Preferences Analysis of Business Executors in Choosing Access to
Conventional and Syariah Micro Financing
Anggi Lani Rahmawati, Arim Nasim and Firmansyah Firmansyah
Economics and Islamic Finance Department, Universitas Pendidikan Indonesia, Jl. Dr. Setiabudhi, Bandung, Indonesia
Keyword: Preferences, Micro Financing, Islamic Financing, Small Medium Enterprise.
Abstract: Financing is one of the solutions to tackle the problem of capital for the business sector in particular micro,
small and medium enterprises (UMKM). However, the tendency of the majority muslim Indonesia
community towards sharia financial institutions for access to micro financing sharia still is quite low.
Therefore, this research aims to analyze the preferences of the community especially businessmen in
choosing access to micro financing to conventional or Sharia with financing products, levels of religiosity
and the quality of service as factors that influenced them. The research design used in this research is a
survey of the eksplanatori with descriptive causality research method. Testing data in this study using
multiple linear regression analysis with the help of IBM SPSS Statistics programme 23. As many as 70
Market Traders in Andir, Bandung City selected as respondents in this research because of its strategic
location and has excellent management. Results of the study showed variable product financing mainly from
the price factor is an influential variable significantly to Andir Market trader's preferences in choosing
access to micro financing conventional and Syariah. While the two other variables, namely the level of
religiosity and the quality of service has no effect significantly to Andir Market trader's preferences in
choosing access to micro financing conventional and Syariah.
1 INTRODUCTION
Indonesia is a country with the largest Muslim
majority population in the world. By 2016, the
number of Muslim populations in Indonesia reaches
85% of the total population of Indonesia (Putra,
2016). Based on these facts, the application of
Islamic values should be applicable in every line of
life including in bermuamalah especially in
transactions in economic activity.
The economy in Indonesia itself is currently
mostly supported by the growth of Micro, Small and
Medium Enterprises (MSMEs) sector. This sector
has contributed up to 60.34% of total GDP (Ministry
of Cooperatives and UMKM, 2013). Behind the
contribution, UMKM sector still has some obstacles
in developing its business. One of them is from the
capital side. As an alternative to overcome these
problems, business actors from the MSME sector
can borrow from external sources such as financial
institutions.
Given the total population of Muslims in
Indonesia who are the majority, should prefer
Muslims especially business actors are more aligned
to financial institutions that apply the principles of
sharia in its business activities. This is because the
rules of sharia have arranged muamalah activities in
such a way as to fit the rules contained in the Qur'an
and Sunnah. Sharia rules themselves have limited
that transactions in the economy must be free of
elements prohibited by the Qur'an and Sunnah such
as transactions containing maysir, gharar, usury, and
other illicit transactions
The principle of profit sharing is different from
the principle of interest applied in conventional
financial institutions. According to Adiwarman
(2004) the financing by profit-sharing method
undertaken by sharia banking is more profitable
when compared to conventional interest-based
financing. This is because interest-based financing
will burden the cost of production in terms of total
cost. Unlike the case with the profit sharing that will
not affect the total cost but will affect the total
revenue.
Behind the benefits of sharia financing, but the
number of SMEs who choose to apply for financing
in Islamic financial institutions can be said is still
minimal. This is supported by pre-research data of
authors who examine the preferences of MSMEs in
selecting access to finance to traders in Pasar Ranca
Rahmawati, A., Nasim, A. and Firmansyah, F.
Preferences Analysis of Business Executors in Choosing Access to Conventional and Syariah Micro Financing.
In Proceedings of the 1st International Conference on Islamic Economics, Business, and Philanthropy (ICIEBP 2017) - Transforming Islamic Economy and Societies, pages 281-285
ISBN: 978-989-758-315-5
Copyright © 2018 by SCITEPRESS – Science and Technology Publications, Lda. All rights reser ved
281

Bentang Cimahi with the number of respondents 23
people, of the number of respondents, the number of
traders who had proposed new financing amounted
to 11 people.
Source: Research Result (2017)
Figure 1: UMKM Preferences to Financial
Institutions.
Preferences of business actors who are more
inclined to apply for financing to conventional
financial institutions also become one of the factors
decreasing the amount of financing provided to the
sector of SMEs by Islamic banking. This fact is
supported by data from the Financial Services
Authority which shows a decrease in the distribution
of financing by sharia banks in the last three years
Source: Research Result (2017)
Figure 2: Distribution of Financing to MSMEs Sector by
Sharia Banking.
More siding with business actors in the MSME
sector to apply for financing to conventional
financial institutions can be caused by several
factors. According Setiadi (2010) the factors that
influence the preference in making these decisions
can be influenced by internal factors and external
factors. These factors include personal factors such
as trust or religiosity and external factors such as
marketing factors 4P (product, price, place,
promotion).
Another study that examines the preference is
done by Masood (2009) who finds that the
preferences of customers in choosing their banking
and products are more influenced by the services
provided by these banking institutions at low prices.
In addition, based on research conducted by Aisyah
(2013) states that the factors that influence the
preferences of MSMEs in choosing access to
financing can be caused by several factors namely
product factors, service, religion, and education
level.
2 METHODOLOGY
The research method used in this research use
descriptive method of causality. Descriptive research
method is to get a general description of business
actors preferences on access to conventional and
syariah micro financing and methods of causality
research is to determine the extent to which the
influence of independent variables in this study are
microfinance products, the level of religiosity and
services affect the dependent variable that is
preference business actors in choosing access to
conventional and syariah micro financing.
In this study the object to be studied are the
variables used in this study. These variables include:
financing product, religiosity level and service
quality as independent variable to business
preferences in choosing access of conventional and
syariah micro financing as dependent variable.
Sampling technique used in this research is
purposive sampling. Purposive sampling was chosen
in this study because only business actors have
conventional and syariah micro financing that can be
used as sample research. Also in this study only
business actors who are Muslims who can be used as
sample research because to facilitate the
measurement of the level of religiosity. A total of 70
respondents were taken as samples of this study
consisting of customers of conventional financing
and sharia.
The model used in analyzing the data to find out
how the influence between independent variables to
the dependent variable and to test the truth of the
hypothesis include the classical assumption test such
as normality test, mulikolinearitas, and
heteroskesdastisitas. The hypothesis testing using
partial test (t test), simultaneous test (F test), and test
ICIEBP 2017 - 1st International Conference on Islamic Economics, Business and Philanthropy
282

coefficient of determination (R2). Here is the model
used in this research are:
Y = β
0
+ β
1
X
1
+ β
2
X
2
+ β
3
X
3
+ e
(1)
Explanation:
Y = Preferences of business actors in choosing
microfinance
β0 = Constants
β1-3 = Regression coefficient
X1 = Financing Products
X2 = Religiusity Level
X3 = Quality of Service
e = Variables Disorder
3 RESULTS
Based on the results of hypothesis testing it can be
known the influence or relevance of the independent
variable to the dependent variable. The acquisition
of t-count value and the level of significance on the
variable of financing products to the preferences of
business actors in choosing access to financing are
as follows.
Tabel 1: T-Variable Test Results X1.
Coefficient
t-hit
t-tab
Sig
0,551
4,009
1,99656
0,000
Source: Research Result (2017)
Hypothesis testing through t test on financing
product variables is done with a significance level of
5% or 0.05 at a confidence level of 95% with df = n-
k (70-4) = 66 so that the value of t table is equal to
1.99656. meaning that there is a significant influence
between financing products with the preferences of
business actors in choosing sharia financing access.
This is in accordance with previous research
conducted by Aisyah (2013) which shows that the
factor of financing product is the most significant
factor having an effect on the UMKM preference in
choosing access to finance.
In addition, research conducted by
Octavianingrum (2016) which states that the price
level is very influential on financing preferences, the
difference in this study investigated is the mortgage
financing (mortgage). In the context of business
actors in Bandung City Andir Market as described
earlier in the description that overall variable
financing products are in good category. However,
this is different from the business actors' preference
for sharia financing which is included in the medium
category.
This is in accordance with the theory put forward
by Yuswohady (2014) which suggests about four
types of Muslim consumers that are included in the
category apatist, rationalist, comformist and
universalist. Where in this study business actor in
Andir Market Bandung City included in rationalist
category. People belonging to the rationalist
category are those who are very critical in choosing
products with benefits are the main parameters
Furthermore, will be explained about the
acquisition of t-count value and significance level on
the variable level of religiosity to the preferences of
business actors in choosing access financing as
follows:
Tabel 2: T-Variable Test Results X2.
Coefficient
t-hit
t-tab
Sig
0,214
1,983
1,99656
0,051
Source: Research Result (2017)
Hypothesis testing through t test on this variable
religiosity level is done with significance level of
5% or 0,05 at trust level equal to 95% with df = n-k
(70-4) = 66 so that t value of table is equal to
1,99656. This means there is no significant influence
between the level of religiosity to the preferences of
business actors in choosing access to Islamic
finance. The results of this study in accordance with
research conducted by Nasrullah (2015) which
shows that the factor of religiosity as a moderating
variable even weaken the relationship of Islamic
branding with consumer purchasing decisions. This
is because the people of Indonesia who tend not to
make a religious factor as a way of life.
In contrast to the results of research conducted
by Gait and Worthington (2009) found that the
reason for religiosity is the main motivation of
society in Libya to use financing by Islamic
methods, followed by social services and profit. In
line with the study, Bley and Kuehn (2004) who
studied economics students in the UAE against
financing in sharia and conventional banks found
that Muslim students have a preference for services
in sharia banking because of the motive of
religiosity.
This is also in line with research conducted by
Rahayu et al (2016) who found that the factors that
most influence the urban community's preference to
Musharaka financing and Mudharabah are due to the
need factor for the benefits not only felt
economically but also spiritually.
When viewed from the facts in this study that
shows that the level of religiosity of business actors
in Andir Market is classified in high category. While
Preferences Analysis of Business Executors in Choosing Access to Conventional and Syariah Micro Financing
283

the preference for sharia financing included in the
category of being. This means that although the level
of religiosity in terms of obedience in worship has
been very good, but this is inversely proportional to
muamalah. This is in accordance with the research
Nasrullah (2015) which states that the people of
Indonesia has not made the value of Islamic values
as a way of life. Whereas Allah in the Qur'an has
ordered the Muslims to implement the rules of Islam
in kaffah.
Furthermore, the authors will describe the
acquisition of the t-count value and the significance
level of the service quality variable to the
preferences of business actors in choosing access to
finance. according to Parasuraman (1985) is the
quality of service is a measure of how well a service
is provided in accordance with customer
expectations. Providing quality service means
shaping customer expectations consistently.
Tabel 3: T-Variable Test Results X3.
Coefficient
t-hit
t-tab
Sig
0,101
0,910
1,99656
0,366
Source: Research Result (2017)
Hypothesis testing through t test on this service
quality variable is done with significance level of
5% or 0,05 at trust level equal to 95% with df = n-k
(70-4) = 66 so that t value of table is equal to
1,99656. meaning there is no significant influence
between the quality of service to the preferences of
business actors in choosing access to Islamic
finance. This is in contrast to previous research
conducted by Dusuki and Abdullah (2006) who
found that the quality of services, including staff
friendliness, competence, prompt and efficient
service are important factors in influencing the
selection of banks in Malaysia.
Tabel 4: Test Results -F and Coefficient of Determination
Test (R2).
F-Count
F-Table
Significance
R-
Squared
12,924
2,74
0,000
0,370
Source: Research Result (2017)
So it can be said that the total of all independent
variables are financing product, the level of
religiosity and service quality simultaneously affect
the dependent variable that is the preference of
business actors in choosing access of conventional
and syariah micro financing. Based on the
estimation result, it is found that the value of R2 is
0.370, meaning that the contribution of independent
variable to dependent variable is 37% and the
remaining 63% is influenced by other factors outside
the research model.
4 CONCLUSIONS
Financing products for business actor in Andir
market are included in good category, this is because
respondents are very selective in choosing financing
products especially in terms of price (interest / profit
/ margin). Then in terms of the level of religiosity of
business actors are included in the high category.
However, this high level of religiosity is not directly
proportional to the obedience of business actors in
terms of muamalah in accordance with sharia.
Furthermore, in terms of service quality obtained by
business actors in Andir Market included in either
category. This is because the majority of
respondents are customers of conventional financial
institutions that have excellent service quality.
The result of the research shows that the variable
of financing product especially from the price factor
is the variable which has significant effect to the
preference of trader of Andir Market in Selecting
Conventional and Sharia Micro Financing Access.
While the other two variables are the level of
religiosity and service quality has no significant
effect on market preferences Andir Market Traders
in Choosing Access Conventional and Sharia Micro
Financing.
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