The Role of Islamic Banks in Improving Small and Medium Enterprises

Abstract

The goals of this research are as follows: (1) to determine the role of Islamic banking in increasing Small and Medium Enterprises in Palembang, (2) to determine the efforts made by Islamic Banks in increasing Small and Medium Enterprise financing, (3) to determine the obstacles faced by the Sumsel Babel Bank. Sharia in increasing Small and Medium Enterprises, and (4) to determine how MSMEs benefit from collaboration with Bank Sumsel Babel Syariah in financing. This study is qualitative in nature. There were four employees interviewed as responses. The study's findings were as follows: 1) Bank Sumsel Babel Muhammadiyah Sub-branch provides cash collateral loans to business actors with the goal of increasing micro, small, and medium firms. The Sumsel Babel Syariah Bank's current role is to aid the MSME sector. 2) Efforts to boost MSME financing, Bank Sumsel Babel Syariah increase sharia finance with profit-sharing contracts such as mudharabah or musyarakah to be provided to the general public and used to carry out business activities in the MSME sector; 3) Obstacles encountered by the Sumsel Babel Syariah Bank in expanding small and medium businesses, namely unqualified sources of funds, human resources, and technology, as well as arrears in repayment of borrowing cash funds from business actors, and 4) MSMEs take advantage of borrowing funds from the Syariah Sumsel Babel Bank.