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A Model for Minimizing Problems in Salam Financing at Islamic Banks in Indonesia

Author

Listed:
  • Bambang Waluyo

    (Department of Accounting, State Polytechnic of Jakarta, Depok, Indonesia.)

  • Sylvia Rozza

    (Department of Accounting, State Polytechnic of Jakarta, Depok, Indonesia.)

Abstract

It has been observed that none of the Islamic banks in Indonesia are involved in salam financing. This research aims to explore the problems faced by Islamic banks in Indonesia in the development of salam-based financing products and efforts to minimize it. The study uses a descriptive qualitative exploratory approach. The method of data collecting is documentation. Data is obtained from scientific journals and websites. The example of problems faced in the operation of salam based financing in Islamic banks are: 1) No capital, 2) Lack of knowledge, 3) Profit oriented, 4) Risk of loss of capital, 5) Unkind characters. The result of this study concludes that to minimize the problems, Islamic banks in Indonesia can: 1) Cooperate with agricultural insurance, 2) Establish a symbiotic relationship, 3) Have a marketing network, 4) Innovate salam products with a hybrid contract, 5) Islamic banks make parallel salam, 6) Islamic banks can expand the object of salam financing, 7) Provide salam financing in groups, 8) establish an agricultural bank, 9) Screen the farmers who should receive the salam financing, 10) Continuous education. It is hoped that Islamic banks can innovate salam products to help improve the welfare of farmers and the community.

Suggested Citation

  • Bambang Waluyo & Sylvia Rozza, 2020. "A Model for Minimizing Problems in Salam Financing at Islamic Banks in Indonesia," International Review of Management and Marketing, Econjournals, vol. 10(2), pages 1-7.
    • Handle: RePEc:eco:journ3:2020-02-1
    as

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    References listed on IDEAS

    as
    1. Khattak, Naeem Ur Rehman Khattak & Hussain, Anwar Hussain, 2006. "A Review of the Principles of Islamic Banking System for Agriculture Credit," MPRA Paper 42038, University Library of Munich, Germany.
    2. Shaikh, Salman, 2010. "A Brief Review & Introduction to Practiced Islamic Banking & Finance," MPRA Paper 19458, University Library of Munich, Germany.
    3. M. Nusrate Aziz & Osman Bin Mohamad, 2016. "Islamic social business to alleviate poverty and social inequality," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 43(6), pages 573-592, June.
    4. Asim Ehsan & Muhammad Asghar Shahzad, 2015. "Bay Salam: A Proposed Model for Shariâ??ah Compliant Agriculture Financing," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 7(1), pages 67-80, April.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Mohamad Shahril Isahak & Nor Firza Alia Nor Azman & Anis Farhana Zaini & Nur Sabrina Shaari & Emylia Elvis & Mohammad Ishaque Husain, 2023. "Factors Influencing the Low Demand for Salam Financing Contracts in Indonesia – Concept Paper," Accounting and Finance Research, Sciedu Press, vol. 12(2), pages 1-17, May.
    2. Jardine A Husman & Ali Sakti, 2021. "Islamic Modes Of Financing For Agriculture: A Supply And Demand Sides Approach," Working Papers WP/11/2021, Bank Indonesia.

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    More about this item

    Keywords

    model; problems; financing; parallel salam; screening; education;
    All these keywords.

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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