Efficiency of Baitul Maal Wa Tamwil as Islamic microfinance institution in Indonesia /
The primary objectives of most microfinance programmes are poverty alleviation and financial sustainability. By providing financing, Microfinance Institutions (MFI) aims to encourage the poor to become economically independent. Islamic microfinance offers financing schemes based on shariah principle...
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| Main Author: | |
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| Format: | Thesis |
| Language: | English |
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Kuala Lumpur :
IIUM Institute of Islamic Banking and Finance, International Islamic University Malaysia,
2017
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| Subjects: | |
| Online Access: | http://studentrepo.iium.edu.my/handle/123456789/2317 |
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| Summary: | The primary objectives of most microfinance programmes are poverty alleviation and financial sustainability. By providing financing, Microfinance Institutions (MFI) aims to encourage the poor to become economically independent. Islamic microfinance offers financing schemes based on shariah principles which are different to conventional microfinance. Conventional microfinance deals with interest (riba) which is not allowed in Islam. Indonesia with the Muslim biggest population in the world has established the Baitul Maal wa Tamwil (BMT) which represents significant growth of Islamic MFIs in the country. Islamic MFI promotes Islamic values in their financial services and also optimises the charitable funds to help the needy. The effort to sustain and improve the quality life of the poor is the main objective of BMT. However, many studies show that this institution has inefficiencies on its operations, represented by the lack of expertise in the field of management. Hence, this study attempts to analyse the efficiency of BMT with the following objectives: first, to examine the efficiency of BMT as Islamic MFI in Indonesia; second, to investigate the influencing determinant factor of BMTs efficiency in Indonesia; and third, to explain issues related to BMT's efficiency in Indonesia. Both primary and secondary data are used to achieve the objectives. The Data Envelopment Analysis (DEA) approach is used to measure the technical efficiency of BMT, while determinant factors that influence BMT efficiency are measured by multiple regression analysis. This study, then, uses a case study research method to find the issues affecting BMT's efficiency. The samples for DEA method are gathered from 57 BMTs in three provinces with highest poverty rate and highest number of BMT namely, West Java, East Java and Central Java for the period of 2009 to 2011. Meanwhile, with case study research method, the study selects nine BMTs which represent the following criteria: most efficient BMTs, efficient BMTs and least efficient BMTs. The results show that the main source of technical inefficiency is pure technical inefficiency. It may indicate the lack of managerial system and resources in most BMTs. The study also finds a positive effect of profitability on technical efficiency, whereas, size and capital negative affect efficiency. The study finds that the main issue of BMTs is not related with the size or capital but rather human capital and managerial issues. Hence, focusing on the improvement of human capital and managerial system of BMTs is more important than increasing their size or capital. The study provides a significant contribution on how BMT, as an Islamic financial intermediary, can improve its efficiency. Moreover, the study provides policy recommendations for the Authority of Financial Services, the Department of Cooperatives and the BMT Centres in Indonesia concerning the development and enhancement of BMT roles in the country by increasing the quality of BMT's human capital. Therefore, BMT may support the government mission to achieve its socio economic objectives. The findings may be relevant and applicable to Islamic MFI not only in Indonesia, but in other Muslim countries and for further empirical research in this area. |
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| Physical Description: | xvi, 296 leaves : illustrations ; 30cm. |
| Bibliography: | Includes bibliographical references (leaves 283-294). |