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Micro finance in sharia rural banks in Indonesia: a case study

Author

Listed:
  • Neneng Nurhasanah

    (Bandung Islamic University, Indonesia)

  • Nunung Nurhayati

    (Bandung Islamic University, Indonesia)

  • Maman Surahman

    (Bandung Islamic University, Indonesia)

Abstract

This paper aimed to identify the implementation of micro finance in sharia rural banks in West Java province, Indonesia. Furthermore, this study attempted to investigate issues found and the solution to them. Six out of 13 sharia rural banks in West Java, Indonesia were selected to be the subjects of the study. The selected banks were claimed to be able to represent urban and rural areas of the bank location. In addition, several experts and practitioners in related fields were also invited to be interviewed and attend a Focus Group Discussion (FGD). Based on the results of the study, it was found that the sharia rural banks found funding resource to be their ultimate issues in dealing with micro finance causing the shift in selecting customers from all people from low social class to those with fixed income. In addition, sharia rural banks also faced a tough competition with conventional banks, sharia banks, and sharia business units in having micro finance activities. There have been several efforts made to increase the quality of implementation of the micro finance yet the support from the government is still low. It is expected that the government creates such an effective system so that micro finance run by the sharia rural banks can be more effective.

Suggested Citation

  • Neneng Nurhasanah & Nunung Nurhayati & Maman Surahman, 2020. "Micro finance in sharia rural banks in Indonesia: a case study," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(4), pages 3455-3463, June.
    • Handle: RePEc:ssi:jouesi:v:7:y:2020:i:4:p:3455-3463
    DOI: 10.9770/jesi.2020.7.4(58)
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    References listed on IDEAS

    as
    1. Li, Lin Yang & Hermes, Niels & Meesters, Aljar, 2019. "Convergence of the performance of microfinance institutions: A decomposition analysis," Economic Modelling, Elsevier, vol. 81(C), pages 308-324.
    2. Khan, Tahsina & Khanam, Shamsun Nahar & Rahman, Md Habibur & Rahman, Syed Mahbubur, 2019. "Determinants of microfinance facility for installing solar home system (SHS) in rural Bangladesh," Energy Policy, Elsevier, vol. 132(C), pages 299-308.
    3. repec:idn:journl:v:5:y:2003:i:4:p:1-60 is not listed on IDEAS
    4. Shirazi, Dr. Nasim Shah & Obaidullah, Dr. Mohammed & Haneef, Mohamed Aslam, 2015. "Integration of Waqf and Islamic Microfinance for Poverty Reduction," Working Papers 1436-5, The Islamic Research and Teaching Institute (IRTI).
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    micro finance; Sharia Rural Bank; entrepreneurship; welfare;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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