THE HALAL ASPECT AND ISLAMIC FINANCING AMONG MICRO, SMALL, AND MEDIUM ENTERPISES (MSMEs) IN YOGYAKARTA: DOES BERKAH MATTER?

  • Abdul Qoyum UIN Sunan Kalijaga Yogyakarta
  • Neneng Ela Fauziyyah International Islamic University Malaysia
Keywords: Halal Industry, MSMEs, Islamic Financing, Attitude, Berkah, Re-using Islamic financing

Abstract

The development of Halal industry points out an amazing result around the world,including Indonesia. Surprisingly, the biggest contributor for its growth is Micro, Smalland Medium Enterprises (MSMEs). In order to improve its significant contribution, thecombination of Halal MSMEs and Islamic financing becomes very crucial. Nevertheless,there is still a lack of awareness of the concept and of intention from MSMEs regardingthe penetration of Islamic financing. Therefore, this study investigates the determinantsaffecting the MSMEs’ desire for utilizing Islamic financing from the Islamic financialinstitution and encouraging Halal MSMEs to adopt Islamic financing in all businessactivities. A survey was conducted on 58 MSMEs in Yogyakarta, Indonesia byemploying self-administered questionnaire as the main approach for data collection.By using Structural Equation Modeling- Partial Least Square (SEM-PLS) analysis, thisstudy reveals that from the variables examined, Cost Benefit and Halal Awareness arethe two factors that have impact on the Use of Islamic Financing. In addition, CostBenefit and Reputation are the two variables that have direct impact on the Attitudeof MSMEs toward Islamic Financing. Interestingly, this research also finds that Berkahas the key component in Islamic financing will be gained by MSMEs when they useIslamic financing instrument, and, thus will encourage Halal MSMEs’ intention to reuseIslamic financing. Moreover, service quality and competitiveness are very crucialto maintain the customer satisfaction. In addition, preaching Berkah as key componentin Muslim life is an important agenda in the future development of Halal Industry,especially in MSMEs sectors.

Published
2019-05-16
How to Cite
Qoyum, A., & Fauziyyah, N. (2019). THE HALAL ASPECT AND ISLAMIC FINANCING AMONG MICRO, SMALL, AND MEDIUM ENTERPISES (MSMEs) IN YOGYAKARTA: DOES BERKAH MATTER?. Journal of Islamic Monetary Economics and Finance, 5(1), 215-236. https://doi.org/10.21098/jimf.v5i1.1055
Section
Articles