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Purpose This study aims to design appropriate micro-fintech models for Islamic microfinance institutions (IMFIs), especially Baitul Maal wat Tamwil (BMT) in Indonesia, thus enabling BMT to combine Islamic social and commercial microfinance optimally. Design/methodology/approach This study uses the analytic network process and Delphi methods, with three groups of experts as the respondents, namely, academician-regulators, BMT practitioners and Fintech practitioners. Findings The first results show that the micro-fintech tools needed by IMFI/BMT are digital banking, payment, peer-to-peer (P2P) financing, P2P social and e-commerce. These could be developed by a BMT alone or with an APEX or Association, which could also collaborate with an existing fintech company that specialises in micro-fintech, applying the offline to online approach. This means that commercial funding, as well as social fundraising of zakat and waqf, would be conducted online, whereas commercial financing for micro and small enterprise customers and the disbursement of zakat and waqf would be conducted offline. The second results show that the limited open ecosystem and hybrid ecosystem are the most appropriate micro-fintech ecosystems for IMFIs/BMT, with various alternative models. In addition, the private closed ecosystem preferred by BMT would be feasible if all criteria show improvement in the future. Research limitations/implications This study is qualitative in nature. The methods used have limitations, meaning the models could be improved by incorporating other methods. Moreover, the case and respondents are all Indonesian, which means that the results may only be applicable to BMTs in Indonesia. Practical implications A BMT and/or BMT association could immediately apply micro-fintech with a limited open ecosystem, while in the future, they could apply micro-fintech with a private closed ecosystem. Social implications The micro-fintech model could be used to optimise the collections of zakat, infaq and waqf, meaning BMT could provide more social programmes for those in need. Originality/value The growth of fintech in Islamic microfinance has occurred only recently, while only a limited number of studies have been conducted; therefore, no study exists on the development of a micro-fintech model appropriate for IMFIs, especially BMT.

Faced with a persistent pandemic, investors are concerned about portfolio diversification. While the literature on COVID-19 has evolved impressively, limited work remains on diversification opportunities. We contribute to the literature by exploring the volatility and co-movement of different sovereign debt instruments, including green sukuk, sukuk, bond and Islamic and conventional equity indices for Indonesia. Our results consistently point towards increased asset co-movement and weak profitability during the pandemic. Interestingly, sukuk and green sukuk have a 14% correlation with stocks, suggesting potential diversification prospects in times of extreme shocks.

The purpose of this paper is to examine how to use first order M arkov chain to build a reliable monitoring system for the profit-loss sharing based contracts (PLS) as the mode of financing contracts in Islamic bank with censored continuous -time observations. The paper adopts the longitudinal analysis with the first order M arkov chain framework. Laplace transform was used with homogenous continuous time assumption, from discretized generator matrix, to generate the transition matrix. Various metrics, i.e.: eigenvalue and eigenvector were used to test the first order M arkov chain assump tion. Cox semi parametric model was used also to analyze the momentum and wait ing time effect as non-M arkov behavior. The result shows that first order M arkov chain is powerful as a monitoring tool for Islamic banks. We find that waiting time negatively affected present rating downgrade (upgrade) significantly. Likewise, momentum covariate showed negative effect. Finally, the result confirms that different origin ratings have different movement behavior. The paper explores the potential of M arkov chain framework as a risk management tool for Islamic banks. It provides valuable insight and integrative model for banks to manage their borrow er accounts. This model can be developed to be a powerful early warning system to identify which borrower needs to be monitored intensively. Ultimately, this model could potentially increase the efficiency, productivity and competitiveness of Islamic banks in Indonesia. The analysis used only rating data. Further study should be able to give additional information about the determinant factors of rating movement of the borrowers by incorporating various factors such as contract-related factors, bank-related factors, borrower-related factors and macroeconomic factors.