Roles of Islamic Microfinance Institutions in Improving Financial Inclusion in Indonesia: Empirical Evidence from Baitulmaal wa Tamwil

Abstract

This research aims to answer and investigate the roles of Islamic microfinance institutions (IMFIs) in improving financial inclusion in Indonesia by taking three regions, namely, Jakarta, Bogor, Depok, Tangerang and Bekasi (JABODETABEK) area; Daerah Istimewa (DI) Yogyakarta area; and Nusa Tenggara Barat (NTB) area as samples. The results will demeanour the roles of IMFIS in improving financial inclusion. Only managers of the IMFIs are taken as respondents since they are the decision makers and have clear understanding of the mission of the IMFIs, thus are practically responsible for achieving IMFIs objectives by anticipating issues and regulatory changes. A complete of 481 managers of Baitulmaal Wa Tamwil (BMTs) which administered under the Sharia Cooperative Centre (INKOPSYAH) involved in the study. Qualitative method were approached in this research for determining the variables in advancing model.  Two mechanisms were developed in the data collection; the first mechanism involved a survey questionnaire, and the second mechanism involved in-depth interview so as to outline data related to the model design. The findings of this research occurred current issues and challenges in increasing the roles of IMFIs in improving financial inclusion. The results also highlight recommendations for BMTs and policy makers that simultaneously collaborate the regulations and the implementations for improving financial inclusion in Indonesia.