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Lilies Setiartiti, Susilo Nur Aji Cokro Darsono, Taufik Akbar Universitas Muhammadiyah Yogyakarta a)

Universitas Muhammadiyah Yogyakarta


Abstract. Micro, small and medium enterprises (MSMEs) play a significant role in economic development in Yogyakarta. Based on 2016 census data, total number of businesses amounting to 246,217 business units, the number of MSMEs was 235,313 or 98.40% of the total businesses in Yogyakarta. Yogyakartas economic growth in 2017 was 5.26% (yoy), where the share of MSMEs was quite significant, around 95%. However, the big problems faced by the MSMEs are financial inclusion are still low. In view of this, there is a vacuum of information that demands a need to empirically investigate to what extent MSMEs has gained access to Islamic financial credit facilities and examine causes that lead to a such situation. The purpose of this research is to assess selected attributes of the MSMEs and analyze the causes of the low access to Islamic finance. Data obtained using survey techniques and in-depth observation to provide answers of the problems faced to explain the phenomenon. The results indicated that MSMEs access to Islamic finance is relatively low and only 30% at the beginning of their business using funds sourced from sharia financial institutions. This condition is an irony because of the rapid development of Islamic financial institutions, especially BMTs in Yogyakarta, and most business actors are micro and small scale, which should be served by sharia microfinance institutions. Overall, this research provides some important insights for Yogyakarta to highlight possible steps for the policy makers as a reference to formulate policies related to increasing financial access for MSMEs Keywords : MSMEs, financial inclusion, microfinance, sharia finance

Keywords: eywords : MSMEs, financial inclusion, microfinance, sharia finance

Topic: International Conference of Islamic Economic and Financial Inclusion


Conference: The 3rd International Conference on Sustainability and Innovation (ICoSI 2019)

Plain Format | Corresponding Author (Syadan Ismail)

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