Realising the MSME Islamic financial inclusion in Indonesia: an institutional theory perspective

• Main Authors: Saifurrahman, Adi, Kassim, Salina
• Format: Conference or Workshop Item
• Language: English; English
• Published: 2020
• Subjects: BPH Islamic Economics; HG3368 Islamic Banking and Finance
• Online Access: http://irep.iium.edu.my/87439/19/87439_Realising%20the%20MSME.pdf; http://irep.iium.edu.my/87439/20/87439_Realising%20the%20MSME_certificate.pdf; http://irep.iium.edu.my/87439/; http://lppm.tazkia.ac.id/index.php/2020/11/22/8th-asean-universities-international-conference-on-islamic-finance-8th-aicif-2020/

The concept of financial inclusion or exclusion is a complex problem, and it was constructed by several aspects ranging from socio-cultural, psychological, economic, geographical and political issues. Financial inclusion under the conceptualisation of institutional theory highlights the role of institutions in active markets, government, communities and societies in explaining the phenomenon of financial exclusion; emphasising its vital position as a component in influencing the realisation of financial inclusion. By implementing this theory, the main objective of this study is to examine and identify the roles of involved institutions as a critical determining factor to attain Islamic financial inclusion for Micro, Small, and Medium-sized Enterprise (MSME) sector in Indonesia by incorporating the notion of “Institutional Isomorphism” in their operation. This study suggests that by integrating the institutional pressure in the institutional environment of the three involving sectors, namely: Public sector, Islamic financial services providers and MSMEs industry; this system will intensify the chance of the MSMEs sector in embracing Islamic financial inclusion and improve their productivity as well as contribution to Indonesia’s sustainable economy.