Syariah-Compliant Financing Models and Their Strategic Contribution to the Agricultural Sector and the Development of Micro, Small, and Medium Enterprises (MSMEs)
Keywords:
Islamic Finance, Agricultural Sector, MSMEs, Sharia-Compliant Financing, Economic Empowerment, IndonesiaAbstract
This study examines how Islamic financing models, like murabahah and salam, impact Indonesia's agricultural and MSME sectors. Using 2023 national data and Structural Equation Modeling (SEM), the research finds that Islamic financing has a significant positive effect on sector performance, boosting productivity and revenue. This improved performance, in turn, acts as a key link to broader strategic contributions, such as MSME growth and improved welfare. The findings suggest that Islamic finance is crucial for inclusive economic development and that policies should be tailored to different regions and business scales to maximize its impact.
References
Ali, A.; Muhammad, T.; & Usman, H. The Role of Islamic Finance in Sustainable Development. Journal of Islamic Economics and Finance2023, 8(2), 121-135.
Ascarya, A.; Rizki, N.; & Rosly, S. A. Sharia financing for the agricultural sector in Indonesia. Journal of Islamic Monetary Economics and Finance2020, 6(1), 1-22.
BPS. Statistical Report of Islamic Finance in Indonesia; Badan Pusat Statistik: Jakarta, Indonesia, 2024.
Hassan, M. K.; & Khan, I. Islamic finance and its role in poverty alleviation and economic development. Global Islamic Finance Journal2022, 13(1), 45-60.
Hassan, M. K.; Siraj, S. M.; & Muhammad, H. Islamic finance and economic development: A quantitative approach; Routledge: London, UK, 2020.
Karim, S.; & Alam, M. A partnership model for Islamic social enterprises: A case study of Indonesia. Islamic Business and Finance Review2024, 15(3), 201-215.
Khan, A.; & Huda, N. Islamic finance for micro, small, and medium enterprises; Palgrave Macmillan: Cham, Switzerland, 2021.
Khan, J.; & Huda, A. Islamic banking and its application in micro, small and medium enterprises. International Journal of Islamic Banking and Finance2021, 4(1), 58-72.
Masciandaro, D.; & Sironi, A. The economics of Islamic finance: Challenges and opportunities; Oxford University Press: Oxford, UK, 2021.
Rahman, S.; & Siddiqui, M. Sharia-compliant financing for small-scale farmers: A case study from Indonesia. Journal of Agriculture and Rural Development2020, 9(1), 33-47.
Rosly, S. A. Ethical aspects of Islamic finance: Principles and practices; Kube Publishing: Markfield, UK, 2020.
Siddiqi, M.; & Khan, K. Innovation and product development in Islamic finance: The case of Indonesia. Journal of Islamic Finance and Banking2021, 5(2), 112-125.
Siddiqui, M. N. Islamic Finance: Principles, Practices, and Prospects; Emerald Publishing: Bingley, UK, 2020.
Sukmana, R.; & Wibowo, R. The integrated approach to Islamic microfinance and sustainable agriculture in Indonesia. Islamic Finance Review2021, 12(4), 88-102.
Syafii, M. S.; Rosly, S. A.; & Ahmad, I. Financing agriculture through Sharia-compliant models; Emerald Publishing: Bingley, UK, 2020.
Taqi, M. The contribution of Islamic microfinance to rural development. International Journal of Islamic Economics and Finance2020, 1(1), 1-15.
Tlemcani, M.; & El Qorchi, M. The challenge of Islamic finance in a modern economy. Islamic Economic Studies2023, 31(2), 145-160.
Zainol, N. R.; Ismail, A. G.; & Abdul Razak, M. Islamic finance and financial inclusion: A global perspective; Wiley: Hoboken, NJ, USA, 2020.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Perspectives on Advanced New Generations of Global and Local Economic Horizons (Panggaleh)
This work is licensed under a Creative Commons Attribution 4.0 International License.
