Masrifah, Atika (2020) Measuring Sharia Financial Inclusion: Evidence From Indonesia. In: Cross Border SMEs: Malaysia Indonesia. UMY PRESS, pp. 67-90. ISBN 9786239168285

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Abstract

Micro Enterprises’ (MEs) contribution towards absorbing the labor for about 88.90% of total enterprises in Indonesia, but almost all MEs called as an unbanked or non-bankable people. This chapter aims to calculate and analyse the Index of Syariah Financial Inclusion (ISFI) covering two dimensions; the accessibility and the usage of Islamic financial services, using field survey. Assessing 250 household of MSMEs across the region in Indonesia, this paper found that the utilisation of Islamic financial institutions, even cooperative, is generally low in Indonesia (0.384 for usage dimension and 0.438 for accessibility dimension). It has been proven by the respondents’ profile that MSMEs prefer conventional loan (75%), while others (25%) prefer Islamic financing. Furthermore, the results show that the enterprise’s source of financing at the first time is different from the last condition significantly when the survey was conducted. MSMEs prefer to use loans from relatives, their personal saving, rotating scheme and even loans from moneylenders. This study recommends that the education and promotion of Sharia Financial Inclusion be given a policy priority in Indonesia to gain the main goals of financial inclusion, inclusive growth, welfare as well as economic development.

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