Sharia Economy, Islamic Financial Performance and Factors That Influence It—Evidence from Indonesia

Abstract

The contribution of SMEs to economic growth is supported by the development of the sharia economy by the government, making SMEs one of the main pillars in Indonesia’s economic development. This study aimed to analyze the influence of the digital economy, financial literacy, human capital, the role of Islamic financial institutions, government support for strengthening the Islamic economy and the Islamic financial performance of SMEs in Makassar City, Indonesia. This study used a quantitative method with a survey approach. Data were obtained through questionnaires distributed to 350 respondents with a sampling method. The results of this study indicated that the strengthening of the sharia economy, the Islamic financial performance of SMEs, economic digitalization and financial literacy are determined by factors of human capital, the role of Islamic financial institutions and government support. Regarding human capital, the roles of Islamic financial institutions and government support affect the Islamic financial performance of SMEs with a coefficient of determination of 58.5%. Human capital, the role of Islamic financial institutions, government support and financial performance have a positive correlation with the strengthening of the sharia economy with a coefficient of determination of 71.6%. This study supports the improvement of government policies and the construction of financial facilities in improving the Islamic financial performance of SMEs and encourages the strengthening of the sharia economy in Makassar City, South Sulawesi, Indonesia. The limitation of this research is that the research object was only carried out on SMEs in Makassar City; thus, similar research can be increased at the national level to describe the strengthening of the sharia economy and the improvement of the financial performance of SMEs as a whole in Indonesia.

Analisis Efektivitas Perencanaan Anggaran Perguruan Tinggi Agama Islam dalam Mencapai Tujuan Strategis

“…Integrasi yang kuat antara aspek keuangan, manajerial, strategis, dan nilai-nilai agama dapat membantu meningkatkan kualitas perencanaan anggaran di institusi tersebut. Pengaruh konteks eksternal, termasuk regulasi pemerintah dan kondisi ekonomi, juga memainkan peran penting dalam proses perencanaan anggaran di perguruan tinggi agama Islam, seperti yang disoroti dalam penelitian literatur oleh Menne et al, (2023). Regulasi pemerintah yang berkaitan dengan pendanaan dan kebijakan pendidikan dapat mempengaruhi cara institusi merencanakan, mengalokasikan, dan menggunakan anggaran mereka.…”

Analyzing the Impact of Islamic Literacy, Technology, and Experience on MSME Performance: The Role of Spirituality as a Moderating Variable

“…In this context, Muslims must attain Islamic financial literacy (IFL), which entails the level of financial understanding necessary to adopt the best practices for serving humanity (Dinc et al, 2021). According to various research-based metrics for measuring financial literacy, Menne et al (2023) identified several indicators: knowledge of Islamic financial products, the ability to use financial products, the capability to prepare financial reports, and the ability to read financial reports. et al (2018) define "fintech" as the use of technology to enhance the efficiency of the financial system and the provision of financial services.…”

“…Consequently, it is essential for Muslims to possess Islamic financial literacy (IFL); they must have sufficient financial knowledge within an Islamic framework to behave ethically and idealistically for the benefit of humanity (Dinc et al, 2021). However, the low level of relevance indicates that MSMEs have not fully comprehended or leveraged Islamic financial literacy (Menne et al, 2023). Alharbi et al (2022) noted that due to the Islamic environment and business location, MSME managers only need a basic understanding of finance to develop their businesses effectively.…”