Micro Entrepreneurs' Intention Towards Islamic Working Capital Financing: Pecking Order Theory Perspective

Authors

  • Hanifa Khoirunnisaa Heryanto Politeknik Negeri Bandung, Indonesia
  • Muhammad Muflih Politeknik Negeri Bandung, Indonesia
  • Marwansyah Marwansyah Politeknik Negeri Bandung, Indonesia

DOI:

https://doi.org/10.29040/jiei.v10i2.13352

Keywords:

Islamic Working Capital Financing, Micro Enterprises, Margin Cost Perception, Maqasid al-Sharia, Prospects

Abstract

The banking world has a significant role in helping MSMEs to increase Indonesia's economic growth. One solution offered is by providing working capital financing based on Murabahah and Ijarah contracts. This research aims to examine Maqasid al-Sharia, risk perception, margin cost perception, and prospects as the determinants of micro entrepreneurs' intention to increase working capital financing in Islamic banks. The research method used a quantitative approach for data collection and analysis. The sampling technique used purposive sampling for micro-entrepreneurs who know the existence of Islamic banks. The data was collected by conducting both online and offline surveys. A final sample of 286 respondents was analyzed using SmartPLS software to predict relationships between latent variables. Based on the data processing results, the perception of margin costs and prospects has a significant impact. In contrast, Maqasid al-Sharia and risk perception do not influence the micro entrepreneurs’ intention to use Islamic working capital financing.

References

Abdeldayem, M., & Aldulaimi, S. (2023). Investment decisions determinants in the GCC cryptocurrency market: a behavioural finance perspective. International Journal of Organizational Analysis. https://doi.org/10.1108/IJOA-02-2023-3623

Abdellaoui, M., Bleichrodt, H., & Kammoun, H. (2013). Do financial professionals behave according to prospect theory? An experimental study. Theory and Decision, 74(3), 411–429. https://doi.org/10.1007/s11238-011-9282-3

Ahmad, A. (1994). Contemporary Practices of Islamic Financing Techniques: Islamic Research and Training Institute. Development and Problems of Islamic Banks, 2(1), 1–43.

Ahmed, A. (2010). Global financial crisis: an Islamic finance perspective. International Journal of Islamic and Middle Eastern Finance and Management, 3(4), 306–320. https://doi.org/10.1108/17538391011093252

Alam, N., & Boon Tang, K. (2012). Risk-taking behaviour of Islamic banks: application of prospect theory. Qualitative Research in Financial Markets, 4(2–3), 156–164. https://doi.org/10.1108/17554171211252493

Amin, H. (2017). Consumer behaviour of Islamic home financing: Investigating its determinants from the theory of Islamic consumer behaviour. Humanomics, 33(4), 517–548. https://doi.org/10.1108/H-12-2016-0102

Amin, H. (2020). Critical success factors for the receptiveness of Islamic home financing in Malaysia. International Journal of Emerging Markets, 15(5), 849–873. https://doi.org/10.1108/IJOEM-04-2018-0187

Amin, H., Abdul-Rahman, A. R., & Abdul-Razak, D. (2016). Malaysian consumers’ willingness to choose Islamic mortgage products: An extension of the theory of interpersonal behaviour. International Journal of Bank Marketing, 34(6), 868–884. https://doi.org/10.1108/IJBM-06-2015-0099

Amin, H., Rahim Abdul Rahman, A., Laison Sondoh, S., & Magdalene Chooi Hwa, A. (2011). Determinants of customers’ intention to use Islamic personal financing: The case of Malaysian Islamic banks. Journal of Islamic Accounting and Business Research, 2(1), 22–42. https://doi.org/10.1108/17590811111129490

Badaj, F., & Radi, B. (2018). Empirical investigation of SMEs’ perceptions towards PLS financing in Morocco. International Journal of Islamic and Middle Eastern Finance and Management, 11(2), 250–273. https://doi.org/10.1108/IMEFM-05-2017-0133

Bahri, E. S., Mohd, M. M. A., Hasan, A. A. H., & Wibowo, H. (2019). Maqasid Al-Shariah in Micro-entrepreneurs Development: an Overview. International Conference of Zakat 2019, 2655–6251.

Charag, A. H., Fazili, A. I., & Bashir, I. (2020). Determinants of consumer’s readiness to adopt Islamic banking in Kashmir. Journal of Islamic Marketing, 11(5), 1125–1154. https://doi.org/10.1108/JIMA-10-2018-0182

Delliana, E. (2016). Analisis Faktor-Faktor Penentu Mindset Financial (Studi Pada Pelaku Usaha Dibeberapa Wilayah Kabupaten Banyumas). Universitas Muhammadiyah Purwokerto.

Gudarzi Farahani, Y., & Dastan, M. (2013). Analysis of Islamic banks’ financing and economic growth: a panel cointegration approach. International Journal of Islamic and Middle Eastern Finance and Management, 6(2), 156–172. https://doi.org/10.1108/17538391311329842

Hair, J. F., Sarstedt, M., Hopkins, L., & Kuppelwieser, V. G. (2014). Partial least squares structural equation modeling (PLS-SEM): An emerging tool in business research. European Business Review, 26(2), 106–121. https://doi.org/10.1108/EBR-10-2013-0128

Hanini, M. W., Iriqat, I. S., & Bawab, I. H. (2021). Evaluating the Role of Islamic Banks in Financing Micro, Small, and Medium Enterprises (MSMEs) In Palestine. Indian Journal of Economics and Business, 20(3), 1003–1029.

Hati, S. R. H., Wibowo, S. S., & Safira, A. (2020). The antecedents of Muslim customers’ intention to invest in an Islamic bank’s term deposits: evidence from a Muslim majority country. Journal of Islamic Marketing, 12(7), 1363–1384. https://doi.org/10.1108/JIMA-01-2020-0007

Henseler, J., Ringle, C. M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1), 115–135. https://doi.org/10.1007/s11747-014-0403-8

Holmes, S., & Kent, P. (1991). An Empirical Analysis of the Financial Structure of Small and Large Australian Manufacturing Enterprises. The Journal of Entrepreneurial Finance, 1(2), 141–154. https://doi.org/10.57229/2373-1761.1118

Hoxha, V., & Hasani, I. (2023). Decision-making biases in property investments in Prishtina, Kosovo. Journal of Property Investment and Finance, 41(2), 155–181. https://doi.org/10.1108/JPIF-04-2022-0031

Hu, L. T., & Bentler, P. M. (1999). Cutoff criteria for fit indexes in covariance structure analysis: Conventional criteria versus new alternatives. Structural Equation Modeling, 6(1), 1–55. https://doi.org/10.1080/10705519909540118

Jaffar, M. A., & Musa, R. (2014). Determinants of Attitude towards Islamic Financing among Halal-certified Micro and SMEs: A Preliminary Investigation. Procedia - Social and Behavioral Sciences, 130, 135–144. https://doi.org/10.1016/j.sbspro.2014.04.017

Kabir, M. N., & Worthington, A. C. (2017). The ‘competition–stability/fragility’ nexus: A comparative analysis of Islamic and conventional banks. International Review of Financial Analysis, 50, 111–128. https://doi.org/10.1016/j.irfa.2017.02.006

Lajuni, N., Wong, W., Ming, P., Yacob, Y., Ting, H., & Jausin, A. (2017). Intention to Use Islamic Banking Products and Its Determinants. International Journal of Economics and Financial Issues, 7(1), 329–333.

Litriani, E., & Leviana, L. (2017). Pengaruh Pembiayaan Modal Kerja Terhadap Pendapatan Usaha Nasabah pada PT. Bank Syariah Mandiri Kantor Cabang Simpang Patal Palembang. I- Finance: A Research Journal On Islamic Finance, 3(2), 123–140.

Mahmood, T., & Arshed, N. (2023). On improving the adoption of Bai’ Salam by Islamic banks of Pakistan: an interpretive phenomenological analysis. Journal of Islamic Accounting and Business Research. https://doi.org/10.1108/JIABR-10-2022-0261

Malik, A. D., Darussalam, A. Z., & Trisnowati, Y. (2019). The performance of MSMEs of Gresik based on maqasid sharia. Journal of Economics, Business & Accountancy Ventura, 21(3), 315. https://doi.org/10.14414/jebav.v21i3.1244

Malim, N. A. K., & Normalini, M. K. (2018). Factors Influencing the Margins of Islamic Banks. Global Business Review, 19(4), 1026–1036. https://doi.org/10.1177/0972150918772970

Mittal, V., & Raman, T. V. (2022). Financing woes: estimating the impact of MSME financing gap on financial structure practices of firm owners. South Asian Journal of Business Studies, 11(3), 316–340. https://doi.org/10.1108/SAJBS-07-2020-0228

Moisseron, J.-Y., Moschetto, B.-L., & Teulon, F. (2015). Islamic Finance: A Review Of The Literature. International Business & Economics Research Journal (IBER), 14(5), 745. https://doi.org/10.19030/iber.v14i5.9375

Mueller, A., & Sensini, L. (2021). Determinants of Financing Decisions of SMEs: Evidence from Hotel Industry. International Journal of Business and Management, 16(3), 117. https://doi.org/10.5539/ijbm.v16n3p117

Muhson, A. (2022). Analisis Statistik Dengan SmartPLS. Universitas Negeri Yogyakarta, 1–34.

Myers, S. C. (1984). The Capital Structure Puzzle. The Journal of Finance, 39(3), 574–592. https://doi.org/10.1111/j.1540-6261.1984.tb03646.x

Nugraha, K., Arief, M., Abdinagoro, S. B., & Heriyati, P. (2022). Factors Influencing Bank Customers’ Orientations toward Islamic Banks: Indonesian Banking Perspective. Sustainability (Switzerland), 14(19). https://doi.org/10.3390/su141912506

Nursini, N. (2020). Micro, small, and medium enterprises (MSMEs) and poverty reduction: empirical evidence from Indonesia. Development Studies Research, 7(1), 153–166. https://doi.org/10.1080/21665095.2020.1823238

Padachi, K., Howorth, C., & Narasimhan, M. S. (2012). Working capital financing preferences: The case of Mauritian manufacturing small and medium-sized enterprises (SMEs). Asian Academy of Management Journal of Accounting and Finance, 8(1), 125–157.

Saleh, L., Yahaya, S., Shinkafi, A. A., & Sulaiman, S. M. (2023). Determinants of acceptance of Ijarah -wa-iqtina in financing small and medium scale women entrepreneurs in Abuja municipal area council. International Journal of Multidisciplinary Research and Growth Evaluation, 04(June), 853–861.

Santoso, B. (2020). The Role of Micro, Small, and Medium Enterprises Toward Sustainable Development Goals Through Islamic Financial Institutions. 409(SoRes 2019), 585–595. https://doi.org/10.2991/assehr.k.200225.127

Saratian, E. T. P., Arief, H., Ramli, Y., Permana, D., & Soelton, M. (2023). Introduction of Sharia Financing Contracts for the Indonesian MSMEs. Iccd, 5(1), 296–301. https://doi.org/10.33068/iccd.v5i1.618

Sofyan, A. S., Nurmiati, & Wahyudi. (2022). Hubungan Total Quality Management dalam Perspektif Islam dan Pengetahuan Manajemen. FORUM EKONOMI: Jurnal Ekonomi, Manajemen Dan Akuntansi, 4(4), 671–681. https://doi.org/10.30872/jfor.v24i4.11697

Suhartanto, D. (2020). Analisa Data Untuk Riset Bisnis (Edisi 2). Politeknik Negeri Bandung.

Wijaya, I. F., & Moro, A. (2022). Trustworthiness and margins in Islamic small business financing: Evidence from Indonesia. Borsa Istanbul Review, 22, S35–S46. https://doi.org/10.1016/j.bir.2022.10.010

Yahaya, S., Hamid, I. A., Fauzi, A., & Haji-Othman, Y. (2016). The Impact of Compatibility and Perceived risk on Customers’ Acceptance of Islamic banking in Nigeria. Www.Ijbmm.Com International Journal of Business Marketing and Management, 1(4), 15–23. www.ijbmm.com

Zaini, F., Bin Shuib, D. M. S., & bin Ahmad, D. M. (2019). the Prospect of Sharia Banking in Indonesia (Opportunities, Challenges and Solutions). International Journal of Business Management and Economic Review, 02(04), 01–14. https://doi.org/10.35409/ijbmer.2019.2401

Ziky, M., & Daouah, R. (2019). Exploring Small and Medium Enterprises’ Perceptions Towards Islamic Banking Products in Morocco. International Journal of Economics and Finance, 11(10), 106. https://doi.org/10.5539/ijef.v11n10p106

Downloads

Published

15-07-2024

How to Cite

Heryanto, H. K., Muflih, M., & Marwansyah, M. (2024). Micro Entrepreneurs’ Intention Towards Islamic Working Capital Financing: Pecking Order Theory Perspective. Jurnal Ilmiah Ekonomi Islam, 10(2), 1879–1889. https://doi.org/10.29040/jiei.v10i2.13352

Issue

Vol. 10 No. 2 (2024): JIEI : Vol.10, No.2, 2024

Section

Articles

Citation Check

License

The copyright of the article fully belongs to the Jurnal Ilmiah Ekonomi Islam and publishing rights belong entirely to LPPM STIE AAS Surakarta

 Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Similar Articles

1 2 3 4 5 6 7 8 9 10 > >> 

You may also start an advanced similarity search for this article.