Research Article
The Determinant of Non-Performing Financing on Micro, Small and Medium Enterprises (MSME) Financing of Islamic Banking in Indonesia
@INPROCEEDINGS{10.4108/eai.21-9-2019.2293967, author={Hayet Hayet and Eddy Suratman}, title={The Determinant of Non-Performing Financing on Micro, Small and Medium Enterprises (MSME) Financing of Islamic Banking in Indonesia}, proceedings={Proceedings of the 1st Conference on Islamic Finance and Technology, CIFET, 21 September, Sidoarjo, East Java, Indonesia}, publisher={EAI}, proceedings_a={CIFET}, year={2020}, month={5}, keywords={non-performing financing inflation exchange rates and economic growth}, doi={10.4108/eai.21-9-2019.2293967} }- Hayet Hayet
Eddy Suratman
Year: 2020
The Determinant of Non-Performing Financing on Micro, Small and Medium Enterprises (MSME) Financing of Islamic Banking in Indonesia
CIFET
EAI
DOI: 10.4108/eai.21-9-2019.2293967
Abstract
The financing provided by Islamic Banks in the Micro, Small and Medium Enterprises (MSME) sector has a high risk of default. The risk is influenced by internal and external conditions. The purpose of this study was to determine the effect of economic growth, inflation and the exchange rate on non-performing financing (NPF) on MSME Sharia Banking sector financing in Indonesia during 2010-2019. This study uses secondary data (time series) with multiple linear regression analysis approaches. The partial test results show that inflation has a positive and significant effect on the problematic financing of MSMEs. This was caused by an increase in inflation that occurred which led to an increase in MSME production costs. The exchange rate has a negative and significant effect on MSME financing problems. The depreciating rupiah exchange rate causes the price of MSME products to be cheaper in foreign markets which increases income from exports. Economic growth has a negative and insignificant effect on MSME financing problems. Indonesia's economic growth is driven by the household consumption sector so it tends to have a less double impact on the economy.