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

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.

Analysis of the Relationship between Micro, Small and Medium Enterprises Sharia Compliance with Increasing Leverage on the Impact of Covid-19 (Case Study of MSMEs in Bandung City, Indonesia)

“…Improved trust and reputation, Sharia compliance enhances credibility and reputation of MSMEs. This will create new opportunities for investors, consumers and business partners to come together to provide additional support and financing to MSMEs (Qoyum & Fauziyyah, 2019).…”

The impact of working capital management on the profitability of listed halal food and beverage companies

“…Moreover, the value of the halal industry was predicted to reach $3tn in 2021, of which the food sector would account for 63.80% ($1,914) of the prediction (Qoyum and Fauziyyah, 2019). Specifically, the market for halal food surged at a 15.4% compound annual growth rate (CAGR) from $1,300.75bn in 2022 to $1,501.5bn in 2023 (Research and Markets, 2023).…”

Pengaruh Social Environment, Religiosity dan Sharia Financial Knowledge Terhadap Minat Menggunakan Perbankan Syariah (Studi Kasus Pada UMKM Kabupaten Wonogiri)

“…Ullah & Sharofiddin (2022) pada penelitiannya menjelaskan bahwasanya kesadaran, pengetahuan, persepsi, religiusitas, perolaki, dan norma subyektif menjadi faktor-faktor yang mempengaruhi minat dalam penggunaan produk dan layanan keuangan syariah. Terkait dengan pembiayaan Qoyum & Fauziyyah (2019), biaya dan kesadaran pentingnya halal sangat penting untuk mempengaruhi UMKM untuk menggunakan pembiayaan syariah serta berkah menjadi faktor utama yang mempengaruhinya. Kemudian penelitian pada masa pandemi Nurfadilah & Samidi (2021) mengetahui faktor-faktor yang memengaruhi niat nasabah dalam menggunakan layanan Teknologi keuangan syariah selama masa pandemi Covid-19.…”