AN ALTERNATIVE CREDIT GUARANTEE SCHEME FOR FINANCING MSEs IN ISLAMIC BANKING
The objective of this paper is to propose a model for a financing guarantee scheme (FGS) funded by the voluntary sector (through zakat, infaq, and sadaqah, or ZIS funds) to support small and medium-sized enterprises (SMEs). We argue that the existing credit guarantee scheme (CGS) relies on governmen...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Bank Indonesia
2021-02-01
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| Series: | Journal of Islamic Monetary Economics and Finance |
| Subjects: | |
| Online Access: | https://jimf-bi.org/index.php/JIMF/article/view/1331 |
| _version_ | 1797870516196868096 |
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| author | M. Luthfi Hamidi Fikri Salahudin |
| author_facet | M. Luthfi Hamidi Fikri Salahudin |
| author_sort | M. Luthfi Hamidi |
| collection | DOAJ |
| description | The objective of this paper is to propose a model for a financing guarantee scheme (FGS) funded by the voluntary sector (through zakat, infaq, and sadaqah, or ZIS funds) to support small and medium-sized enterprises (SMEs). We argue that the existing credit guarantee scheme (CGS) relies on government funding, but that in the current Covid-19 pandemic it is experiencing unstable financial capability. Hence, the sustainability of the CGS program is questionable. We employ the input-output (I-O) approach to identify the expected impact if the proposed FGS is applied. We further substantiate the proposal with seven Indonesian Syariah experts’ opinions, of whom five suggest that the alternative scheme is acceptable. The simulation using I-O shows that if IDR1 trillion (out of IDR10 trillion from ZIS funds in 2019) is disbursed through the scheme, this will increase economic growth by 0.0117%, representing economic activities worth IDR1.235 trillion, and creating 2,151 new jobs. We further discuss the implications of the findings for the Islamic banking industry in the future and for regulators. |
| first_indexed | 2024-04-10T00:28:40Z |
| format | Article |
| id | doaj.art-54f28e17b3f941429667d1a8922462e9 |
| institution | Directory Open Access Journal |
| issn | 2460-6146 2460-6618 |
| language | English |
| last_indexed | 2024-04-10T00:28:40Z |
| publishDate | 2021-02-01 |
| publisher | Bank Indonesia |
| record_format | Article |
| series | Journal of Islamic Monetary Economics and Finance |
| spelling | doaj.art-54f28e17b3f941429667d1a8922462e92023-03-15T04:30:42ZengBank IndonesiaJournal of Islamic Monetary Economics and Finance2460-61462460-66182021-02-0171275410.21098/jimf.v7i1.13311331AN ALTERNATIVE CREDIT GUARANTEE SCHEME FOR FINANCING MSEs IN ISLAMIC BANKINGM. Luthfi Hamidi0Fikri Salahudin1Griffith University, AustraliaDiponegoro University, IndonesiaThe objective of this paper is to propose a model for a financing guarantee scheme (FGS) funded by the voluntary sector (through zakat, infaq, and sadaqah, or ZIS funds) to support small and medium-sized enterprises (SMEs). We argue that the existing credit guarantee scheme (CGS) relies on government funding, but that in the current Covid-19 pandemic it is experiencing unstable financial capability. Hence, the sustainability of the CGS program is questionable. We employ the input-output (I-O) approach to identify the expected impact if the proposed FGS is applied. We further substantiate the proposal with seven Indonesian Syariah experts’ opinions, of whom five suggest that the alternative scheme is acceptable. The simulation using I-O shows that if IDR1 trillion (out of IDR10 trillion from ZIS funds in 2019) is disbursed through the scheme, this will increase economic growth by 0.0117%, representing economic activities worth IDR1.235 trillion, and creating 2,151 new jobs. We further discuss the implications of the findings for the Islamic banking industry in the future and for regulators.https://jimf-bi.org/index.php/JIMF/article/view/1331covid-19msescredit guarantee schemeislamic bank |
| spellingShingle | M. Luthfi Hamidi Fikri Salahudin AN ALTERNATIVE CREDIT GUARANTEE SCHEME FOR FINANCING MSEs IN ISLAMIC BANKING Journal of Islamic Monetary Economics and Finance covid-19 mses credit guarantee scheme islamic bank |
| title | AN ALTERNATIVE CREDIT GUARANTEE SCHEME FOR FINANCING MSEs IN ISLAMIC BANKING |
| title_full | AN ALTERNATIVE CREDIT GUARANTEE SCHEME FOR FINANCING MSEs IN ISLAMIC BANKING |
| title_fullStr | AN ALTERNATIVE CREDIT GUARANTEE SCHEME FOR FINANCING MSEs IN ISLAMIC BANKING |
| title_full_unstemmed | AN ALTERNATIVE CREDIT GUARANTEE SCHEME FOR FINANCING MSEs IN ISLAMIC BANKING |
| title_short | AN ALTERNATIVE CREDIT GUARANTEE SCHEME FOR FINANCING MSEs IN ISLAMIC BANKING |
| title_sort | alternative credit guarantee scheme for financing mses in islamic banking |
| topic | covid-19 mses credit guarantee scheme islamic bank |
| url | https://jimf-bi.org/index.php/JIMF/article/view/1331 |
| work_keys_str_mv | AT mluthfihamidi analternativecreditguaranteeschemeforfinancingmsesinislamicbanking AT fikrisalahudin analternativecreditguaranteeschemeforfinancingmsesinislamicbanking AT mluthfihamidi alternativecreditguaranteeschemeforfinancingmsesinislamicbanking AT fikrisalahudin alternativecreditguaranteeschemeforfinancingmsesinislamicbanking |