Mosque-Based BMT: Finding The Best Financing Models
Okyviandi Putra Erlangga (a), Didik Pudjo Musmedi (b)

(a) Faculty of Economics and Business, Universitas Airlangga
Jalan Airlangga 4 Surabaya 60286, Indonesia
okyviandiputra[at]gmail.com
(b) Faculty of Economics and Business, University of Jember
Jember 68121, Indonesia

Abstract

Indonesia is a country that has the most Muslim population in the world. This has implications for the large number of mosques that spread from urban to rural areas. This is what drives practitioners of Islamic finance to empower the function of the mosque by forming a Baitul Maal wa Tamwil (BMT) and known as the Mosque-Based BMT (MBB). Currently, MBB is slowly being established in a number of regions in Indonesia, especially in rural areas that have not been reached by financial institutions. Due to its location, MBB offer different financing models from BMT in general. This occurence drives the writer to summarize what financing models can be applied in distributing MBB funds to members, as well as finding the ideal financing model according to the MBB conditions. The author finds a couple of financing models can be applied to MBB, but financing models that has the lowest risk of loss needs to be considered. Participation-based financing such as Musharaka and Mudaraba contracts are seen as having a lower risk than other financing models.

Keywords: Mosque-Based BMT, Financing Models

Topic: Social and Economic Issues

Link: https://ifory.id/abstract-plain/F6ZhL3ubDqya

Web Format | Corresponding Author (Okyviandi Putra Erlangga)