Determinants of Financing Decisions for Micro Enterprises in Malang City in 2022-2023 Moderated by Islamic Financial Literacy


  • Fina Rosyada UIN Maulana Malik Ibrahim Malang, Indonesia
  • Azriel Rakaha Handoko UIN Maulana Malik Ibrahim Malang, Indonesia
  • Feri Dwi Riyanto UIN Maulana Malik Ibrahim Malang, Indonesia
  • Sri Andriani UIN Maulana Malik Ibrahim Malang, Indonesia



Islamic financial literacy, financing decisions, logistic regression



This study aims to analyze the Determinants of Financing Decisions in Micro Enterprises in Malang City Moderated by Sharia Financial Literacy


This research uses a mix method with purposive sampling techniques and the number of samples isas many as 60 respondents of micro business actors. The data of this study uses primary data obtained directly from the source using interview techniques, questionnaires, literature studies. Logistic regression is used to analyze the data.


This study revealed that variations in income and business age have a negative and significant effect on the variability of financing decisions. Meanwhile, guarantees have a positive and significant effect on the provision of financing decisions. Then, the variables of education, guarantees, and cultural characteristics do not affect the decision to provide financing. Vaiebel moderation itself is predicted to influence and strengthen the relationship between income variability and financing decisions. However, moderation variability has an influence and weakens the relationship between collateral variables and financing decisions.

Research limitations/implications

This research has limitations related to the amount of financing data conducted by Islamic banks


This study seeks to examine cultural characteristics with financing decisions which has rarely conducted before.


Adeosun, O. T., Shittu, A. I., &; Ugbede, D. (2023). Disruptive financial innovations: the case of Nigerian micro-entrepreneurs. Journal of Business and Socio-Economic Development, 3(1), 17–35.

Adomako, S., Danso, A., &; Ofori Damoah, J. (2016). The moderating influence of financial literacy on the relationship between access to finance and firm growth in Ghana. Venture Capital, 18(1), 43–61.

Alktrani, S. H. M., &; Abbas, A. N. (2021). The Impact of Financial Depth Indicators on Economic Growth of Iraqi Banking Sector: An Analytical Study. Turkish Journal of Computer and Mathematics Education, 12(7), 3352–3363.

Amraini, Mas'ud, M., &; Amang, B. (2023). The Influence of Sharia Financial Literacy on the Decision to Use Digital Financial Inclusion for the Millennial Generation in Makassar City. 05(04), 15637–15651.

Anggraini, S. D., &; Widyastuti, I. (2020). The influence of the 5C concept on lending decisions in the Kud Karya Mukti Kuamang Kuning Muara Bungo savings and loan business unit. Business Management Analysis Journal (BMAJ), 3(2), 158–173.

Ansir, V. R., Isyana, Y., Pongoliu, D., &; Hamin, D. I. (2022). Analysis of Financial Literacy Level in MSME Owners in North Gorontalo Regency, Gorontalo Province in 2021. SEIKO : Journal of Management &; Business, 5(2), 2022–2152.

Asiyah, B. N. (2015). Sharia Bank Financing Management. Kalimedia.

Ayu, M., Geriadi, D., Erynayati, L., Putu, N., &; Ria, Y. (2021). The effect of financial access on SME growth with financial literacy as a moderation variable. 10(03), 161–172.

Azhar, A. N., &; Farida, Y. N. (2021). Factors Influencing Credit Decisions for MSMEs in Banyumas Regency during the Covid-19 Pandemic. Journal of Accounting and Business, 6(1), 13–25.

Azikin, N., &; Hamid, R. S. (2023). Analysis of the impact of income, length of business, age on financial literacy of MSME actors. 7, 2486–2493.

Bustami, A. W., Zulkarnain, I., Sarmigi, E., & Kerinci, I. (2022). The effect of business duration and interest rate on decisions of micro small medium enterprises. Journal of Economic Appreciation, 10(2), 181–188.

Candera, M., Afrilliana, N., & Ahdan, R. (2020). The Role of Islamic Financial Literacy in moderating the Demographic Influence on Interest in Saving in Islamic Banking. Journal of Motivation Management, 16(1), 1.

Chandio, A. A., Jiang, Y., Rehman, A., Twumasi, M. A., Pathan, A. G., &; Mohsin, M. (2021). Determinants of demand for credit by smallholder farmers': a farm level analysis based on survey in Sindh, Pakistan. Journal of Asian Business and Economic Studies, 28(3), 225–240.

Defiansih, D. D. (2021). The influence of religiosity, family education, and financial socialization on Islamic financial literacy with intellectual intelligence as a moderation variable. Journal of Economics and Education, 18(1), 34–51.

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

Fatinah, A., &; Fasa, M. I. (2021). Analysis of Financial Performance, Impact of Merger of 3 State-Owned Sharia Banks and Strategy of Bank Syariah Indonesia (BSI) in National Economic Development. Journal of Business Management (JMB), 34(1), 22–33.

Ghozali, I. (2018). Applications of Multivariate Analysis with IBM SPSS 25 Program. Diponegoro University Publishing Board.

Hair, J. F. et al. (2014). Multivariate Data Analysis (Harlow (ed.); Seventh Ed). Pearson Education Limited.

Halim, A. (2020). The influence of the growth of micro, small and medium enterprises on the economic growth of Mamuju Regency. Scientific Journal of Development Economics, 1(2), 157–172.

Hamonangan. (2020). Analysis of the Application of 5C Principles in Financing Distribution at Bank Muamalat KCU Padangsidempuan. MEA Scientific Journal (Management, Economics, and Accounting), 4(2), 454–466.

Handayani, S. (2018). Analysis of Working Capital Lending Decisions to Small and Medium Enterprises (Case Study at PD BPR Bank Daerah Lamongan). Journal of Accounting, 3(3), 755.

Hapsila, A., &; Astarina, I. (2020). The Effect Of Character, Capacity, Capital, Collateral And Condition Of Economy On Giving Credit (Case Study At PT Bank Rakyat Indonesia Kerumutan Unit And Tri Mulia Jaya Unit).

Hastuti, N. H., &; Supriyadi, A. (2020). Pay attention to cultural characteristics in the phenomenon of social life. Adi Widya : Journal of Community Service, 4(2), 131–141.

Hirawati, H., Sijabat, Y. P., &; Giovanni, A. (2021). Financial Literacy, Risk Tolerance, and Financial Management of Micro-enterprise Actors. Society, 9(1), 174–186.

Hon, C. Van, &; Ninh, L. K. N. (2020). Impact of credit rationing on capital allocated to inputs used by rice farmers in the Mekong River Delta, Vietnam. Journal of Economics and Development, 22(1), 47–60.

Jannah, N., Roudhotul, N., Pudiastiono, P., &; Ruswaji, R. (2018). Analysis of factors influencing lending decision making at Pd. Bpr. Bank Daerah Lamongan. Journal of Ekbis, 19(2), 1141.

Jappelli, T. (2010). Economic Literacy: An International Comparison. The Economic Journal, 120(48), F429–F451.

Jaya, T. J. (2018). Analysis of the effect of people's business credit on the production value of micro small enterprises in Tiara Metro City. Journal of Development Economics, 7(1), 285–295.

Key, N. (2020). Off-farm Income, Credit Constraints, and Farm Investment. Journal of Agricultural and Applied Economics, 52(4), 642–663.

Kuhn, L., &; Bobojonov, I. (2021). The role of risk rationing in rural credit demand and uptake: lessons from Kyrgyzstan. Agricultural Finance Review.

Loppies, L. S., Essomar, M. aria J. F., & Rikumahu..., B. F. . (2021). Analysis of the Effect of 5C (Character, Capacity, Capital, Collateral, Condition of Economic) on Credit Decisions at PT. BPR Modern Express Ambon. SOSOQ Journal, 9(1), 88–107.

Mahalizikri, I. F., &; Herbi. (2021). The Effect of Business Capital Lending on Increasing Business Actors' Income (Case Study on Trading Business in Tameran Village). Journal of IAKP, 2.

Masithah, S., Purnamawati, G. A., &; Sinarwati, N. K. (2023). The effect of financial literacy, innovation, and the use of BPUM funds on the performance of micro enterprises in Buleleng Regency with financial inclusion as a moderation variable. 12(1), 11–22.

Matto, M., &; Niskanen, M. (2019). Religion, national culture and cross-country differences in the use of trade credit: Evidence from European SMEs. International Journal of Managerial Finance, 15(3), 350–370.

Muneeza, A., &; Mustapha, Z. (2020). Practical application of Kafalah in Islamic banking in Malaysia. PSU Research Review, 4(3), 173–187.

Munir Yusuf. (2018). Introduction to the Science of Education. In IAIN Palopo Campus Publishing House.

Murti, A. K., Trisnadewi, A. A. E., Citraresmi, L. D., &; Saputra, K. A. K. (2018). SAK ETAP, Quality of Financial Statements and the Number of Loans received by MSMEs. Equity: Journal of Economic Education, 6(2), 52–61.

Mutegi, & Kinyua, H. (2015). Financial literacy and its impact on loan repayment by small and medium entrepreneurs. International Journal of Economics, Commerce and Management, 3(3).

Neves, M. D. C. R., Freitas, C. O., Silva, F. D. F., Costa, D. R. D. M., & Braga, M. J. (2020). Does Access to Rural Credit Help Decrease Income Inequality in Brazil? Journal of Agricultural and Applied Economics, 52(3), 440–460.

Nurholis, M. S., Anwarudin, O., &; Makhmudi, M. (2020). The capacity of rice farmers in accessing People's Business Credit (KUR) in Pameungpeuk District, Garut Regency, West Java. Journal of Agricultural Extension, 15(1), 53–72.

Nurudin, N., Arifin, J., &; Ma'ruf, A. (2021). The influence of education level, Islamic financial literacy, and culture on the interest in saving for Semarang City students with religiosity as a moderation variable. EL MUDHORIB : Journal of Islamic Economic and Banking Studies, 2(1), 1–19.

Prabowo, H., Herwiyanti, E., &; Pratiwi, U. (2020). The effect of financial literacy, interest rates, service quality and guarantees on bank credit taking by SMEs. Journal of Accounting and Taxation Jayakarta, 2(1), 34–44.

Princess, M. N. (2022). Sharia Financial Literacy and MSME Performance. Milkiyah: Journal of Sharia Economic Law, 1(2), 81–87.

Princess, S. (2021). The role of Sharia financing in the development of MSMEs in Indonesia. Journal of Sharia Economics, 1(2), 1–11.

Rahayu, P., &; Suprihandari, M. D. (2022). Analysis of financial statements as a support for the decision to provide working capital loans to PT. Bank Maspion Tbk Surabaya Branch Analysis of Financial Statements to Support Decisions for Giving. 1(2), 103–118.

Rofiani, R., Ahmad, N., &; Suhartini, A. (2021). The Concept of Culture in the View of Islam as a Global Cultural Value System (Analysis of the thought of Ali Ahmad Madkur). At-Tajdid : Journal of Islamic Education and Thought, 5(01), 62.

Rusniati, R., Sudarti, S., &; Agustin, A. F. (2018). Analysis of the Effect of Economic Growth and Minimum Wage on Employment in Malang Regency. FALAH: Journal of Sharia Economics, 3(2), 34.

Ruwaidah, S. H. (2020). The Influence of Sharia Financial Literacy and Shariah Governance on Student Decisions in Using Sharia Banking Services. Muhasabatuna : Journal of Sharia Accounting, 2(1), 79.

Saifurrahman, A., &; Kassim, S. (2022). Collateral imposition and financial inclusion: a case study among Islamic banks and MSMEs in Indonesia. Islamic Economic Studies, November 2021.

Saputra, F. E. (2020). Analysis of factors affecting the financial performance of Islamic commercial banks listed on the Indonesia Stock Exchange (IDX) for the 2016-2018 period. TECHNOBIZ : International Journal of Business, 3(1), 45.

Setyawan, F. A. (2020). Analysis Of The Effect Of Revenue, Number Of Customers, And Covid-19 Pandemic On Kca Credit Distribution At Pt. Pegadaian (Persero) Upc Secang. E-Mabis: Journal of Management and Business Economics, 21(1), 79–86.

Shokr, M. A. (2020). Real interest rate, income and bank loans: panel evidence from Egypt. Journal of Financial Economic Policy, 12(2), 227–243.

Siswanto, H. P., Arifin, A. Z., &; Cavin, C. (2019). Critical Factors That Determine Credit Approval to Micro, Small, and Medium Enterprises (MSME) IN BEKASI. Etikonomi, 18(1), 93–104.

Sugiyono. (2018). Quantitative, qualitative and mixed methods research methods. Alphabeta.

Sugiyono. (2019). Quantitative, Qualitative, and R&D Research Methods. Alphabet.

Sulastri. (2022). The Important Role of MSMEs in the Threat of Recession Issues. Www.Djkn.Kemenkeu.Go.Id.

Susilawati, E., &; Puryandani, S. (2020). The Effect of Financial Literacy on MSME Capital Structure Decisions with Kueuangan Inclusion as a Moderating Variable. Solutions Scientific Magazine, 18(2), 41–70.

Taria, E., Husen, T. I., &; Umar, U. T. (2022). The Effect of Sharia KUR Financing on Increasing MSME Turnover: A Case Study of PT. Sinabang Sharia Pawnshop. 297–304.

Ulpah, M. (2020). Concept in Sharia Banking Financing, Vol. 3 No.2 August 2020. Madani Shari'ah, 3(2), 147–160.

Wardiyah, M. (2016). Intermediate Financial Accounting. CV Pustaka setia.

Wau, M. (2020). Factors Influencing Lending Policy to Bumi Putera Telukdalam Community Cooperative, Nias Regency.... Journal of Education and Development, 8(2), 298–300.

Wijaya, K. (2019). The effect of the quality of financial statements on MSMEs and the prospect of implementing Sak Etap. Ecobisma (Journal of Economics, Business and Management), 6(2), 89–100.

Yulianto, A. (2018). The Influence of Islamic Financial Literacy on the Decision to Use Products or Services of Islamic Financial Institutions. Energies, 6(1), 1–8.