POTENTIAL OF SHARIA-BASED EQUITY CROWDFUNDING FOR MICRO SMALL AND MEDIUM ENTERPRISES (MSME) FINANCING IN INDONESIA

Abstract

Micro, small and medium enterprises (MSMEs) play a critical role in Indonesia's economic growth and development. MSMEs make a significant contribution to the national GDP. However, the development of MSMEs faces challenges in obtaining financing from the banking sector. The advancement of technology has resulted in significant changes in the financial industry. Equity crowdfunding is emerging as a new financing option for MSMEs. This study investigates alternative financing for MSMEs via equity crowdfunding and the use of sharia concepts. Equity Crowdfunding is a financing concept that uses the internet to connect issuers and investors through stock offerings. This enables business actors to obtain financing without returning capital in the form of loan interest but rather in the form of profit sharing (dividends) to shareholders. The results show that the practice of equity crowdfunding is conceptually under sharia principles. Because practicing the equity crowdfunding mechanism has fulfilled the provisions in the form of contracts and avoided Maghrib (maysir, gharar, and usury). The various opportunities for sharia-based equity crowdfunding to grow and become new alternative financing for MSMEs in Indonesia are unquestionably exciting.