MODELLING A SUSTAINABILITY MODEL OF ISLAMIC MICROFINANCE INSTITUTIONS

Abstract

Islamic microfinance institutions (IMFIs) – such as Baitul Maal wat Tamwil (BMT - with
cooperative legal entities), established in Indonesia as part of the shariah-compliant
financial industry sector (part of the halal sector) – need to maintain their sustainability
in order to encourage poverty alleviation and economic growth. In observing the
sustainability of BMT, there has been relatively little research involving aspects of the
quality of the human resources that carry out internal activities. Therefore, the aim of
this study is to create a model that is useful for predicting the sustainability of IMFIs,
especially BMT, based on variables that are considered important, namely financing
growth, Islamic human capital, fraud and Islamic leadership. The model was analysed
using multiple regression analysis based on the stepwise method. The primary
data (cross-sectional) were obtained in 2019 using questionnaires completed by 105
respondents comprising the administrators and managers of BMTs in Semarang and
Pekalongan, Central Java, Indonesia. We found that only two variables have a significant
influence on the sustainability of IMFIs: financing growth and Islamic human capital.
Practitioners can apply the results of the study to improve the performance of Islamic
microfinance, especially BMT, through the distribution of funding in the context of
economic improvement (especially micro-enterprise), spiritual strengthening for
human resources, risk prevention and appropriate leadership criteria.