Preferences for Sharia Financial Products in Indonesian Rural Communities

Abstract

The rural areas have been affected by the Islamic financing business. The creation of sharia cooperatives, formerly known as baitul maal wa at-tamwil (BMT), has made sharia-based financial services and goods available to rural areas. The purpose of this essay is to explain how Islamic financial goods are preferred in rural areas and what factors influence how strongly individuals prefer Islamic financial products. In order to investigate and characterize this, a qualitative research design was employed, which involved both in-depth interviews with BMT members and those who transact business with them under different contracts, as well as observation of the actual operations in a number of BMTs. The results of this study show that rural areas have relatively low preference levels for Islamic financial products, with only 30 percent. Their ignorance of the Islamic finance sector is a major contributing cause to their low preference, leading to the misconception that there is no distinction between Islamic and conventional financial goods. Based on the aforementioned conclusions, it is anticipated that the research's consequences will have an effect on a larger-scale literacy and inclusion program for Islamic financial products by all parties involved, including academics, banks, sharia cooperatives, and educational institutions.