Does The Component of Islamic Financial Literacy Affect on MSMEs Decision in Islamic Banking Financing : Creative Economy Investigate

Main Article Content

Habriyanto
Budi Trianto
Nik Hadiyan Nik Azman
Busriadi
Evan Hamzah Muchtar
Elida Elfi Barus

Abstract

This study aims to determine what factors influence MSMEs in the creative economy sector in deciding to Islamic Banking financing in Indonesia. We investigated the role of Islamic financial awareness, Islamic financial knowledge and Islamic financial skills. We also examine whether the decision to Islamic Banking financing has an impact on business performance. By using a path analysis approach, the results of this study show that Islamic financial awareness and Islamic financial skills has a positive relationship on decision to financing in Islamic banking. Meanwhile, the decision to financing in Islamic banking has a positive effect on the business performance, but insignificant. Other results show that Islamic financial skills have a positive and significant impact on MSME business performance. The results of this study imply that business actors in the creative economy sector must be given an understanding of Islamic financial skill and Islamic financial awareness. On the other hand, Islamic banking must expand financing in the creative economy sector through a more competitive financing scheme so that it can be easily accessed by MSMEs. The expansion of access to Islamic financing for MSMEs is expected to accelerate the inclusion of Islamic finance in Indonesia.

Downloads

Download data is not yet available.

Article Details

Section
Articles

References

Abubakar, H.A. (2015). Enterpreneurship Development and Financial Literacy in Africa. World Journal of Enterpreneurship, Management and Sustainable Development, Vol.11., No.4., pp.281 – 294.

Ali, M.M., Devi, A., Furqani, H. and Hamzah, H. (2020), "Islamic financial inclusion determinants in Indonesia: an ANP approach", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 13 No. 4, pp. 727-747. https://doi.org/10.1108/IMEFM-01-2019-0007

Alharbi, R.K., Yahya, S.B. and Kassim, S. (2021), "Impact of religiosity and branding on SMEs performance: does financial literacy play a role?", Journal of Islamic Marketing, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JIMA-08-2019-0162

Anderson, D.R., Sweeney, D.J. and Williams, T.A. (1996). Statistics for Business and Economics. West Publishing Company, St. Paul, MN.

Antaranews. (2022). PDB Ekonomi Kreatif Mencapai Rp. 1.134 Triliun Pada 2021. Available at : PDB Ekonomi Kreatif mencapai Rp1.134 triliun pada 2021 - ANTARA News Kalimantan Timur. Date of access, 07th November 2022.

Bank Indonesia. (2015). Kajian Peningkatan Akses Pembiayaan Bagi Industri Kreatif di Indonesia, Sektor Industri Kerajinan. Jakarta : Bank Indonesia.

Behrman, J., Mitchell, O, S., Soo, C., and Bravo, D. (2010). Financial Literacy, Schooling, and Wealth. Pension Research Council Working Paper No. 2010-24.

BPS. (2017). Ekspor Ekonomi Kreatif 2010 – 2016.

Bongomin, G. O. C., Munene, J. C., Ntayi, J. M., & Malinga, C. A. (2018). Nexus between financial literacy and financial inclusion: Examining the moderating role of cognition from a developing country perspective. International Journal of Bank Marketing, 36(7), 1190–1212. https://doi.org/10.1108/IJBM-08-2017-0175.

Candiya Bongomin, G. O., Munene, J. C., Ntayi, J. M., & Malinga, C. A. (2017). Financial literacy in emerging economies. Managerial Finance, 43(12), 1310–1331. doi:10.1108/mf-04-2017-0117.

Chepngetich, P. (2016). Effect of Financial Literacy and Performance SMEs. Evidence from Kenya. American Based Rsearch Journal, Volume 5, Issue 11, pp. 26 – 35.

Demirguc-Kunt, A., Klapper, L., & Singer, D. (2017). Financial Inclusion and Inclusive Growth: A Review of Recent Empirical Evidence. Financial Inclusion and Inclusive Growth: A Review of Recent Empirical Evidence, April. https://doi.org/10.1596/1813-9450-8040

Esiebugie, U., Richard, A., & Emmanuel, A. (2018). Financial literacy and performance of small and medium scale enterprises in Benue State, Nigeria. International Journal of Economics, Business and Management Research, 2(4), 65-79.

Fatoki, O. (2014). The Financial Literacy of Micro Entrepreneurs in South Africa. Journal of Social Sciences, 40(2), 151–158. https://doi.org/10.1080/09718923.2014.11893311

Fowowe, B. (2017). Access to Finance and Firm Performance : Evidence from African Countries. Review of Development Finance, 7, 6-12.

Hilgert, M., Hogarth, J., & Beverly, S. (2003). Household Financial Management: The Connection between Knowledge and Behavior. Federal Reserve Bulletin, 89, 309-322.

Hussain, J., Salia, S. and Karim, A. (2018), "Is knowledge that powerful? Financial literacy and access to finance: An analysis of enterprises in the UK", Journal of Small Business and Enterprise Development, Vol. 25 No. 6, pp. 985-1003. https://doi.org/10.1108/JSBED-01-2018-0021.

Kementerian Pariwisata dan Ekonomi Kreatif. (2021). Oulook Pariwisata dan Ekonomi Kreatif Indonesia 2020/2021.

Lusardi, A. and Tufano, P. (2015). Debt Literacy, Financial Experiences and overindebtedness. Journal of Pension Economics and Finance, 14(4).332-368.

OJK. (2017). Strategi Nasional Literasi Keuangan Indonesia (Revisit). Available at : https://www.ojk.go.id/id/berita-dan-kegiatan/publikasi/Documents/Pages/Strategi-Nasional-Literasi-Keuangan-Indonesia-(Revisit-2017)-/SNLKI%20(Revisit%202017)-new.pdf. Access date, 28 June 2020.

Okello, G.C.B., Ntayi, J.M., Munene, J.C., and Malinga, J.M. (2017). The Relationship Between Access to Finance and Growth of SMEs in Developing Economies : Financial Literacy as a Moderator. Review of International Business and Strategy.

Okello Candiya Bongomin, G., Ntayi, J.M., Munene, J.C. and Nkote Nabeta, I. (2016), "Social capital: mediator of financial literacy and financial inclusion in rural Uganda", Review of International Business and Strategy, Vol. 26 No. 2, pp. 291-312. https://doi.org/10.1108/RIBS-06-2014-0072

Pikiran Rakyat. (2017). Ekonomi Kreatif Intangible Sulit Akses Perbankan. https://www.pikiran-rakyat.com/ekonomi/pr-01286464/ekonomi-kreatif-intangible-sulit-akses-perbankan-410021. Access date : August 11th, 2020.

Susan, M. (2020).Financial Literacy and Growth of Micro, Small, and Medium Enterprises in West Java, Indonesia, Barnett, W.A. and Sergi, B.S. (Ed.) Advanced Issues in the Economics of Emerging Markets (International Symposia in Economic Theory and Econometrics, Vol. 27), Emerald Publishing Limited, Bingley, pp. 39-48. https://doi.org/10.1108/S1571-038620200000027004

Trianto, B., Barus, E,E. and Sabiu, T.T. (2021). Relationship Between Islamic Financial Literacy, Islamic Financial Inclusion and Business Performance : Evidence from Culinary Cluster of Creative Economy. IKONOMIKA : Jurnal Ekonomi dan Bisnis Islam, Vol.6, No.1

UNCTAD. (2018). Creative Economy Outlook. Trend in International Trade in Creative Industries 2002 – 2015.

Usama, K.M. and Yusoff, W.F.W. (2018). The Relationship Between Entrepreneurs’ Financial Literacy and Business Performance Among Entrepreneurs o f Bauchi State Nigeria. International Journal of Entrepreneurship and Business Innovation, Vol1, No.1, pp.15-26.

Widarjono, A. and Mardhiyah, Z. (2022). Profit-Loss Sharing Financing and Stability of Indonesian Indonesian Islamic Banking. International Journal of Islamic Business and Economics, Vol. 6, No.1. https://doi.org/10.28918/ijibec.v6i1.4196.

World Bank. (2020). Financial Inclusion Support Framework (FISF). https://www.worldbank.org/en/topic/financialinclusion/brief/financial-inclusion-support-framework. Acces date, 28 June 2020.
Abstract viewed = 140 times
PDF downloaded = 131 times