The Impact of Murabahah Financing on Microenterprise Growth: Examining the Contribution of the Murabahah Scheme in Strengthening Microenterprise Capital Structure

Abstract

This study aims to examine the impact of murabahah financing on microenterprise growth by analyzing its contribution to capital structure strengthening. A qualitative research approach was employed to capture in-depth insights into the mechanisms through which murabahah financing influences business development. The study adopted a case study design, as it allows a comprehensive exploration of financing practices, institutional processes, and micro-level outcomes within a specific context. The research was conducted at an Islamic rural bank and its microenterprise clients in West Java, Indonesia, selected due to the region’s active implementation of murabahah financing and its dense microenterprise ecosystem. Data were collected from seventeen informants, consisting of twelve microenterprise owners and five institutional stakeholders, purposively selected based on their direct involvement in murabahah financing. The findings indicate that murabahah financing supports microenterprise growth primarily through the acquisition of productive assets, improved financial discipline, and restructuring of capital away from informal debt. Capital structure strengthening emerged as a key mechanism linking financing to sustainable growth. The study recommends that Islamic financial institutions emphasize asset productivity and capital structure enhancement in murabahah product design to promote long-term microenterprise resilience.