Do Islamic fintech lending promote microenterprises performance in Indonesia? Evidence of difference-in-difference model

Himmatul Kholidah, Bayu Arie Fianto, Sri Herianingrum, Shafinar Ismail and Putri Aliah Mohd Hidzir

International Journal of Islamic and Middle Eastern Finance and Management, 2024, vol. 18, issue 1, 224-246

Abstract: Purpose - This study aims to investigate the impact of Islamic fintech lending on the performance of microenterprises in Indonesia. Design/methodology/approach - This study conducted a survey involving 400 microenterprises located in East Java, Indonesia. This investigation used a two-year panel data set and used the double differences-in-differences (DID) approach for rigorous analysis, including both standard DID and adjusted DID. Findings - The findings demonstrate that microenterprises benefiting from Islamic fintech lending witnessed significant growth in their annual revenue, indicating a positive impact of Islamic fintech on their performance. In addition, these microenterprises showed an increase in the number of employees, suggesting improved business expansion and sustainability due to access to Islamic fintech lending services. Research limitations/implications - This study’s limitations arise from its focus on a specific region and time frame. However, recognizing potential future developments enhances its relevance and applicability within Islamic finance literature. Practical implications - This study offers valuable insights for microentrepreneurs, Islamic fintech platforms, policymakers and regulators, helping them make informed decisions and support the microenterprise sector in Indonesia. Originality/value - This study brings new insights and adds value by examining the unique relationship between Islamic fintech lending and microenterprise performance, which can contribute to better understanding and decision-making in this field.

Keywords: Financing; Islamic fintech lending; Microenterprises; Difference-in-difference; Indonesia; Profitability; Islamic finance; Islamic finance and Shariah compliance; Profit-and-loss sharing-PLS; Financial performance evaluation (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:imefmp:imefm-08-2023-0310

DOI: 10.1108/IMEFM-08-2023-0310

Access Statistics for this article

International Journal of Islamic and Middle Eastern Finance and Management is currently edited by Dr Syed Aun Raza Rizvi

More articles in International Journal of Islamic and Middle Eastern Finance and Management from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().