Article Sidebar

Download
Full text PDF
Statistic
Read Counter : 489 Download : 466

Downloads

Download data is not yet available.

Main Article Content

Abstract

Purpose – The purpose of this study is to investigate the relationship between financial inclusion and the distribution of Islamic banking financing to Indonesia's MSME industry.
Methodology – This study utilizes the Vector Error Correction Model (VECM) approach covering the period between 2015 to 2020.
Findings – The study's findings suggest that the use of all-inclusive financial variables, as represented by the number of ATMs, branch offices, and Third-Party Fund (TPF), has a significant effect on the distribution of financing in the short-term but not in the long term. Furthermore, macroeconomic as well as internal control variables, such as inflation and Non-Performing Financing, have been shown to have a significant influence. The impulse-response function analysis shows that the financing distribution responds positively to financial inclusion variables such as ATMs and branch offices. TPF, inflation, ROA, and exchange rate variables were found to have negative responses in the case of a shock.
Implications – The findings of this study are expected to be used as a basis to develop government policies, particularly in supporting the post-COVID-19 national economic recovery through a comprehensive financial program that can broaden access to financing from Islamic banks for the general public, particularly MSME actors who have been severely impacted by the COVID-19 pandemic.
Originality – This investigation utilizes three distinct indicators to assess the relationship between Islamic financing distribution in Islamic banking and financial inclusion for MSMEs. These include measures of financial inclusion, financial performance metrics of Islamic banking institutions, and macroeconomic variables.

Keywords

Islamic banking Financial Inclusion Financing Distribution Indonesia Micro, Small and Medium Enterprises (MSME)

Article Details

License

Copyright (c) 2023 Sri Yayu Ninglasari, Sulaeman, Indri Supriani, M. Fikri Himmawan

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Authors who publish with this journal agree to the following terms:

  1. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
  2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
  3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
Author Biographies

Sulaeman Sulaeman, R-Square Research Consulting, Bogor, Indonesia

 

 

Indri Supriani, Departemen of Economics, Faculty of Economics and Business, Universitas Brawijaya, Malang, Indonesia

 

 

M. Fikri Himmawan, Islamic Economics Department, Faculty of Economics and Business, Universitas Airlangga, Surabaya, Indonesia

 

 

How to Cite
Ninglasari, S. Y., Sulaeman, S., Supriani, I., & Himmawan, M. F. (2023). Nexus between financial inclusion and Islamic financing distribution: Evidence from Indonesian MSMEs. Jurnal Ekonomi & Keuangan Islam, 9(2), 167–184. https://doi.org/10.20885/JEKI.vol9.iss2.art2
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX
Crossref
Scopus
Google Scholar
Europe PMC

References

  1. Anwar, A., Uppun, P., Tri, I., & Reviani, A. (2016). The role of financial inclusion in poverty reduction in Indonesia. Journal of Business and Management (IOSR-JBM). https://doi.org/10.9790/487X-1806033739
  2. Aysan, A. F., Disli, M., Ng, A., & Ozturk, H. (2016). Is small the new big? Islamic banking for SMEs in Turkey. Economic Modelling, 54, 187–194. https://doi.org/10.1016/j.econmod.2015.12.031
  3. Basuki, A. T. (2018). Aplikasi model VAR dan VECM dalam ekonomi. Fakultas Ekonomi Univ. Muhammadiyah Yogyakarta, 1, 1–41. https://ekonometrikblog.files.wordpress.com/2015/10/model-var-dan-vecm.pdf
  4. Bella, F. I., & Himmawan, M. F. (2021). Digitalization and efficiency: Technology-based service of Indonesia Sharia commercial banks. Iqtishadia, 14(2), 280. https://doi.org/10.21043/iqtishadia.v14i2.8983
  5. Dasih, K. (2019). Determinan penyaluran kredit di Indonesia pasca periode krisis keuangan global. Unpublished, n.d(n.d), 1–17.
  6. Disli, M., Aysan, A. F., & Abdelsalam, O. (2022). Favoring the small and the plenty: Islamic banking for MSMEs. Economic Systems, April 2021, 101051. https://doi.org/10.1016/j.ecosys.2022.101051
  7. Evans, O. (2018). Connecting the poor: The internet, mobile phones and financial inclusion in Africa. Digital Policy, Regulation and Governance, 20(6), 568–581. https://doi.org/10.1108/DPRG-04-2018-0018
  8. Gitaharie, B. Y., Soelistianingsih, L., & Djutaharta, T. (2017). Financial inclusion: Household access to credit in Indonesia. Competition and Cooperation in Economics and Business, 4(1). Routledge. https://doi.org/10.1201/9781315225227-35
  9. Gutiérrez-Romero, R., & Ahamed, M. (2021). COVID-19 response needs to broaden financial inclusion to curb the rise in poverty. World Development, 138, 105229. https://doi.org/10.1016/j.worlddev.2020.105229
  10. Haini, H. (2021). Financial access and the finance–growth nexus: Evidence from developing economies. International Journal of Social Economics, 48(5), 693-708. https://doi.org/10.1108/IJSE-08-2020-0549
  11. Hakeem, M. M. (2019). Innovative solutions to tap the Micro, Small, and Medium Enterprises (MSME) market. Islamic Economic Studies, 27(1), 38–52. https://doi.org/10.1108/ies-05-2019-0002
  12. Harley, T. W., Adegoke, A. J., & Adegbola, D. (2017). Role of financial inclusion in economic growth and poverty reduction. Internal Journal of Research in Economics and Social Sciences (IJRESS), 7(5), http://www.euroasiapub.org
  13. Himmawan, M. F., & Firdausi, N. A. (2021). Projection of Indonesian Islamic commercial banks' efficiency and stability in the Covid-19 period using DEA and panel ARDL. Jurnal Ekonomi & Keuangan Islam, 7(1), 17–30. https://doi.org/10.20885/jeki.vol7.iss1.art2
  14. Iqbal, B. A., & Sami, S. (2017). Papel de los bancos en la inclusión financiera en la India. Contaduria y Administracion, 62(2), 644–656. https://doi.org/10.1016/j.cya.2017.01.007
  15. Kim, D.-W., Yu, J.-S., & Hassan, M. K. (2018). Financial inclusion and economic growth in OIC countries. Research in International Business and Finance, 43, 1–14. https://doi.org/10.1016/j.ribaf.2017.07.178
  16. Kim, D. W., Yu, J. S., & Hassan, M. K. (2018). Financial inclusion and economic growth in OIC countries. Research in International Business and Finance, 43, 1–14. https://doi.org/10.1016/j.ribaf.2017.07.178
  17. Kuswara, D. P., Lestari, E. P., & Retnaningsih, T. K. (2019). Determinant of Islamic banking profitability in Indonesia. Jurnal Organisasi dan Manajemen, 15(1), 36–45. https://doi.org/10.33830/jom.v15i1.865.2019
  18. Le, T.-H., Chuc, A. T., & Taghizadeh-Hesary, F. (2019). Financial inclusion and its impact on financial efficiency and sustainability: Empirical evidence from Asia. Borsa Istanbul Review, 19(4), 310–322. https://doi.org/10.1016/j.bir.2019.07.002
  19. Lutkepohl, H. (1991). Introduction To Multiple Time Series Analysis. Springer-Verlag.
  20. Maulayati, R. R., Bahril, M. A., & Herianingrum, S. (2020). Effect of macroeconomic variables on third-party funds in Islamic commercial banks in Indonesia. Journal of Islamic Economics Lariba, 6(1), 19–40. https://doi.org/10.20885/jielariba.vol6.iss1.art2
  21. Muhammad, R., Suluki, A., & Nugraheni, P. (2020). Internal factors and non-performing financing in Indonesian Islamic rural banks. Cogent Business and Management, 7(1). https://doi.org/10.1080/23311975.2020.1823583
  22. Nastiti, N. D., & Kasri, R. A. (2019). The role of banking regulation in the development of Islamic banking financing in Indonesia. International Journal of Islamic and Middle Eastern Finance and Management, 12(5), 643–662. https://doi.org/10.1108/IMEFM-10-2018-0365
  23. Nugraha, D., & Darmansyah, A. (2019). The effect of Sharia funding and financing product toward profitability of Islamic commercial banks in Indonesia. International Conference on Rural Development and Entrepreneurship 2019, 5(1), 622–632. http://jp.feb.unsoed.ac.id/index.php/Icore/article/viewFile/1528/1539
  24. Otoritas Jasa Keuangan. (2022). Statistik perbankan Syariahhttps://ojk.go.id/id/kanal/syariah/data-dan-statistik/statistik-perbankan-yariahsyariah/Pages/Statistik-Perbankan-Syariah---Desember-2022.aspx
  25. Priyadi, U., Utami, K. D. S., Muhammad, R., & Nugraheni, P. (2021). Determinants of credit risk of Indonesian sharī’ah rural banks. ISRA International Journal of Islamic Finance, 13(3), 284–301. https://doi.org/10.1108/IJIF-09-2019-0134
  26. Raza, M. S., Tang, J., Rubab, S., & Wen, X. (2019). Determining the nexus between financial inclusion and economic development in Pakistan. Journal of Money Laundering Control, 22(2), 195–209. https://doi.org/10.1108/JMLC-12-2017-0068
  27. Raza, S. A., Shah, N., & Ali, M. (2019). Acceptance of mobile banking in Islamic banks: Evidence from modified UTAUT model. Journal of Islamic Marketing, 10(1), 357–376. https://doi.org/10.1108/JIMA-04-2017-0038
  28. Rifai, S. A., Susanti, H., & Setyaningrum, A. (2017). Analisis pengaruh kurs rupiah, laju inflasi, jumlah uang beredar dan pertumbuhan ekspor terhadap total pembiayaan perbankan Syariah dengan dana pihak ketiga sebagai variabel moderating. Muqtasid: Jurnal Ekonomi Dan Perbankan Syariah, 8(1), 13–27. https://doi.org/https://doi.org/10.18326/muqtasid.v8i1.13-27
  29. Sethi, D., & Acharya, D. (2018). Financial inclusion and economic growth linkage: Some cross country evidence. Journal of Financial Economic Policy, 10(3), 369–385. https://doi.org/10.1108/JFEP-11-2016-0073
  30. Shaban, M., Duygun, M., Anwar, M., & Akbar, B. (2014). Diversification and banks’ willingness to lend to small businesses: Evidence from Islamic and conventional banks in Indonesia. Journal of Economic Behavior and Organization, 103, S39–S55. https://doi.org/10.1016/j.jebo.2014.03.021
  31. Sharma, D. (2016). Nexus between financial inclusion and economic growth. Journal of Financial Economic Policy, 8(1), 13–36. https://doi.org/10.1108/JFEP-01-2015-0004
  32. Sohibien, G. P. D., Laome, L., Choiruddin, A., & Kuswanto, H. (2022). COVID-19 pandemic’s impact on return on asset and financing of Islamic commercial banks: Evidence from Indonesia. Sustainability, 14(3), 1–13. https://doi.org/10.3390/su14031128
  33. Sudarsono, H. (2019). Analysis of factors affecting financing with Islamic banks in agriculture sectors. Asian Journal of Islamic Management (AJIM), 1(2), 116–126. https://doi.org/10.20885/ajim.vol1.iss2.art6
  34. Sulaiman. (2021). Factors determining behavioral intentions to use Islamic crowdfunding platform in times of Covid-19 in Indonesia: Evidence from TAM approach. Jurnal Ekonomi & Keuangan Islam, 7(1), 31–44. https://doi.org/https://dx.doi.org/10.20885/JEKI. vol7.iss1.art3
  35. Tahiri Jouti, A. (2018). Islamic finance: financial inclusion or migration? ISRA International Journal of Islamic Finance, 10(2), 277–288. https://doi.org/10.1108/IJIF-07-2018-0074
  36. Tohirin, A., & Husaini, F. (2019). Does Islamic banking financing help the poor? Proceeding UII-ICABE, 2019(1955), 41–50. https://journal.uii.ac.id/icabe/article/view/14693
  37. Undang-Undang Nomor 21 Tahun 2008 tentang perbankan Syariah. (2008). Undang-Undang Nomor 21 Tahun 2008 tentang perbankan Syariah (No. 21). Otoritas Jasa Keuangan (OJK); Otoritas Jasa Keuangan.
  38. Whidaningayu, E. (2018). Analisis pengaruh non performing financing dan financing to deposit ratio terhadap volume pembiayaan pada perbankan Syariah di Indonesia dengan dana pihak ketiga sebagai variabel mediasi. Jurnal Riset Keuangan Dan Akuntansi, 1(01), 14–28. https://doi.org/10.25134/jrka.v1i01.430
  39. Zivot, E., & Wang, J. (2005). Modeling Financial Time Series with S-PLUS. Springer US. https://doi.org/10.1007/978-0-387-32348-0