Efficiency and Effectiveness of Islamic Microfinance toward Poverty Alleviation in Indonesia

In the past few decades, Islamic microfinance has become pivotal in mitigating poverty, making it crucial to explore its operational effectiveness and performance within Muslim-majority nations. This research is centered on examining the efficiency and impact of Islamic microfinance in alleviating p...

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Main Author:	Arif Rahman, Hakim
Format:	Thesis
Language:	English
Published:	2024
Subjects:	HB Economic Theory HG Finance
Online Access:	http://ir.unimas.my/id/eprint/46421/3/Thesis%20PhD_Arif%20Rahman%20Hakim.pdf
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id	my-unimas-ir.46421
record_format	uketd_dc
spelling	my-unimas-ir.464212024-10-23T07:20:14Z Efficiency and Effectiveness of Islamic Microfinance toward Poverty Alleviation in Indonesia 2024-10-18 Arif Rahman, Hakim HB Economic Theory HG Finance In the past few decades, Islamic microfinance has become pivotal in mitigating poverty, making it crucial to explore its operational effectiveness and performance within Muslim-majority nations. This research is centered on examining the efficiency and impact of Islamic microfinance in alleviating poverty across Indonesia. Employing a quantitative approach, the study utilizes Data Envelopment Analysis (DEA) to evaluate efficiency and panel data regression to determine effectiveness, drawing on data from 144 Islamic rural banks across 21 provinces. Initially, the results indicate that only 12 of these banks are performing efficiently, with the remaining banks showing variable efficiency levels across different provinces. Factors influencing efficiency include urban infrastructure, the density of microfinance institutions (MFIs), regional disparities, and the size of the Muslim population. Furthermore, the study underscores a stronger emphasis on financial performance over social performance among Indonesian MFIs. Despite variations in scale, the narrow gap between financial and social performance underscores the institutions' dedication to both sustainability and social objectives, aligning with the institutionalist perspective that influences sector practices in the region. Additionally, the analysis of effectiveness reveals critical insights. A notable inverse relationship between Total Financing (TF) and poverty levels highlights the importance of enhancing financial inclusion and expanding access to credit. Moreover, the management of Non-Performing Financing (NPF) emerges as crucial, correlating directly with rising poverty levels. The study also notes regional variations in how Financial Efficiency (FE) impacts poverty, emphasizing the need for targeted inflation management to support sustainable poverty reduction efforts. Universiti Malaysia Sarawak 2024-10 Thesis http://ir.unimas.my/id/eprint/46421/ http://ir.unimas.my/id/eprint/46421/3/Thesis%20PhD_Arif%20Rahman%20Hakim.pdf text en validuser phd doctoral Universiti Malaysia Sarawak Faculty of Economics and Business
institution	Universiti Malaysia Sarawak
collection	UNIMAS Institutional Repository
language	English
topic	HB Economic Theory HG Finance
spellingShingle	HB Economic Theory HG Finance Arif Rahman, Hakim Efficiency and Effectiveness of Islamic Microfinance toward Poverty Alleviation in Indonesia
description	In the past few decades, Islamic microfinance has become pivotal in mitigating poverty, making it crucial to explore its operational effectiveness and performance within Muslim-majority nations. This research is centered on examining the efficiency and impact of Islamic microfinance in alleviating poverty across Indonesia. Employing a quantitative approach, the study utilizes Data Envelopment Analysis (DEA) to evaluate efficiency and panel data regression to determine effectiveness, drawing on data from 144 Islamic rural banks across 21 provinces. Initially, the results indicate that only 12 of these banks are performing efficiently, with the remaining banks showing variable efficiency levels across different provinces. Factors influencing efficiency include urban infrastructure, the density of microfinance institutions (MFIs), regional disparities, and the size of the Muslim population. Furthermore, the study underscores a stronger emphasis on financial performance over social performance among Indonesian MFIs. Despite variations in scale, the narrow gap between financial and social performance underscores the institutions' dedication to both sustainability and social objectives, aligning with the institutionalist perspective that influences sector practices in the region. Additionally, the analysis of effectiveness reveals critical insights. A notable inverse relationship between Total Financing (TF) and poverty levels highlights the importance of enhancing financial inclusion and expanding access to credit. Moreover, the management of Non-Performing Financing (NPF) emerges as crucial, correlating directly with rising poverty levels. The study also notes regional variations in how Financial Efficiency (FE) impacts poverty, emphasizing the need for targeted inflation management to support sustainable poverty reduction efforts.
format	Thesis
qualification_name	Doctor of Philosophy (PhD.)
qualification_level	Doctorate
author	Arif Rahman, Hakim
author_facet	Arif Rahman, Hakim
author_sort	Arif Rahman, Hakim
title	Efficiency and Effectiveness of Islamic Microfinance toward Poverty Alleviation in Indonesia
title_short	Efficiency and Effectiveness of Islamic Microfinance toward Poverty Alleviation in Indonesia
title_full	Efficiency and Effectiveness of Islamic Microfinance toward Poverty Alleviation in Indonesia
title_fullStr	Efficiency and Effectiveness of Islamic Microfinance toward Poverty Alleviation in Indonesia
title_full_unstemmed	Efficiency and Effectiveness of Islamic Microfinance toward Poverty Alleviation in Indonesia
title_sort	efficiency and effectiveness of islamic microfinance toward poverty alleviation in indonesia
granting_institution	Universiti Malaysia Sarawak
granting_department	Faculty of Economics and Business
publishDate	2024
url	http://ir.unimas.my/id/eprint/46421/3/Thesis%20PhD_Arif%20Rahman%20Hakim.pdf
_version_	1818611698022481920

Efficiency and Effectiveness of Islamic Microfinance toward Poverty Alleviation in Indonesia

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