Market microstructure and sharia-compliant financing of small and medium enterprises in Indonesia: an empirical analysis
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Published:
Feb 28, 2024
Keywords:
Market Microstructure, Sharia-Compliant Financing, SMEs, Indonesia
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Economy
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Abstract
This study explores the intricate relationship between Indonesian Small and Medium Enterprises' (SMEs') acceptance of finance that complies with Shariah. This work uses Structural Equation Modeling with Partial Least Squares (SEM-PLS) and quantitative empirical analysis to investigate how market microstructure dynamics affect financing choices and performance results that adhere to Shariah. A survey was conducted with the 105 SMEs that made up the study participants to gather information about their overall performance, financing choices, and market engagement. The results show a strong positive correlation between the success of SMEs, the use of finance that complies with Shariah, and market microstructure. Additionally, there is a complicated interaction between SME performance, funding options, and market conditions. The study's findings have practical consequences for financial institutions, policymakers, and small- and medium-sized enterprise owners navigating Indonesia's constantly changing financial scene. They offer insights into how to finance sustainable growth in a way that aligns with Shariah principles
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Abdurahman, F. R., Sari, M. . and Harisandi, P. . (2024) “Market microstructure and sharia-compliant financing of small and medium enterprises in Indonesia: an empirical analysis ”, Jurnal Mantik, 7(4), pp. 3031-3042. doi: 10.35335/mantik.v7i4.4515.
References
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Anwar, M. K., Yunanto, S., Purbaningrum, D. G., & Rizkynata, R. (2023). Efektivitas Program Penyusunan Peta Peluang Investasi dalam Mendukung Pencapaian Realisasi Investasi di Indonesia (Studi di Kementerian Investasi/Badan Koordinasi Penanaman Modal Republik Indonesia). Jurnal Manajemen Dan Ilmu Administrasi Publik (JMIAP), 5(2), 201–208.
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Chowdhury, M. A. I., Uddin, M. S., Ahmmed, M., Hassan, M. R., & Kabir, M. J. (2023). Potential risks of liquidity and credit affecting the efficiency of Islamic banks in Bangladesh. Cogent Economics & Finance, 11(1), 2209950.
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Dela Cruz, N. A., Villanueva, A. C. B., Tolin, L. A., Disse, S., Lensink, R., & White, H. (2023). PROTOCOL: Effects of interventions to improve access to financial services for micro?, small?and medium?sized enterprises in low?and middle?income countries: An evidence and gap map. Campbell Systematic Reviews, 19(3), e1341.
D’souza, C., Nanere, M., Marimuthu, M., Arwani, M., & Nguyen, N. (2022). Market orientation, performance and the mediating role of innovation in Indonesian SMEs. Asia Pacific Journal of Marketing and Logistics, 34(10), 2314–2330.
Febriandika, N. R., Hakimi, F., & Awalliyah, M. (2023). CONTAGION AND SPILLOVER EFFECTS OF GLOBAL FINANCIAL MARKETS ON THE INDONESIAN SHARIA STOCK INDEx POST-COVID-19. Innovations, 20(3), 35–47.
Febriyantoro, M. T., Suyoto, Y. T., Saputra, F., & Suleman, D. (2023). The Effect of Innovation Capability on Market Performance Mediated by External Collaboration on SMEs. KnE Social Sciences, 249–262.
Fikri, M. K., & Firmansyah, F. (2022). Analysis of Market Structure and Performance on the Go Public Pharmaceutical Industry in Indonesia. JEJAK, 15(2), 401–411.
Fitri Komariyah, A. F., & Mulyono, R. D. A. P. (n.d.). A Relation between Financing Shariah Product and Asset Quality an Evidence from Indonesia.
Gulo, H. R., & Ginting, K. E. N. (2023). The Influence of Operational Flow Analysis Reports and Investment Cash Flows on the Stock Prices of Electronics Companies on the Indonesia Stock Exchange (IDX), 2018-2021. Journal of Research in Business, Economics, and Education, 5(3), 44–52.
Hadi, H., Sodiki, M., Toyyibah, I. A., & Komarudin, P. (2023). THE URGENCY OF MAQASHID SHARIA IN THE DEVELOPMENT OF SHARIA BANKING PRODUCTS. Darussalam, 24(01).
Handayani, A. (n.d.). The Role Of Financial Factor On The Financial Behaviour Of Small And Medium Enterprises (SMEs).
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Hartanto, A., & Fatwa, N. (2020). The Geostrategy of Sharia Banking Merger in Indonesia. Scientific Research Journal (SCIRJ), 3(12), 60–66.
Haryadi, A. I. (2023). The Determinants Factors of Islamic Financial Inclusion in West Java: A Comparison Between Generation Z and Millennials. Journal of Consumer Studies and Applied Marketing, 1(1), 67–73.
Hidayah, N., & Karimah, N. A. (2023). ARE SHARIA FINANCING SCHEMES PROFITABLE? THE CASE OF ISLAMIC RURAL BANKS IN INDONESIA.
Hubbansyah, A. K., Hakim, D. B., & Hartoyo, S. (2023). Three Decades of Structural Transformation of the Indonesian Economy: Has the Turning Point Been Reached? International Journal of Advanced Research in Economics and Finance, 5(2), 145–155.
Iswanto, B. (2022). The Influence of CAR, FDR, Inflation, GDP, Mudharabah Financing, and Musyarakah Financing on NPF of Islamic Commercial Banks in Indonesia.
Izzah, R., Purnamawati, I. G. A., & Yuniarta, G. A. (2023). Determinan Kinerja Maqashid Syariah dengan Corporate Governance sebagai Variabel Moderasi Pada Bank Umum Syariah di Indonesia. JIMAT (Jurnal Ilmiah Mahasiswa Akuntansi) Undiksha, 14(01), 207–221.
Kennedy, P. S. J. (2023). Do Reforms in Indonesia Affect Economic Growth? Learn Ten Years from 1999-2008 Period. KnE Social Sciences, 156–166.
Khanam, T., & Haider, M. Z. (2018). CREDIT FOR SMALL AND MEDIUM ENTERPRISES: A STUDY ON KHULNA CITY CORPORATION, BANGLADESH. Khulna University Studies, 61–70.
Kiranawati, Y. C., Aziza, S. M., Nasim, A., & Ningsih, C. (2023). Islamic Banking Governance in Maqashid Sharia Perspectives: A Systematic Literature Review. Share: Jurnal Ekonomi Dan Keuangan Islam, 12(1), 59–74.
Krishnadas, M., Harikrishnan, K. P., & Ambika, G. (2022). Recurrence measures and transitions in stock market dynamics. Physica A: Statistical Mechanics and Its Applications, 608, 128240.
Lio, S., Onyango, J., Mirichii, J., Mumanthi, C., Njeru, G., Karimi, J., & Warue, B. (2018). Implication of efficient market hypothesis and arbitrage pricing theory in Chepkube market at the Kenya-Uganda border: A critique of literature review. The University Journal, 1(2), XX–XX.
Mitra, S., Mondal, R., & Mukherjee, S. (2023). Select Firm Specific Determinates and Debt Procurement Policy of Small and Medium Sized Indian Health Sectors Firms: A Generalised Methods of Moment Approach. Management Journal for Advanced Research, 3(1), 26–34.
Naim, N. Y. A., & Abdul Rahman, N. A. (2023). The Effects of Internal Governance Factors on Lending Portfolio Composition in Islamic Banks. International Journal of Financial Studies, 11(3), 85.
Nasikah, D., Fitriani, F., & Wibowo, Y. P. (2023). Pengaruh Strategi Marketing Mix (Bauran Pemasaran) Dalam Meningkatkan Usaha Mikro, Kecil Dan Menengah (UMKM) Di Kota Metro. Jurnal Manajemen DIVERSIFIKASI, 3(2), 316–322.
Naz, S. A., & Gulzar, S. (2023). Islamic financial development & economic growth: the emergence of Islamic financial market in Pakistan. Journal of Islamic Accounting and Business Research.
Permadi, A., Susilowati, E., Hariyanti, S., & Damayanti, D. N. A. (2022). Causality of Consumption, Government Expenditure, and Distribution of ZIS Funds (Zakat Infaq and Shodaqoh) on Indonesia’s Economic Growth. Open Access Indonesia Journal of Social Sciences, 5(5), 846–855.
Qisti, M. N., & Budiman, A. (2023). Pengaruh Reksadana Syariah, Saham Syariah, dan Inflasi terhadap Pertumbuhan Ekonomi Indonesia Tahun 2013-2022. Journal on Education, 5(4), 16927–16940.
Randyantini, V., Saputri, I. P., Perkasa, D. H., Abdullah, M. A. F., & Purwanto, S. (2023). Analysis Stock Return on Manufacture Sector Post-Covid-19 Pandemic. KnE Social Sciences, 734–742.
Salazar-Rebaza, C., Aguilar-Sotelo, F., Zegarra-Alva, M., & Cordova-Buiza, F. (2022). Financing in the alternative securities market: Economic and financial impact on SMEs.
Shawtari, F. A., Elsalem, B. A., Salem, M. A., & Shah, M. E. (2023). Financial development and economic diversification in Qatar: does Islamic finance matters. Journal of Islamic Accounting and Business Research.
Vahabi, H., Namaki, A., & Raei, R. (2022). Comparing the collective behavior of banking industry in emerging markets versus mature ones by random matrix approach. Frontiers in Physics, 10, 896303.
Wulandari, P., & Ibrahim, M. (2023). Fintech Lending Business Ethics in Indonesia: A Case Study of Shopee Pinjam (SPinjam). InFestasi, 19(1), 13–21.
Xiao, P., Salleh, M. I. bin, & Cheng, J. (2022). Research on Factors Affecting SMEs’ Credit Risk Based on Blockchain-Driven Supply Chain Finance. Information, 13(10), 455.
Yuli, S. B. C., & Rofik, M. (2023). Implications of Sharia-compliant financing trade-offs on unemployment and growth. Public and Municipal Finance, 12(1), 100–109.
Adewiyah, R., & Bawono, A. (2023). The Effect of Islamic Capital Market Instruments on Indonesia’s Economic Growth is Moderated by The Money Supply. ISLAMICONOMIC: Jurnal Ekonomi Islam, 14(1).
Amalia, S., Kesuma, A. I., & Pramono, A. T. (n.d.). Which is more important for Indonesia: Foreign Investment, Effective Exchange Rates, or Inflation?(Study on Indonesia’s workforce over the past three decades).
Annisa, L. H., & Saridewi, L. P. (2023). Implementation of Grounded Theory to Analyze the Effect of Social Media Functionality on MSME Market Segmentation in Indonesia. Jurnal Sisfokom (Sistem Informasi Dan Komputer), 12(2), 322–328.
Anwar, M. K., Yunanto, S., Purbaningrum, D. G., & Rizkynata, R. (2023). Efektivitas Program Penyusunan Peta Peluang Investasi dalam Mendukung Pencapaian Realisasi Investasi di Indonesia (Studi di Kementerian Investasi/Badan Koordinasi Penanaman Modal Republik Indonesia). Jurnal Manajemen Dan Ilmu Administrasi Publik (JMIAP), 5(2), 201–208.
Boier, I. (2023). Multiresolution Signal Processing of Financial Market Objects. ICASSP 2023-2023 IEEE International Conference on Acoustics, Speech and Signal Processing (ICASSP), 1–5.
Chowdhury, M. A. I., Uddin, M. S., Ahmmed, M., Hassan, M. R., & Kabir, M. J. (2023). Potential risks of liquidity and credit affecting the efficiency of Islamic banks in Bangladesh. Cogent Economics & Finance, 11(1), 2209950.
Civelek, M. (2023). THE INFLUENCES OF BANK-FIRM RELATIONSHIPS IN CREDIT ACCESS OF SMES: Received: 01st August 2022; Revised: 24th November 2022, 13th December 2022; Accepted: 16th December 2022. Socialis Series in Social Science, 4, 16–30.
Dela Cruz, N. A., Villanueva, A. C. B., Tolin, L. A., Disse, S., Lensink, R., & White, H. (2023). PROTOCOL: Effects of interventions to improve access to financial services for micro?, small?and medium?sized enterprises in low?and middle?income countries: An evidence and gap map. Campbell Systematic Reviews, 19(3), e1341.
D’souza, C., Nanere, M., Marimuthu, M., Arwani, M., & Nguyen, N. (2022). Market orientation, performance and the mediating role of innovation in Indonesian SMEs. Asia Pacific Journal of Marketing and Logistics, 34(10), 2314–2330.
Febriandika, N. R., Hakimi, F., & Awalliyah, M. (2023). CONTAGION AND SPILLOVER EFFECTS OF GLOBAL FINANCIAL MARKETS ON THE INDONESIAN SHARIA STOCK INDEx POST-COVID-19. Innovations, 20(3), 35–47.
Febriyantoro, M. T., Suyoto, Y. T., Saputra, F., & Suleman, D. (2023). The Effect of Innovation Capability on Market Performance Mediated by External Collaboration on SMEs. KnE Social Sciences, 249–262.
Fikri, M. K., & Firmansyah, F. (2022). Analysis of Market Structure and Performance on the Go Public Pharmaceutical Industry in Indonesia. JEJAK, 15(2), 401–411.
Fitri Komariyah, A. F., & Mulyono, R. D. A. P. (n.d.). A Relation between Financing Shariah Product and Asset Quality an Evidence from Indonesia.
Gulo, H. R., & Ginting, K. E. N. (2023). The Influence of Operational Flow Analysis Reports and Investment Cash Flows on the Stock Prices of Electronics Companies on the Indonesia Stock Exchange (IDX), 2018-2021. Journal of Research in Business, Economics, and Education, 5(3), 44–52.
Hadi, H., Sodiki, M., Toyyibah, I. A., & Komarudin, P. (2023). THE URGENCY OF MAQASHID SHARIA IN THE DEVELOPMENT OF SHARIA BANKING PRODUCTS. Darussalam, 24(01).
Handayani, A. (n.d.). The Role Of Financial Factor On The Financial Behaviour Of Small And Medium Enterprises (SMEs).
Harahap, B., Risfandy, T., & Futri, I. N. (2023). Islamic Law, Islamic Finance, and Sustainable Development Goals: A Systematic Literature Review. Sustainability, 15(8), 6626.
Hartanto, A., & Fatwa, N. (2020). The Geostrategy of Sharia Banking Merger in Indonesia. Scientific Research Journal (SCIRJ), 3(12), 60–66.
Haryadi, A. I. (2023). The Determinants Factors of Islamic Financial Inclusion in West Java: A Comparison Between Generation Z and Millennials. Journal of Consumer Studies and Applied Marketing, 1(1), 67–73.
Hidayah, N., & Karimah, N. A. (2023). ARE SHARIA FINANCING SCHEMES PROFITABLE? THE CASE OF ISLAMIC RURAL BANKS IN INDONESIA.
Hubbansyah, A. K., Hakim, D. B., & Hartoyo, S. (2023). Three Decades of Structural Transformation of the Indonesian Economy: Has the Turning Point Been Reached? International Journal of Advanced Research in Economics and Finance, 5(2), 145–155.
Iswanto, B. (2022). The Influence of CAR, FDR, Inflation, GDP, Mudharabah Financing, and Musyarakah Financing on NPF of Islamic Commercial Banks in Indonesia.
Izzah, R., Purnamawati, I. G. A., & Yuniarta, G. A. (2023). Determinan Kinerja Maqashid Syariah dengan Corporate Governance sebagai Variabel Moderasi Pada Bank Umum Syariah di Indonesia. JIMAT (Jurnal Ilmiah Mahasiswa Akuntansi) Undiksha, 14(01), 207–221.
Kennedy, P. S. J. (2023). Do Reforms in Indonesia Affect Economic Growth? Learn Ten Years from 1999-2008 Period. KnE Social Sciences, 156–166.
Khanam, T., & Haider, M. Z. (2018). CREDIT FOR SMALL AND MEDIUM ENTERPRISES: A STUDY ON KHULNA CITY CORPORATION, BANGLADESH. Khulna University Studies, 61–70.
Kiranawati, Y. C., Aziza, S. M., Nasim, A., & Ningsih, C. (2023). Islamic Banking Governance in Maqashid Sharia Perspectives: A Systematic Literature Review. Share: Jurnal Ekonomi Dan Keuangan Islam, 12(1), 59–74.
Krishnadas, M., Harikrishnan, K. P., & Ambika, G. (2022). Recurrence measures and transitions in stock market dynamics. Physica A: Statistical Mechanics and Its Applications, 608, 128240.
Lio, S., Onyango, J., Mirichii, J., Mumanthi, C., Njeru, G., Karimi, J., & Warue, B. (2018). Implication of efficient market hypothesis and arbitrage pricing theory in Chepkube market at the Kenya-Uganda border: A critique of literature review. The University Journal, 1(2), XX–XX.
Mitra, S., Mondal, R., & Mukherjee, S. (2023). Select Firm Specific Determinates and Debt Procurement Policy of Small and Medium Sized Indian Health Sectors Firms: A Generalised Methods of Moment Approach. Management Journal for Advanced Research, 3(1), 26–34.
Naim, N. Y. A., & Abdul Rahman, N. A. (2023). The Effects of Internal Governance Factors on Lending Portfolio Composition in Islamic Banks. International Journal of Financial Studies, 11(3), 85.
Nasikah, D., Fitriani, F., & Wibowo, Y. P. (2023). Pengaruh Strategi Marketing Mix (Bauran Pemasaran) Dalam Meningkatkan Usaha Mikro, Kecil Dan Menengah (UMKM) Di Kota Metro. Jurnal Manajemen DIVERSIFIKASI, 3(2), 316–322.
Naz, S. A., & Gulzar, S. (2023). Islamic financial development & economic growth: the emergence of Islamic financial market in Pakistan. Journal of Islamic Accounting and Business Research.
Permadi, A., Susilowati, E., Hariyanti, S., & Damayanti, D. N. A. (2022). Causality of Consumption, Government Expenditure, and Distribution of ZIS Funds (Zakat Infaq and Shodaqoh) on Indonesia’s Economic Growth. Open Access Indonesia Journal of Social Sciences, 5(5), 846–855.
Qisti, M. N., & Budiman, A. (2023). Pengaruh Reksadana Syariah, Saham Syariah, dan Inflasi terhadap Pertumbuhan Ekonomi Indonesia Tahun 2013-2022. Journal on Education, 5(4), 16927–16940.
Randyantini, V., Saputri, I. P., Perkasa, D. H., Abdullah, M. A. F., & Purwanto, S. (2023). Analysis Stock Return on Manufacture Sector Post-Covid-19 Pandemic. KnE Social Sciences, 734–742.
Salazar-Rebaza, C., Aguilar-Sotelo, F., Zegarra-Alva, M., & Cordova-Buiza, F. (2022). Financing in the alternative securities market: Economic and financial impact on SMEs.
Shawtari, F. A., Elsalem, B. A., Salem, M. A., & Shah, M. E. (2023). Financial development and economic diversification in Qatar: does Islamic finance matters. Journal of Islamic Accounting and Business Research.
Vahabi, H., Namaki, A., & Raei, R. (2022). Comparing the collective behavior of banking industry in emerging markets versus mature ones by random matrix approach. Frontiers in Physics, 10, 896303.
Wulandari, P., & Ibrahim, M. (2023). Fintech Lending Business Ethics in Indonesia: A Case Study of Shopee Pinjam (SPinjam). InFestasi, 19(1), 13–21.
Xiao, P., Salleh, M. I. bin, & Cheng, J. (2022). Research on Factors Affecting SMEs’ Credit Risk Based on Blockchain-Driven Supply Chain Finance. Information, 13(10), 455.
Yuli, S. B. C., & Rofik, M. (2023). Implications of Sharia-compliant financing trade-offs on unemployment and growth. Public and Municipal Finance, 12(1), 100–109.
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