Determinants of Farmer’s Financing Participation in Sharia Microfinance Institutions

Dahlan Tampubolon, Mardiana Mardiana, Iriana Safitri Zen


This study aims to analyze the determinants of farmer participation in sharia microfinance institutions.  The study area covers Siak Regency and Bengkalis Regency, Riau Province. Respondents were taken as many as 30 respondents in Siak and 32 respondents in Bengkalis. The probit regression model is used to explain the factors that influence farmer participation in sharia microfinance institutions. Farmer loans are used for working capital, buying seeds and daily necessities. Most of the financing is wakalah wal mudhárabah and very few borrows in the form of wakalah wal musháraka. The results showed that the factors that influence farmer participation are education, dependency ratio, value of liquid assets owned, and farmers' income. The farther the farmer's house is from the location of the shariah microfinance institution, the less opportunity to participate. Other independent variables included in the model have no significant effect on farmers' opportunities to participate in sharia microfinance institutions in the two districts.


participation, sharia microfinance institutions, mudhárabah, musháraka

Full Text:



Abdul Razak, D., & Abdul-Wahab, A. (2018). Promoting a sharing economy in the Islamic finance industry: A study of selected OIC countries. International Journal of Islamic Economics and Finance, 1(1), 59–72.

Abdullah, M. W., Kadir, S., & Alaaraj, H. (2020). Sharia financial literation in developing sharia-based business for rural communities in South Sulawesi. Ikonomika: Jurnal Ekonomi Dan Bisnis Islam, 5(1), 117–140.

Addai, B., Gyimah, A. G., & Boadi Owusu, W. K. (2017). Savings habit among individuals in the informal sector: A case study of Gbegbeyishie Fishing Community in Ghana. International Journal of Economics and Finance, 9(4), 262–272.

Afkar, T. (2017). Influence analysis of mudharabah financing and qardh financing to the profitability of Islamic banking in Indonesia. Asian Journal of Innovation and Entrepreneurship, 2(3), 340–351.

Akram, K., Iqbal, M. A., & Hayat, M. M. (2020). ). The role of formal and informal credit in agriculture sector: A case study of District Faisalabad, Pakistan. Journal of Economic Impact, 2(3), 99–102.

Akudugu, M. A. (2016). Agricultural productivity, credit and farm size nexus in Africa: A case study of Ghana. Agricultural Finance Review, 76(2), 288–308.

Ali, M. M., Devi, A., & Bustomi, H. (2020). Determinants of Islamic financial exclusion in Indonesia. Journal of Islamic Monetary Economics and Finance. Journal of Islamic Monetary Economics and Finance, 6(2), 373–402.

Ameraldo, F., Saiful, & Husaini. (2019). Islamic banking strategies in rural area: Developing halal tourism and enhancing the local welfare. Ikonomika: Jurnal Ekonomi Dan Bisnis Islam, 4(1), 109 –136.

Anane, I., Zhang, Y., & Nie, F. Y. (2021). The sources of microfinance capital and its effects on farmers access to credit in Ghana. International Journal of Agricultural Science, 3(1), 112–128.

Anang, B. T., Sipiläinen, T., Bäckman, S., & Kola, J. (2015). Factors influencing smallholder farmers’ access to agricultural microcredit in Northern Ghana. African Journal of Agricultural Research, 10(24), 2460–2469.

Anggraeni, D. T. (2013). Faktor-Faktor yang Mempengaruhi Keterandalan Pelaporan Keuangan Pemerintah Daerah (Studi pada SKPD di Kabupaten Sidoarjo). Jurnal Ilmu Dan Riset Akuntansi, 3(3), 1–16.

Ariani, N., Yuyetta, E. N. A., & Hardiningsih, P. (2020). The supporting of sharia rural banks financing on national financial inclusion. International Journal of Islamic Business and Economics, 4(1), 40–50.

Asante-Addo, C., Mockshell, J., Siddig, K., & Zeller, M. (2017). Agricultural credit provision: What really determines farmers’ participation and credit rationing? The 5th International Conference of the African Association of Agricultural Economists, 1–25.

Asutay, M. (2013). Islamic moral economy as the foundation of Islamic finance. In V. Cattelan & E. Elgar (Eds.), Islamic Finance in Europe: Towards a Plural Financial System (pp. 55–69). Edward Elgar Publishing Limited.

Awunyo-Vitor, D., Al-Hassan, R. M., Sarpong, D. B., & Egyir, I. (2014). Agricultural credit rationing in Ghana: what do lenders look for? Agricultural Finance Review, 74(3), 364–378.

Bhanot, D., & Bapat, V. (2015). Sustainability index of microfinance institutions (MFIs) and contributory factors. International Journal of Social Economics, 42(4), 387–403.

Calomiris, C. W., Larrain, M., Liberti, J., & Sturgess, J. (2017). How collateral laws shape lending and sectoral activity. Journal of Financial Economics, 123(1), 163–188.

Chandio, A. A., & Jiang, Y. (2017). Determinants of Credit Constraints: Evidence from Sindh, Pakistan. Emerging Markets and Finance Conference, 54(15), 3401–3410.

Chandio, A. A., Jiang, Y., Wei, F., Rehman, A., & Liu, D. (2017). Farmers’ access to credit: does collateral matter or cash flow matter?–Evidence from Sindh, Pakistan. Cogent Economics and Finance, 5(1), 1–15.

Chen, X., Zeng, D., Zhang, H., & Kang, C. (2019). Farm expansion under credit constraint: evidence from commercial rice farmers in Guangxi, China. International Food and Agribusiness Management Association, 23(2), 1–13.

Chen, Z., & Jin, M. (2017). Financial inclusion in China: Use of credit. Journal of Family and Economic Issues, 38(2), 1–13.

Chisasa, J. (2016). Determinants of the demand for credit by smallholder farmers: survey results from South Africa. International Journal of Economic Policy in Emerging Economies, 9(1), 26–46.

Darwanto, Roessali, W., Woyanti, N., Salam, A. N., & Santosa, P. B. (2019). Sharia microfinance institutions financing model for strengthening agricultural sector. IOP Conf. Series: Earth and Environmental Science 292, 012016.

Das, T. (2018). Does credit access lead to expansion of income and multidimensional poverty? A study of rural Assam. International Journal of Social Economics, 26(2), 252–270.

Diaz-Serrano, L., & Sackey, F. G. (2018). Microfinance and credit rationing: does the microfinance type matter? Journal of Sustainable Finance & Investment, 8(2), 114–131.

Djoumessi, Y., Afari-Sefa, V., Kamdem, C., & Bidogeza, J. (2018). Socio-economic and institutional factors underlying efficiency of smallholder vegetable farms in Southwest region of Cameroon. International Journal of Social Economics, 45(1), 93–106.

Djoumessi, Y., Kamdem, C., Afari-sefa, V., & Bidogeja, J. (2018). Determinants of smallholder vegetable farmers credit access and demand in Southwest region, Cameroon. Economics Bulletin, Accessecon LLC. s.L., 38(2), 1231–1240.

Fakhrunnas, F. (2020). Total financing of Islamic rural banks and regional macroeconomic factors: A dynamic panel approach. Jurnal Ekonomi Dan Studi Pembangunan, 21(1), 1–15.

Fauzia, I. Y. (2015). Membangun ekonomi pedesaan dengan financial inclusion melalui lembaga keuangan shariah. An-Nisbah, 1(2), 181–198.

Fonke, J. B. (2021). Socio-economic factors determining rural household’s access to credit and amount of loan utilization for proposed action: The case of Omo Micro Finance. Journal of Economics and International Finance, 13(1), 58–63.

Hananu, B., Abdul-Hanan, A., & Zakaria, H. (2015). Factors influencing agricultural credit demand in Northern Ghana. African Journal of Agricultural Rresearch, 10(7), 645–652.

Hassan, M. T., Sattar, M. A., Tousif, M. A., Nasir, N., Sadiq, M., & Yasmeen, M. (2012). Role of Islamic banking in agriculture development in Bahawalpur, Pakistan. International Journal of Learning & Development, 2(3), 123 – 138.

Hemtanon, W., & Gan, C. (2020). Microfinance participation in Thailand. Journal of Risk and Financial Management, 13(122), 1–27.

Hendri, D. (2016). Shariah financing for farmers poverty reduction. JEBI (Jurnal Ekonomi Dan Bisnis Islam), 1(1), 33–51.

Henning, J. I., Bougard, D. A., Jordaan, H., & Matthews, N. (2019). Factors affecting successful agricultural loan applications: the case of a South African credit provider. Agriculture, 9(11), 243.

Ibrahim, A. H., & Bauer, S. (2013). Access to micro credit and its impact on farm profit among rural farmers in dryland of Sudan. Global Advanced Research Journal of Agricultural Science, 2(3), 88–102.

Jumpah, E. T., Osei-Asare, Y., & Tetteh, E. K. (2019). Do farmer and credit specific characteristics matter in microfinance programmes’ participation? Evidence from smallholder farmers in Ada West and East Districts. Agricultural Finance Review, 79(3), 353–370.

Juwana, H., Berlinti, Y. S., & Dewi, Y. K. (2014). Shariah law as a system of governance in Indonesia: The development of Islamic finance law. Wisconsin International Law Journal, 25(4), 774–795.

Khan, A., & Malik, M. S. (2020). Micro-financing: A comparative study of Bangladesh & Pakistan. Business and Economic Research, 10(3), 181–202. .v10i3.17225

Khasanah, U., Salim, U., Triyuwono, I., & Irianto, G. (2013). The practice of profit and loss sharing system for rice farmers in East Java , Indonesia. IOSR Journal of Business and Management, 9(3), 1–7.

Kosgey, Y. K. (2013). Agricultural credit access by grain growers in Uasin-Gishu County, Kenya. IOSR Journal of Economics and Finance, 2(3), 36–52.

Kumar, A., Das, R., Aditya, K. S., Bathla, S., & Jha, G. K. (2021). Examining institutional credit access among agricultural households in Eastern India: Trends, patterns and determinants. Agricultural Finance Review, 81(2), 250–264.

Lam, B. T., Hop, H. T., Burny, P., Dogot, T., Cuong, T. H., & Lebailly, P. (2019). Impacts of credit access on agricultural production and rural household’s welfares in Northern Mountains of Vietnam. Asian Social Science, 15(7), 119–133.

Leaman, O. (2015). Economics and Religion or Economics versus Religion: The Concept of an Islamic Economics. In R. T. Ames & P. . Hershock (Eds.), Value and Values (pp. 272–282). University of Hawaii Press. 10.1515/9780824854522-017

Linh, T. N., Tuan, D. A., Trang, P. T., Lai, H. T., Anh, D. Q., Cuong, N. V., & Lebailly, P. (2020). Determinants of farming households’ credit accessibility in rural areas of Vietnam: A case study in Haiphong City, Vietnam. Sustainability, 12(4357), 1–17.

Luan, X. D., & Bauer, S. (2016). ). Does credit access affect household income homogeneously across different groups of credit recipients? Evidence from rural Vietnam. Journal of Rural Studies, 47(A), 186–203.

Meutia, I., Adam, M., & Vegirawati, T. (2017). Comparative analysis of agricultural financing in some countries. Tazkia Islamic Finance and Business Review, 11(1), 15–38.

Mi’raj, D. A., & Ryandono, M. N. H. (2015). Linkage program bank syariah dengan BMT: Tinjauan kritis bagi pengembangan sistem keuangan Islam yang lebih kaffah. Jurnal Ekonomi Syariah Teori Dan Terapan, 2(2), 850–864.

Moahid, M., & Maharjan, K. L. (2020). Factors affecting farmers’ access to formal and informal credit: Evidence from rural Afghanistan. Sustainability, 12(1268), 1–16.

Mori, M. (2017). Pursuing sustainability in the Euro-Mediterranean Area: The role of agricultural finance. Athens Journal of Mediterranean Studies, 3(3), 235–250.

Moriguchi, T., Khattak, M. A., Farhan, M., Firdaus, M., Worasutr, A., Hakim, A. L., Musthafa, F., & Muneeza, A. (2016). Contemporary practices of musharakah in financial transactions. International Journal of Management and Applied Research, 3(2), 65 – 76.

Mukhlisin, M., & Komalasari, R. (2018). Do you capture the financial crisis. Journal of Islamic Monetary Economics and Finance, 3(2), 245–292.

Muslimah, S., Maharani, E., & Edwina, S. (2017). Analisis Efisiensi Pemasaran Dan Mutu Gula Aren Di Kabupaten Kuantan Singingi. Jurnal Dinamika Pertanian, 33(3), 243–250.

Muzammil, M., & Siddiqui, D. A. (2020). Shariah Audit In-Regularities on Financial Performance of Islamic Banks. SSRN.

Nasution, H., Nasution, Y., & Yafiz, M. (2017). Analisis financial inclusion terhadap pemberdayaan masyarakat miskin di Medan (Studi kasus pembiayaan mikro SS II di Bank Sumut Syariah). Jurnal Ekonomi Dan Bisnis Islam, 2(1), 1–20.

Panekenan, D., Rumagit, G. A., & Pangemanan, P. . (2017). Peran kredit perbankan pada sektor pertanian di Provinsi Sulawesi Utara. Agri-SosioEkonomi, 13(1A), 183–194.

Parvin, S. S., Hossain, B., Mohiuddin, M., & Cao, Q. (2020). Capital structure, financial performance, and sustainability of micro-finance institutions (MFIs) in Bangladesh. Sustainability, 12(6222), 1–18.

Rahman, S., Hussain, A., & Taqi, M. (2014). Impact of agricultural credit on agricultural productivity in Pakistan: An empirical analysis. International Journal of Advanced Research in Management and Social Sciences, 3(4), 125–139.

Ridhwan, M., Aziz, A., & Yusoff, M. M. (2014). Identifying risks of financing for agro Projects in Islamic banks. International Journal of Technical Research and Applications, 4(4), 29–33.

Rusyana, A. Y. (2014). Islam and economic development: Exploring the role of Indonesian muslim society in developing Islamic microfinance institution. International Journal of Nusantara Islam, 2(1), 83 – 94.

Saleem, M. Y. (2013). Islamic Comercial Law. John Wiley & Sons.

Santoso, D. B., & Gan, C. (2019). Microcredit accessibility in rural households: Evidence from Indonesia. Economics and Finance in Indonesia, 65(1), 67–88.

Santoso, I. R., Canon, S., & Pakaya, A. R. (2019). The role of Islamic financial institutions in supporting economic growth in the digital era: case study in Indonesia. The First International Conference On Islamic Development Studies 2019.

Saqib, S., Kuwornu, J. K., Panezia, S., & Ali, U. (2018). Factors determining subsistence farmers’ access to agricultural credit in flood-prone areas of Pakistan. Kasetsart Journal Social Science, 39(2), 262–268.

Sarantakos, S. (2013). Social Research (4th ed.). Macmillan International Higher Education.

Sebatta, C., Wamulume, M., & Mwansakilwa, C. (2014). Determinants of smallholder farmers’ access to agricultural finance in Zambia. Journal of Agricultural Science, 6(11), 63–73.

Syarif, F. (2019). Regulatory framework for Islamic financial institutions: Lesson learn between Malaysia and Indonesia. Journal of Halal Product and Research, 2(2), 79–85.

Tampubolon, D. (2020). Tinjauan literatur partisipasi petani ke lembaga keuangan pedesaan. In E. Maria, M. A. Adam, & A. Halim (Eds.), Ekonomi Keuangan Dan Kemandirian Desa Di Tengah Pandemi (pp. 61–75). UPP STIM YKPN.

Utama, S., Suwarsi, A. A., & Listiono. (2019). The role of Islamic banking in agriculture financing (case study of Indonesian agriculture sector). Humanities & Social Sciences Reviews, 7(2), 261–269.

Wulandari, E., Meuwissen, M. P., Karmana, M. H., & Oude Lansink, A. J. (2017). Access to finance from different finance provider types: Farmer knowledge of the requirements. PLoS ONE, 12(9), e0179285.

Yadav, P., & Sharma, A. K. (2015). Agriculture credit in developing economies: A review of relevant literature. International Journal of Economics and Finance, 7(12), 219–244.

Yoko, B., & Prayoga, A. (2019). Akses dan persepsi petani terhadap pembiayaan pertanian mikro syariah: Studi di Kabupaten Lampung Tengah. Journal of Halal Product and Research, 2(1), 6–15.

Yüksel, S., & Canöz, I. (2017). Does Islamic banking contribute to economic growth and industrial development in Turkey? Ikonomika: Journal of Islamic Economics and Business, 2(1), 93–102.

Yuliana, S., Suhel, & Bashir, A. (2017). Comparative analysis of profit sharing financing between Islamic Banks (BUS) and Islamic Rural Bank (BPRS) in Indonesia. International Journal of Economics and Financial Issues, 7(2), 266–270.


Article Metrics

Abstract views : 794 | PDF downloads : 99


  • There are currently no refbacks.



More archive, citation & indexing...

Ikonomika : Jurnal Ekonomi dan Bisnis Islam  is a Journal of Islamic Economics and Business, Published by the Faculty of Islamic Economics and Business at UIN RadenIntan Lampung Indonesia. 


This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.