Analysis of the Impact of Sharia Financing on the Growth of Micro, Small, and Medium Enterprises (MSMEs)

Abstract

Sharia-compliant financing is increasingly emerging as a funding alternative for MSMEs. However, a deeper understanding of its impact on MSME growth still needs to be explored.The objective of this research is to analyze the impact of sharia financing on the growth and development of MSMEs in certain regions.This research method uses a qualitative method with a case study approach through in-depth interviews and observations of MSME actors who receive sharia financing and managers of sharia financial institutions in several regions.The research results show that Sharia financing has a positive impact on MSME growth, such as increased working capital, market expansion, and business sustainability. Furthermore, the implementation of Sharia principles also increases MSME trust and loyalty towards Sharia financial institutions.This study concludes that Islamic financing plays a crucial role in driving MSME growth, particularly in improving access to capital and business sustainability. Policy support and increased Islamic financial literacy are essential.