Islamic Fintech Growth Prospects in Accelerating MSMEs Growth: Evidence in Indonesia

Abstract

Islamic fintech plays a role in encouraging the growth of MSMEs in Indonesia with its financing segment. The more Islamic fintech develops, the faster the growth of MSMEs in Indonesia will be. This study aims to identify macroeconomic factors such as gross domestic product (GDP), interest rates, and inflation in encouraging the growth of Islamic fintech. Using the OLS regression method, the results show that GDP has a positive effect on the growth of Islamic fintech, while interest rates have a negative effect on the growth of Islamic fintech. Improving macroeconomic conditions will encourage the growth of Islamic fintech which will ultimately contribute to the growth of MSMEs which are the main segment of Islamic fintech financing. In general, the growth of Islamic fintech assets in Indonesia tends to decline in line with the decline in GDP during the Covid-19 pandemic period. However, fintech assets can still grow, supported by declining interest rates and other factors such as the growth of the digital ecosystem in Indonesia.