Do Islamic fintech lending promote microenterprises performance in Indonesia? Evidence of difference-in-difference model

• Published in: International Journal of Islamic and Middle Eastern Finance and Management
• Main Author: Kholidah H.; Fianto B.A.; Herianingrum S.; Ismail S.; Mohd Hidzir P.A.
• Format: Article
• Language: English
• Published: Emerald Publishing 2024
• Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85210372116&doi=10.1108%2fIMEFM-08-2023-0310&partnerID=40&md5=c17b2b3c0f1d98cbe32003acadf10484

Purpose: This study aims to investigate the impact of Islamic fintech lending on the performance of microenterprises in Indonesia. Design/methodology/approach: This study conducted a survey involving 400 microenterprises located in East Java, Indonesia. This investigation used a two-year panel data set and used the double differences-in-differences (DID) approach for rigorous analysis, including both standard DID and adjusted DID. Findings: The findings demonstrate that microenterprises benefiting from Islamic fintech lending witnessed significant growth in their annual revenue, indicating a positive impact of Islamic fintech on their performance. In addition, these microenterprises showed an increase in the number of employees, suggesting improved business expansion and sustainability due to access to Islamic fintech lending services. Research limitations/implications: This study’s limitations arise from its focus on a specific region and time frame. However, recognizing potential future developments enhances its relevance and applicability within Islamic finance literature. Practical implications: This study offers valuable insights for microentrepreneurs, Islamic fintech platforms, policymakers and regulators, helping them make informed decisions and support the microenterprise sector in Indonesia. Originality/value: This study brings new insights and adds value by examining the unique relationship between Islamic fintech lending and microenterprise performance, which can contribute to better understanding and decision-making in this field. © 2024, Emerald Publishing Limited.