to improve sales performance by cultivating employee psychological empowerment, which impacts adaptive selling capability and innovative selling behavior.

Risk management of Islamic microfinance institutions: unique practices at crucial risks

The objective of this study is to gain a better understanding of risk management and control practices at BMT UGT Nusantara, an Islamic microfinance institution in Indonesia, with a particular emphasis on financing risk, liquidity risk, and Sharia compliance risk. These three risks are said to occur frequently and have a direct impact on performance. Because of the uniqueness of the site, the design of this qualitative research is descriptive and exploratory with a holistic single-case approach. In-depth interviews, field observations, focus group discussions, and a review of supporting documents were used to collect data. Because the interactive cycle process includes data collection, data reduction, data presentation, and data withdrawal, data analysis employs an interactive model. The data was validated using the criteria of credibility, transferability, dependability, and confirmability. The study's findings show that BMT UGT Nusantara, an Islamic microfinance institution in Indonesia, employs traditional-partial risk management on financing risk, liquidity risk, and Sharia compliance risk. Risk management is carried out by integrating "macul bumi", or outward efforts based on sincerity, and "macul langit", or spiritual efforts. Furthermore, it employs information systems that play an important role in risk management in order to improve organizational performance and competitive advantage.

Collateral Functions In Baitulmal Wal Tamwil (BMT) Positive Legal Perspective and Sharia Economic Law

Microfinance institutions in Indonesia are experiencing very rapid development with the existence of the Baitulmal Wal Tamwil (BMT) as a new breakthrough by offering financing products that are present in the midst of a lower-class economic society. The development of Baitulmal Wal Tamwil (BMT) today offers many products in financing. At Baitulmal Wal Tamwil (BMT) the financing offered includes: mudharabah financing (youth cheerful), mudharabah financing (equally cheerful), murobahah ceria, services (hiwalah Ceria), services (Ihrom Ceria), and policies (qord Ceria). This type of research belongs to the Normative Juridical type of research. This research aims to find out how the legal position of guarantees/collaterals in Baitulmal Wat Tamwil, Every financing in Baitulmal Wal Tamwil (BMT) requires collateral where the collateral is one of the legal conditions in the Baitulmal Wat Tamwil financing contract. This type of research belongs to the Normative Juridical type of research. This research aims to find out how the legal position of guarantees/collaterals in Baitulmal Wat Tamwil, Every financing in Baitulmal Wal Tamwil (BMT) requires collateral where the collateral is one of the legal conditions in the Baitulmal Wat Tamwil financing contract. So researchers want to examine the function of collateral in Baitulmal Wal Tamwil (BMT) in sharia economic law and positive law where collateral is often used as a problem and its legal requirements in financing transactions in the Baitulmal Wat Tamwil (BMT) microfinance institution.

Modeling the significance of dynamic capability on the performance of microfinance institutions.

According to strategic management theory, dynamic capability plays a significant role in enhancing organizational performance. Using a cross-sectional research design, the current study quantitatively assesses the mediating effect of dynamic capability on the relationships of total quality management, customer intellectual capital, and human resource management practice with the performance of microfinance institutions. An online survey involving 120 members of Induk Koperasi Kredit, a credit union association in West Kalimantan, Indonesia, is conducted. All the data are subjected to variance-based partial least squares structural equation modeling (PLS-SEM) analysis. The obtained results demonstrate the significant and positive influence of total quality management and human resource management practice on dynamic capability. Furthermore, dynamic capability is found to mediate the relationship between total quality management and human resource management practice on the performance of microfinance institutions. However, this study is unable to conclude that total quality management and human resource management practice have any significant impact on the performance of microfinance institutions. Nonetheless, this study demonstrates the crucial need for microfinance institutions to enhance their management activities via dynamic capability to enhance performance. This is one of the earliest studies conducted during the COVID-19 pandemic to examine the capabilities and performance of microfinance institutions in Indonesia. Notably, the performance of microfinance institutions can be further sustained by improving customers' intellectual and dynamic capabilities.

Women's Economic Empowerment Through Sharia Micro-Finance Institutions In Indonesia: A Qualitative Research

Women's empowerment has become an agenda that has recently been put forward and has become one of the essential agendas in sustainable development. One of the common problems women micro-enterprises face is the difficulty of accessing sources of capital. Islamic microfinance institutions are an alternative that can be utilized by women micro-enterprises in Indonesia to overcome the challenges in accessing business capital. This research uses a qualitative approach to study literature and in-depth interviews. The literature study was conducted by selecting relevant papers by accessing the Google Scholar database using the keywords “women empowerment” AND “Islamic microfinance” OR “Islamic microfinance”. The search time range is limited to the last 5 years, namely 2017 to 2022. The literature search results found 19 relevant papers. 4 sharia microfinance institutions are reported to run women's empowerment programs, namely sharia cooperatives, Baitul Mal Wat Tamwil, Zakat Management Organizations, and Micro Waqf Banks. The results of interviews with 20 lecturers of Islamic Economics strengthen the role of Islamic microfinance institutions in women's empowerment programs in Indonesia.

Islamic Work Ethics in Indonesia Islamic Microfinance Institutions: A Bibliometric Review and Analysis

The concept of "Islamic Work Ethics at Islamic Micro Finance Institutions in Indonesia" is a development of "Islamic work ethics", studied and applied in sharia-based microfinance institutions, especially those in Indonesia, considering that Indonesia is the most prominent Islamic country in the world. This paper provides an extensive bibliometric literature overview on "Islamic Work Ethics at Islamic Micro Finance Institutions in Indonesia". Publish or Perish (PoP) software found articles related to the topic, with a database sourced from Google Scholar. 596 of the 990 articles from 2015 to 2020 were analyzed from Google Scholar's database. The selected references are managed using reference manager software, Mendeley. After processing Google Scholar's database, this paper orders and imagines it utilizing VOSviewer. In general, this paper gives an incredible reference highlight for future research on "Islamic Work Ethics at Islamic Micro Finance Institution in Indonesia".

Characteristics of Cooperative Debtor Households in Maluku Province

Cooperatives are one of the recognized microfinance institutions in Indonesia, with the aim of improving the welfare of members in particular and society in general. This is in line with the goals of the SDGs to end poverty, ensure a healthy life and prosperity for all. Cooperatives are considered easier to reach the lower middle class, especially in accessing loans and having problems with collateral. This paper examines the characteristics of cooperative debtor households in Maluku Province. This research uses descriptive analysis based on the SUSENAS 2021 data by Central Bureau Statistic. As a result, most of those who access loans in cooperatives are married men aged 30 years and over with education below high school and informal employment status, live in rural areas outside the provincial capital, have a total of 4 household members and are not poor households, however have health complaints. Based on these results, it can be concluded that future government policy is to encourage cooperatives to innovate so that it is easier to reach poor households in order to minimize the occurrence of loans in the informal sector (family, friends or online loans) which have the potential to increase conflict and prolonged poor status. Keywords: Characteristics, Household, Cooperative Loan, Maluku, Descriptive Analysis, SUSENAS.

TANTANGAN PENGEMBANGAN LKMS MELALUI UMKM DI INDONESIA

Sharia microfinance institutions are institutions specifically established to provide business development services and community empowerment. The development of Islamic Microfinance Institutions in Indonesia has increased quite rapidly and has a very vital role in the progress of the Indonesian economy. The existence of baitul mal wa tamwil (BMT) as one of the pioneers of sharia microfinance institutions in Indonesia. This study uses a qualitative approach. The type of this research approach is descriptive, namely a method to describe a research result, which provides an explanation of the phenomenon to be studied using factual data. The results of the study show that capital is an obstacle faced by MSMEs due to limited information from Islamic financial institutions. This is the challenge that is still being faced related to economic development, including Islamic financial institutions. Islamic financial institutions are still struggling with capital issues, the development of sharia product innovations, to the inadequate quality of human resources.

Stimulating Salesperson's Innovative Work Behavior: A Study of Microfinance Institutions in Indonesia

In today's uncertain market environment, salesperson innovative work behavior (IWB) has become critical for business sustainability. This research aims to develop a conceptual model for explaining the process of how psychological empowerment, learning goal orientation (LGO), and core self-evaluations (CSE) leverages salespersons' IWB by investigating the potential mediating of knowledge sharing. The participants were 279 salespeople working at microfinance institutions (MFIs) in Central Java, Indonesia. The results revealed that psychological empowerment and LGO are positively related to a salesperson's IWB. Knowledge sharing shares a mediating effect on the relationship between psychological empowerment and LGO on IWB. However, CSE has a nonsignificant effect on the salesperson's IWB. The findings provide a new perspective in understanding the intervening mechanisms underlying psychological empowerment and individual characteristic of a salesperson's IWB. This present study also contributes to the human resource practice regarding nurturing a work environment that stimulates salesperson' IWB.

Do Organizational Culture and Human Resources Management Practices Decrease Turnover Intention in Microfinance Company?

Organizational culture can be interpreted as an accumulation of basic assumptions, practices, principles, beliefs, norms, and values that govern a person’s behavior and action in an organization. Microfinance Institutions (MFIs) in Indonesia are growing very fast which is not accompanied by availability of sufficient competent human resources in this financial industry. This condition has caused employee turnover which tends to increase in the last three years. The research aimed to analyze the organizational culture designed by the company manager compared to the organizational culture according to employee perception and the effect of organizational culture and Human Resources Management (HRM) Practices run by the company on employee turnover intention. The research was a case study in PT DMS, one of MFIs in Indonesia. Primary data were collected from 249 respondents using the census method as a sampling technique. Then, the analysis of organizational culture using the Organizational Culture Assessment Instrument (OCAI) analysis showed that the culture that could be applied was the type of clan. The Structural Equation Model (SEM) analysis shows that organizational culture positively affects satisfaction with the implementation of HRM practices. However, organizational culture has a negative impact on turnover intention. Then, satisfaction with implementing HRM practices has a significant and negative effect on turnover intention. It can be concluded that to decrease turnover intention, companies need to increase employee satisfaction with the implementation of organizational culture and HRM practice, such as creating employee development program.

THE CONDITIONS OF BAITUL MAAL WAT TAMWIL (BMT) IN INDONESIA: A LITERATURE REVIEW

The purpose of this research is to analyze the condition of BMT, is an Islamic microfinance institution in Indonesia, based on a literature review using SWOT analysis. Based on the SWOT analysis BMT’s strengths, weaknesses, opportunities, and threats will be mapped through four types of strategies, namely aggressive, competitive, conservative and defensive strategies. The results indicate that based on the analysis of aggressive strategies, BMT is a community-based agency that has an opportunity to capture the market; BMT can use the ZISWAF fund in cooperation with charity institutions. Based on the analysis of competitive strategies, BMT competition with conventional micro institutions can be solved by Islamic economic socialization about the prohibition of usury; competition with Islamic banks that have a microfinance program can be solved with the distribution of business; BMT sustainability issues can be overcome by strengthening the regulation, supervision, infrastructure, human resources, and capital. From the conservative strategies, BMT has limitations in terms of capital, human resources, and marketing strategies. This problem can be overcome through their linkage with Islamic Banks and companies, using CSR and low-cost funds from Islamic Banks. Other opportunities are the transfer of knowledge about finance, managerial expertise, as well as the right marketing strategy. In addition, a lack of oversight in BMT can be solved by maximizing the role of associations and agents of BMT. Meanwhile, from the defensive strategies, fundamental reform of government is required to develop BMT’s rules, oversight, feasibility measurement and clear level of health.