Determinants of the Establishment of Islamic Micro Finance Institutions: The Case of Baitul Maal wa Tamwil (BMT) in Indonesia
Alfiah Hasanah () and
Arief Yusuf ()
Additional contact information
Alfiah Hasanah: Department of Economics, Padjadjaran University
No 201308, Working Papers in Economics and Development Studies (WoPEDS) from Department of Economics, Padjadjaran University
As a country with the largest number of muslim population in the world, Islamic micro finance institutions have a large potential to playa greater role in the country's aspiration to poverty reduction. However, the determinants of theestablishment of Islamic Micro Finance Institutions, particularly in Indonesia, has not been extensively studied. This paper attempts to explore the determinants of the establishment ofBaitul Maal wa Tamwil (BMT), one of the main Islamic microfinance institutions in Indonesia. A probit model of BMT establishment is estimated using an Indonesian village-level data. The result suggests that the extent of economic activities particularly in agriculture sector, and high accessibility to market are strong determinants of BMT establishmentin Indonesian villages. It is also found that villages that experienced recent calamities particularly drought are more likely to have BMT established. This may indicate the role of BMT as a provider of financial service in the midst of hardship. Religion is among the strongest determinant of BMT establishment. Villages with Islam as the dominant religion is more likely of having BMT established. However, this effect is strong only in rural areas.In urban areas, this effect is weak.
Keywords: Micro Finance Institution; Baitul Maal wa Tamwil; Indonesia; Islamic banking (search for similar items in EconPapers)
JEL-codes: P49 G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mfd and nep-sea
Date: 2013-03, Revised 2013-03
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
http://ceds.feb.unpad.ac.id/wopeds/201308.pdf First version, 2013 (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:unp:wpaper:201308
Access Statistics for this paper
More papers in Working Papers in Economics and Development Studies (WoPEDS) from Department of Economics, Padjadjaran University Contact information at EDIRC.
Series data maintained by Arief Anshory Yusuf ().