Economics, Business, Accounting & Society Review

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

Faiz Aqila Izura Atanta Berampu — 2026-02-16

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.

Capital Expenditure, Audit Opinion and Fiscal Autonomy under Fiscal Decentralization: Evidence from Indonesian Provinces

Amelia Hamdani Putri — 2026-02-16

Despite the expansion of fiscal decentralization in Indonesia, provincial governments remain structurally dependent on central government transfers, raising concerns about the substantive achievement of fiscal autonomy. However, prior research largely conflates compliance-based accountability indicators with development-oriented fiscal mechanisms, leaving underexplored how capital expenditure and audit opinion differentially shape fiscal independence. This study aims to examine the distinct roles of capital expenditure and audit opinion in explaining provincial fiscal autonomy under an agency theory framework. Using secondary data from 34 Indonesian provinces over the period 2021–2023 (102 observations) and employing multiple linear regression analysis, this paper tests the effects of development-oriented fiscal allocation and compliance-based monitoring on the fiscal independence ratio. The findings indicate that capital expenditure has a positive and significant effect on fiscal autonomy, suggesting that discretionary investment in infrastructure and public assets enhances long-term revenue capacity. In contrast, audit opinion exhibits a significant but negative association, indicating that compliance with reporting standards does not necessarily translate into stronger fiscal independence. These results highlight the conceptual distinction between monitoring mechanisms and fiscal discretion in decentralized systems. This study contributes to public sector accounting and fiscal decentralization literature by clarifying that accountability compliance and development-oriented fiscal decisions operate through different mechanisms in shaping regional financial performance. Practically, the findings inform policymakers to integrate audit-based evaluations with strategic capital allocation in advancing sustainable fiscal autonomy.

Frugal Innovation as a Mediating Mechanism between Strategic Flexibility, Sustainability Orientation, and Operational Performance

Achmad Labanie — 2026-02-16

Recent studies recognize innovation as a critical pathway for strengthening SME competitiveness and resilience. This study investigates how food and beverage SMEs improve operational performance by transforming strategic flexibility and sustainability orientation into practical, cost-efficient innovation practices. In highly competitive and resource-constrained environments, SMEs must balance efficiency, adaptability, and increasing sustainability expectations. The research focuses on frugal innovation as a pragmatic approach that emphasizes simplicity, affordability, and optimal resource utilization in daily operations. A quantitative research design was employed using survey data collected from owners and operational managers of food and beverage SMEs in the Jabodetabek region. The constructs were measured using established Likert-scale instruments adapted from prior studies. Data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM), which enables simultaneous assessment of measurement reliability and structural relationships among variables. This approach allows for examining both direct and indirect effects within a mediation framework. The findings indicate that strategic flexibility and sustainability orientation contribute to the development of frugal innovation practices. In turn, frugal innovation significantly enhances operational performance by improving efficiency, reducing operational waste, and strengthening process effectiveness. The results confirm that performance improvements emerge when strategic intentions are translated into concrete, resource-aware innovations. This study contributes by providing empirical evidence that frugal innovation serves as a practical mechanism linking strategic orientation to superior operational outcomes in resource-constrained SMEs.