Mislan Cokro, Widiyanto and Ismail, Abdul Ghafar (2008): Sustainability of BMT financing for Developing Micro-enterprises.
Download (270kB) | Preview
The aim of this study is to analyze the sustainability of Islamic micro-financing for developing micro-enterprises (ME). We use the sample of Baitul Mal Wat Tamwil (BMT), as Islamic microfinance institution in Indonesia. Two approaches will be used to explore the sustainability, i.e., technical efficiency (using data envelopment analysis (DEA) and level of outreach. The results indicate that: first, generally the efficiency of BMTs is relatively low. Scale efficiency also indicates that BMTs are operated still far from optimal scale. The results suggest that there is gap in efficiency scores obtained from CCR and BCC models. This indicates that BMTs still face the managerial problems. Second, Islamic micro-financing is useful for developing micro-enterprises and contribute a great social benefits to the society in several ways. Although the profitability efficiency of BMTs is relatively low, since generally BMTs have made a profit and social benefit, Islamic financing can be predicted to be sustainable – able to provide viable Islamic financing.
|Item Type:||MPRA Paper|
|Original Title:||Sustainability of BMT financing for Developing Micro-enterprises|
|Keywords:||Sustainability, technical efficiency of profitability efficiency, level of outreach|
|Subjects:||G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages|
|Depositing User:||Abdul Ghafar Ismail|
|Date Deposited:||28. Feb 2009 11:47|
|Last Modified:||11. Feb 2013 16:50|
Afrane, S. 2003. Impact Assessment of Microfinance Intervention in Ghana and South Africa. Journal of Microfinance Vol.4 No.1: 37-58.
Akram Khan, M. (undated) Economic Teachings of Prophet Muhammad (pbuh). Pakistan: Darul-Ishaat.
Anderson, C.L., Locker, L. and Nugent, R. 2002. Microcredit, Social Capital, and Common Pool Resourcess. World Development. Vol.30 No.1: 95-105.
Anderson, T. 1996. A Data Envelopment Analysis (DEA) Home Page. http://www.emp.pdx.edu/dea/homedea.html. Accessed on 26 April 2005.
Attaullah, A., Cockerill, T., Le, H. Financial liberalization and bank efficiency: a comparative analysis of India and Pakistan. Applied Economics. No.36: 1915-1924.
Barr, R.S., Killogo, K.A., Siems, T.F., Zimmel, S. 2002. Evaluating the productive efficiency and performance of U.S. commercial banks. Managerial Finance. Vol.28 Iss.8: 3-26.
Bellalah, M and Ellouz, S. 2004. Islamic Finance, Interest Rate and Islamic Banking: A Survey of the Literature. Finance India. Vol. XVIII: 533-546.
Brau, J.C and Woller, G.M. (2004) Microfinance: A Comprehensive Review of the Existing Literature and an Outline for Future Financial Research. Forthcoming in Journal of Entrepreneurial Finance and Business Ventures. Budiantoro, S. Financial Reform untuk Keuangan Mikro. Republika Jumat 4 Juni 2004: 4.
CAMEO. 2004. Fact About SB 1156: Promoting Micro-enterprise. http://www.microbiz.org/html/article_sb1156.htm. Accessed on 22 Pebruary 2005. Chapra, M.U. 1985. Toward a Just Monetary System. London : The Islamic Foundation.
Cherchye, L., Post, T. 2001. Methodological Advances in DEA: A Survey and Application for the Dutch Electricity Sector. https://ep.eur.nl/retrieve/112/erimrs20010921133001.pdf. Accessed on 29 April 2005.
Coelli, T. 1996. A Guide to DEA Version 2.1: A Data Envelopment Analysis (Computer) Program. http://www.une.edu.au/econometrics/cepa.htm. Accessed on 07 March 2005.
Doyle, K. and Black, J. 2002. Performance Measures for Microenterprise in the United States. Journal of Microfinance. Vol.3 No.1: 19-43.
Dumairy. 1990. Program dan Pemilihan Kelompok Sasaran Dalam Kredit Pedesaan. In Kredit Pedesaan di Indonesia, ed. Mubyarto, and E.S. Hamid, pp125-139. Yogyakarta: BPFE. European Commission. 2003. Microcredit for small business and business creation: bridging a market gap. http://europa.eu.int/comm/enterprise/entrepreneurship/financing/docs/microcredit_reprort_en.pdf. Accessed on 23 March 2005.
Gaika, R. 2002. Micro-credit and the Rural Poor, A Review of Maharashtra Rural Credit Project. Journal of Microfinance Vol.3 No.2: 125-153.
Golany, B., Phillips, F.Y., Rousseau, J.J. 1993. Model for Improved Effectiveness Based on DEA Efficiency Results. IIE Transaction. Vol.25 No.6: 2-11.
Greeley, M. 2003. Sustainability and Poverty Outreach : Trade –Off Issues. www.ids.ac.uk/impact/Publication/Programme. Accessed on 15 Oct. 2004.
Gregoriou, G., Messier, J., Sedzro, K. 2004. Assessing the Relative Efficiency of Credit Unionbranches Using Data Envelopment Analysis. INFOR. Vol.42 No.4: 281-297.
Hamze, I.A. 2001. The Role Of Microcredit in Poverty Alleviation: Profile of the Mcrocredit Sector in Lebanon. Eradicting Poverty Studies Series. No.21 : 1-110. ICC. 2001. Financial Sustainability of Micro Saving and Credit Scheme : Three Option for Multi Sectoral NGOs. www.cmfnet.org.za/Library.htm. Accessed on 15 Oct 2004.
Jemric, I., Vujcic, B. 2002. Efficiency of Banks in Croatia: A DEA approach. Comparative Economic Studies. Vol.44 No.2/3: 169-193.
Khalily, M.A.B. 2004. Quantitative Approach to Impact Analysis of Microfinance Programmes in Bangladesh- What Have We Learn ?. Journal of International Development. Vol.16 No.4; 331-353.
Khandker, S.R. 2003. Microfinance of Poverty: Evidence using panel data from Bangladesh. World Bank Policy Reserch Working Paper 2945.
Krivonoshko, V.E., Utkin, O.B., Volodin, A.V., Sablin, I.A. 2002. Interpretation of Modeling Results in Data Envelopment Analysis. Managerial Finance. Vol.28 No.9: 37-47.
Kuntjoro. 1983. Identifikasi Faktor-Faktor Yang Mempengaruhi Pembayaran kembali Kredit Bimas (Studi Kasus di Kabupaten Subang Jawa Barat). Disertasi, Institut Pertanian Bogor, Indonesia.
Lee,T.S., Chiu,C.C., Lu, C.J and Chen, I.F. 2002. Credit scoring using the hybrid neural discriminant technique. Expert System with Applicant. Vol.23 No.3: 245-254.
Leong, W.H., Dollery, B., Coelli, T. 2003. Measuring the Technical Efficiency of Banks in Singapore for the Period 1993-99: An Application and Extention of Bauer et al. (1997) Technique. ASEAN Economic Bulletin. Vol.20 Iss.3: 195 – 211.
Luo, X. 2003. Evaluating the profitability and marketability efficiency of large banks An application of data envelopment analysis. Journal of Business Research. No.56: 627-635.
Manzoor, N. 1999. Islamic Economic A Welfare Approach. Delhi: Adam Publisher & Distributors.
Marr, A. 2002. Studying Group Dynamics : An Alternative Analytical Framework for the Study of Microfinance Impact on Poverty Reduction. Journal of International Development. Vol.14 No. 4: 511-534.
Mas’udi, M.F. 1993. Agama Keadilan Risalah Zakat Dalam Islam. Jakarta: P3M.
McGuire, P.B. 1999. Policy and Regulation for Sustainable Microfinance: Country Experiences in Asia. Journal of International Development. Vol.11 No.5: 717-729. MDE. 2005. Vietnam-Netherlands Master In Developing Economics Program. http://www.mde.edu.vn/yen4.asp. Accessed on 01 Jun 2005.
Naqvi, S.N.H. 1981. Ethics and Economics An Islamic Synthesis. London: The Islamic Foundation.
Nieto, B.G., Cinca, C.S., Molinero, C.M. 2004. Microfinance Institutions and Efficiency. http://www.management.soston.ac.uk/reseach/publication/documents/AF04-20.pdf. Accessed on 05 Jun 2005.
Otero, M. 1998. Governance of Microfinance Institutions. http://www.undp.org/ods/areas/area-3/area-mm/otero3edit.doc. Accessed on 09 March 2005.
Park, R.K., De, P. 2004. An Alternative Approach to Efficiency Measurement of Seaports. Maritime Economics & Logistic. Vol.6 Iss.1: 53-66.
Patten, R., Rosengard, J., Johnston, D., Kusumo, W. 2003. Improving access to Financial Services for Low-Income Household and Microenterprises in Indonesia: The Potential for Further Development of Local Government-Owned Financial Institution. http://www.ksg.havard.edu/cbg/asia/rosengard_improving-access.pdf. accessed on 25 Jun 2005.
Periera, R.O. 2002. Microcredit Evaluating the Efficiency of Financial Institutions. http://www.federativo.bndes.gov.br/bf_bancos/estudos/e0001907.pdf. Accessed on 30 May 2005.
Pissarides, F., Nussambaumer, M., Gray, C. 2004. Sustainability of microfinance banks: the ultimate goal. http://www.ebrd.com/pubs/lawp/lit/03a/sustain.pdf. Accessed on 09 March 2005.
Pitt, M.M., Khandker, S.R. and Cartwright, J. 2003. Does Micro-credit Empowerment Women? Evidence from Bangladesh. World Bank Policy Research Working Paper 2998.
Puglielli, D. 2003. The World Bank and Microfinance: An elephan trying to build a bird nest. http://www.gdrc.org/icm/puglielli-paper.htm. Accessed on 28 December 2004. Quthb, Sayyid. 1994. Keadilan Sosial Dalam Islam (Terjemah: Muhammad, Affif). Bandung: Penerbit Pustaka.
Ramzan, A.K. 1997. Partnership financing of microenterprise. International Journal of Social. Vol.24 No. 12: 1470-1480.
Roberts, C.D. and Roberts, G.B. 2003. Techniques in Entrepreneurial Finance for Practitioners: Helping Entrepreneurs gain Access to Capital. http://www.aoef.org/papers/2003/roberts.pdf. Accessed on 05 February 2005. Schreiner, M. 1997. A Framework for the Analysis of the Performance and Sustainability of Subsidized Microfinance Organizations With Application to Bancosol of Bolivia and Grameen Bank of Bangladesh. Ph.D Dissertation, The Ohio State University.
Snow, D. 1999. Microcredit : An Institutional Development opportunity. International Journal of Economic Development. Vol . 1 (1): 65-79.
Soteriou, A., Zenios, S.A. 1999. Operation, Quality, and Profitability in the Provision of Banking Services. Management Science. Vol. 45 No. 9: 1221-1238.
Sowlati, T. 2005. Efficiency Studies in Forestry Using Data Envelopment Analysis. Forest Products Journal. Vol.55 No.1: 49-57.
USAID. 2001. USAID and Micro-enterprise Development. http://www.usaidmicro.org/About/. Accessed on 02 Jun 2005.
Woller, G. and Person, R. 2002. Assessing the Community Economic Impact of Microfinance Institutions. Journal of Developmental Entrepreneurship. Vol.7 No.2: 133-150.
Yaron, J. 1994. Successful Rural Finance Institution. Finance and Development. Vol.31 No.1: 32-35.