IJARAH ASSET CONTRACT: A PRODUCT INNOVATION FOR ISLAMIC MICROFINANCE

Islamic Microfinance Institutions Micro Small and Medium Enterprises Product Innovation Islamic Financing Contract

Authors

  • Umrotul Khasanah
    um_amana@pbs.uin-malang.ac.id
    Islamic Economics Department, Faculty of Economics, Universitas Islam Negeri Maulana Malik Ibrahim, Indonesia
  • Ahmad Tibrizi Soni Wicaksono Islamic Economics Department, Faculty of Economics, Universitas Islam Negeri Maulana Malik Ibrahim, Indonesia
  • Alvi Rahmawati College of Business, University of Utara Malaysia, Malaysia
June 30, 2025

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This research aims to develop a tool for assessing the potential of ijarah asset contract model as a product offered by Islamic Microfinance Institutions (IMFIs) to Micro, Small and Medium Enterprises (MSMEs) in Malang Regency, Batu City, and Malang City areas of Indonesia. In this context, a grounded theory is applied, including open, axial, and selective coding, as well as qualitative model analysis to report crucial factors for ijarah asset contract product at IMFIs. The results show that Sharia compliance is the most fundamental instrument, followed by trust, benefit, agreement, and tolerance based on the priority criteria. In addition, the relationship between instruments create the best implementation model in the forerunner of ijarah asset contract product. This research is carried out by determining the instrument of ijarah asset contract and explaining the relationship between instruments forming an implementation model. The development of fresh ijarah product innovations at IMFIs is conducted to facilitate asset leasing for MSMEs. A model is also proposed using the results as a benchmark for execution to minimize the potential for unsuccessful outcomes.