The impact of sharia peer-to-peer lending financing on the business performance of Islamic micro enterprises: Case study of PT. Ammana Fintek Syariah

Pramesti Dyavi Tamara, Rahmatina Awaliah Kasri

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

Abstract

Funding assistance from non-bank financial institutions such as the Peer-to-Peer (P2P) lending platform is needed by microenterprises in order to improve their quality of life. Unlike banks, through the P2P platform, applicants can receive business capital easily and without complicated requirements. This is especially important for Islamic Micro Enterprises (IMEs) in Indonesia which are strongly constrained by a lack of financing from both conventional and Islamic banks. Therefore, this study aims to examine the impacts of sharia P2P lending on the business performance of IMEs in Indonesia, based on a case study of PT. Ammana Fintek Syariah (Ammana). Until mid 2019, Ammana is the pioneer and the only sharia P2P lender providing financial support to IMEs in Indonesia. The study collected primary data from Ammana loan customers and employed a multivariate regression model to examine the relationships between the amount of financing and the IMEs business performance. The main findings show that the amount of financing provided by the Islamic P2P lending and family involvement in managing the micro businesses have a positive effect on the IMEs’ profits. Contrastingly, having too many employees has a negative effect on the profits. Age, education and competition do not significantly impact profits. Overall, the study suggests that Islamic P2P lending indeed plays a positive role in the IME business performance in Indonesia. The bigger the loan, the greater is the impact. The results are expected to provide insights in developing Islamic P2P lending in Indonesia and ultimately enrich empirical literature regarding contemporary Islamic finance.

Original languageEnglish
Title of host publicationResearch on Firm Financial Performance and Consumer Behavior
PublisherNova Science Publishers, Inc.
Pages21-35
Number of pages15
ISBN (Electronic)9781536180206
Publication statusPublished - 1 Jan 2020

Keywords

  • Ordinary least square
  • Peer-to-peer lending
  • Sharia peer-to-peer lending financial technology
  • Small and micro enterprises

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