The Role of Internal Control System in Islamic Microfinance Cooperatives for Micro and Small Enterprises

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Abstract

The lack of knowledge and the weakness in control and monitoring systems are two problems that hamper the majority of Islamic Microfinance Cooperative institutions (IMC) in Indonesia. To solve this problem, this study aims to discover a proper scheme of credit-risk management that is applicable to several IMCs in different areas. Furthermore, this study also investigates the role of internal control systems in organizing operational risks. Conducting in-depth interviews (IDI) and focus group discussions (FGD) in Jakarta, West Java, and South Sulawesi, this study employs content analysis to understand the scheme of credit-risk management and the hierarchy of intensity of internal control levels. It reveals the general scheme of credit risk management in Islamic microfinance in Indonesia. It also reveals the loan repayment behavior by internal control order.
Original languageEnglish
Pages (from-to)113-136
JournalInternational Journal of Business Anthropology
Volume7
Issue number1
Publication statusPublished - 1 Dec 2017

Keywords

  • Credit risk management, Internal control system, Islamic microfinance, Micro and small enterprises, Poverty, Qualitative study

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