Price rationing in Islamic Cooperatives Institutions (challenges and solutions to poverty reduction in Indonesia)

A primary focus of this study is to highlight the suggested solutions from Islamic cooperatives practitioners to overcome the challenges in the practice of price rationing assessment in three Bottom of the Economic Pyramid (BOP) regions, namely Daerah Istimewa (DI) Yogyakarta, Nusa Tenggara Barat (NTB) and Makassar, Indonesia. A total of 26 Islamic cooperatives Institutions (MFIs) in Indonesia were chosen based on purposive sampling methods. An in-depth interview was developed to profile the data related to the suggested solution. This study found evidence that Baitul Maal Wa Tamwil (BMT) has a higher margin than commercial and rural banks. The problem of higher margin is fixed through reducing margin (giving special margin for loyal consumers, seeking a channelling bank with lower margin, giving an option of margin negotiation and increasing financing distribution) and giving rationalization to customers of the benefit associated with a high margin (giving value to the product, increasing the level of sharia understanding and good communication of margin).