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Publication date: 27 January 2025

Permata Wulandari, Liyu Adhi Kasari Sulung, Elevita Yuliati, Dony Abdul Chalid and Salina Kassim

This paper aims to examine a range of factors that may influence the intention of ultra-micro-SMEs in Indonesia in choosing the type of microfinance facilities in the case of…

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Abstract

Purpose

This paper aims to examine a range of factors that may influence the intention of ultra-micro-SMEs in Indonesia in choosing the type of microfinance facilities in the case of getting better offerings.

Design/methodology/approach

Drawing from the theory of planned behavior (TPB) framework, religious elements factors include religious leader endorsements, religiosity and Sharia compliance, whereas socially/commercially driven factors include social and rational sociodemographic indicators. Data was obtained from 319 ultra-micro-SMEs in emerging economies such as Indonesia, and structural equation modeling was used to analyze the survey data.

Findings

The findings reveal that commercial aspects, as rational variables, have a negative influence on the intention to switch from Islamic to conventional microfinancing. On the contrary, social influence from peers and family positively influences the intention to switch from Islamic to conventional microfinancing. Religious aspects, however, have no influence on the intention to switch or actual switching behavior from Islamic to conventional. Intention to switch was shown to positively influence actual switching behavior as per the prediction of the TPB.

Originality/value

There is a lack of research on the choice or behavior of ultra-micro-SMEs when deciding whether to use Islamic or conventional microfinance. This study enriches the literature by providing empirical evidence on the factors affecting this choice-making.

Details

Journal of Islamic Marketing, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0833

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Article
Publication date: 8 August 2016

Permata Wulandari, Salina Kassim, Liyu Adhi Kasari Sulung and Niken Iwani Surya Putri

This paper aims to highlight on the unique aspects of Islamic microfinance based on the experience of Baitul Maal Wa Tamwil (BMT) in Indonesia.

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Abstract

Purpose

This paper aims to highlight on the unique aspects of Islamic microfinance based on the experience of Baitul Maal Wa Tamwil (BMT) in Indonesia.

Design/methodology/approach

It adopts the content analysis approach and focuses on three phases of financing, namely, pre-financing, financing and post-financing using coding and model buildings. Data are collected through in-depth interview with a sample of representatives of BMTs that offer product based on Islamic principle for the poor located in Jakarta, Bogor, Depok, Tanggerang and Bekasi (JABODETABEK), Sulawesi Selatan, Yogyakarta and Nusa Tenggara Barat (sample chosen based on the most concentrated areas of Islamic microfinance that offered product based on Islamic principles). Ultimately, a model based on the unique features of Islamic microfinance will be developed based on the findings of the content analysis.

Findings

The proposed model incorporates the peculiarities of the poor people in pre-financing, financing and post-financing activities of micro-financing products to serve as a reference for policy makers. The paper also found that each region has unique product preferences depending on the poor’s characteristics.

Research limitations/implications

This study is only conducted in four areas with BMT representation, namely, Jakarta, Bogor, Depok, Tangerang, Bekasi (often abbreviated as JABODETABEK), Sulawesi Selatan, Yogyakarta and Nusa Tenggara Barat) in Indonesia. Despite the limited scope, the findings have wide applications to the Islamic microfinancing in general.

Originality/value

The paper adds value to the literature on Islamic microfinance by enabling researchers and practitioners to understand the model of three step financing (pre-financing, financing and post-financing) in Islamic microfinance in Indonesia. Although not a new issue, the paper provides the practice of pre-financing, financing and post-financing processes which may differ from the practices of Islamic microfinance in other settings because of different cultural influences unique to every region.

Details

Humanomics, vol. 32 no. 3
Type: Research Article
ISSN: 0828-8666

Keywords

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