The role of sharia microfinance institutions in developing MSMEs

Abstract

This study aims to investigate and identify the current conditions regarding the role of Sharia microfinance institutions in developing MSME businesses. The community needs Microfinance institutions, especially low-income groups and small and micro-entrepreneurs who have yet to be reached by banking financial services, especially public banks. In providing loans to MSMEs, microfinance institutions must effectively educate and equip their clients with relevant entrepreneurial knowledge and skills. This research will use a qualitative approach with a case study method, which does not use statistical generalizations but uses logical generalizations and replication. Three Sharia microfinance institutions and sixteen MSME cases will be selected in this research. The research was conducted at Sharia Microfinance Institutions as providers of microcredit and MSMEs receiving microcredit in the Southern region of the Special Region of Yogyakarta, Gunungkidul, and Kulonprogo. This research will use three data collection methods, namely interviews, observation, and documentation, to maintain the validity and reliability of the data. Data triangulation is used to test the validity of the data. The data analysis process in this research uses two stages: descriptive analysis and case analysis. The findings of this research show hope regarding the promise of easy access to capital or funding sources as an effective tool for improving MSME business development through effectiveness, supervision, and guidance carried out by Sharia microfinance institutions. This change can be realized if the community has economic stability obtained through easy access to capital, increasing business income, and empowering the community to be ready to become entrepreneurs. It supports the development of a creative economy industry based on entrepreneurship and globally competitive ethics.