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How do Islamic MFIs compete with their conventional counterparts? Study of the Difference Structure between Islamic and Conventional MFI’s to Create Sustainable Islamic Microfinance Institutions in Indonesia

How do Islamic MFIs compete with their conventional counterparts? Study of the Difference Structure between Islamic and Conventional MFI’s to Create Sustainable Islamic Microfinance Institutions in Indonesia
Dian Masyita
Universitas Padjadjaran, Submitted to the Sixth Foundation of Islamic Finance Conference Durham University on 2-3 April, 2014
Bahasa Inggris
Universitas Padjadjaran, Submitted to the Sixth Foundation of Islamic Finance Conference Durham University on 2-3 April, 2014
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Microfinance institutions (MFIs) have different organizational formats, they have to deal with daily management issues. The measurement of performance is important for both stakeholders and stockholders. In order to understand the operational structure of different MFIs, this paper assesses their performance by using the Balanced Scorecard (BSC) from four perspectives. The BSC provides the “balanced” and “integrative” financial and non financial perspectives of a MFI such as internal business processes, growth and learning, financial and customer perspectives which are extremely important to create sustainable operations. BRI is partly due to makes it difficult for other smaller MFIs to compete. In contrast, BMT shows a weak institutional structure in terms of internal processes, learningand-growth and customer satisfaction. It seems that BMT is not managed well according to BSC’s KPIs. The clients chose MFIs that perform best in daily operations and also those are affordable instead of choosing a religious/Shari’ah compliant one.

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