Beyond Subsidized Credit: Sharia-Compliant Microfinance as a Catalyst for Inclusive MSME Growth

Faiz Aqila Izura Atanta Berampu; Nurbaiti Nurbaiti; Atika Atika

doi:10.55980/ebasr.v5i1.361

Authors

Faiz Aqila Izura Atanta Berampu Faculty of Islamic Economics and Business, State Islamic University of North Sumatra, Medan, Indonesia
Nurbaiti Nurbaiti Faculty of Islamic Economics and Business, State Islamic University of North Sumatra, Medan, Indonesia
Atika Atika Faculty of Islamic Economics and Business, State Islamic University of North Sumatra, Medan, Indonesia

DOI:

https://doi.org/10.55980/ebasr.v5i1.361

Keywords:

Sharia-compliant microfinance , Entrepreneurial Sustainability , Social Impact Finance , MSME Growth

Abstract

This study investigates whether Sharia-compliant KUR (Credit program) distributed by Bank Syariah Indonesia (BSI) functions merely as subsidized financing or as a strategic instrument for inclusive and sustainable MSME growth. Despite the recognized importance of KUR in supporting small enterprises, limited research has examined its impact within a Sharia-compliant framework that integrates ethical finance principles with microenterprise growth. Addressing this gap, the study employs an explanatory sequential mixed-methods design combining quantitative analysis and qualitative interviews with MSME actors in Medan City. Quantitative findings reveal a significant positive effect of Sharia-compliant microfinance on MSME growth, particularly in terms of revenue growth, employment expansion, and business stability. MSMEs receiving Sharia-compliant microfinance demonstrate stronger performance and higher resilience compared to non-recipients. Qualitative insights further indicate that beyond financial capital, the program enhances entrepreneurial confidence, strategic planning capacity, and optimism in navigating post-pandemic economic challenges. The murabaha-based financing mechanism and ethical, interest-free structure contribute to increased trust and perceived fairness among beneficiaries. The study contributes to the microfinance dual mission debate by demonstrating that Sharia-compliant microfinance reconciles financial sustainability with social outreach. It extends microfinance theory beyond liquidity provision by integrating ethical finance principles with MSME growth dynamics. The findings suggest that Sharia-compliant microfinance can serve as a transformative development instrument, fostering inclusive growth, employment generation, and sustainable regional economic development.

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