Analysis of Sharia Banking Financing Based on Mudhārabah Contract on The Development of MSMEs in Indonesia

Abstract

This study analyzes Islamic banking financing based on mudhārabah contracts on the development of Micro, Small, and Medium Enterprises (MSMEs) in Indonesia. Using a descriptive qualitative approach with secondary data analysis, the study found that Islamic bank financing has a significant effect on the development of MSMEs (R² = 0.61). In addition, the development of MSMEs is positively and significantly correlated with national economic growth and labor absorption. Although the mudhārabah contract has great potential, its implementation is still constrained by low Islamic financial literacy, complex procedures, and high risks perceived by banks. Synergy is needed between Islamic banking, the government, and MSME actors to optimize profit-sharing-based financing to support inclusive and sustainable economic growth in Indonesia.