ANALYSIS OF THE DETERMINANTS OF MSME FINANCING IN ISLAMIC BANKING
Isi Artikel Utama
Abstrak
Although Micro, Small and Medium Enterprises (MSME) financing provided by Islamic banks in Indonesia has continued to increase in nominal terms, its growth rate has gradually slowed, highlighting the need to examine the macroeconomic factors influencing financing distribution. This study aims to analyze the effects of the Manufacturing Purchasing Managers' Index (PMI), BI-7 Day Reverse Repo Rate (BI7DRR), Bank Indonesia Sharia Deposit Facility (FASBIS), and inflation on MSME financing by Islamic banks in Indonesia. The study is grounded in the Islamic Banking Intermediation Theory and Monetary Policy Theory, which explains that macroeconomic conditions influence the intermediation function of Islamic banks in channeling financing to the real sector. A quantitative approach was employed using secondary data for the 2020–2025 period obtained from the Financial Services Authority (OJK), Bank Indonesia (BI), Statistics Indonesia (BPS), and Standard and Poor's Global (S&P) Global. The data were analyzed using panel data regression, with the Random Effect Model (REM) selected as the most appropriate model based on the Chow, Hausman , and Lagrange Multiplier tests. The results indicate that the Manufacturing PMI has a positive and significant effect on MSME financing, while the BI-7 Day Reverse Repo Rate (BI7DRR) has a negative and significant effect. FASBIS has a negative but insignificant effect, whereas inflation has a negative and significant effect on MSME financing in Indonesian Islamic banks. These findings imply that stronger manufacturing activity encourages MSME financing, while tighter monetary policy and higher inflation tend to reduce financing distribution. Meanwhile, FASBIS has not been proven to significantly influence MSME financing
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