OUTREACH, SOCIAL EFFICIENCY AND DIGITALIZATION TO IMPROVE THE ROLE OF ISLAMIC MICROFINANCE INSTITUTIONS IN INDONESIA

Abstract

This study investigates outreach factors that determine social efficiency and strategies implemented to face the future. The role of Islamic Microfinance Institutions in helping alleviate the poor community is a real contribution to building the national economy. Barriers to financial access for the lower groups to develop their businesses are suspected to be the cause. Quantitative and qualitative incorporation as a mixed-method is capable of resolving problems and meeting expected goals. Multivariate analysis is the statistical instrument, while the interview and Focus Group Discussion with the Pentahelix model is to clarify or deepen existing information. The estimation process of the dependent variable is influenced by the proxies of depth, breadth, length, scope, and cost. The results show that the average loan installments, number of offices and branches, profit orientation, amount and type of financing/savings significantly influence social efficiency. Meanwhile, age, fund collection, and cost per borrower do not have a high contribution. The determination coefficient is 53.29% and the proportion is included in the strong criterion. Synergy of practitioners, academics, government, communities, and the media is needed to improve the capability of this institution. Originality/value, his paper investigates the determinants of social efficiency, adding the number and type of financing/savings as a proxy for the scope of coverage in the BMT and Islamic Cooperatives to improve the economy of the poor as a gap of research that has not been done. The digitalization of microfinance will encourage the trust of members or the public in placing their funds.