Publication:

Islamic crowd-investment in Indonesia’s agriculture sector

Islamic crowd-investing is a platform that facilitates farmers' access to working capital in Indonesia's agriculture sector. These intermediary companies faced regulatory and financial performance issues. This research seeks to evaluate the factors that affect online Islamic crowd-investing in agriculture. Regulatory sandboxes, Sharia compliance, and Sustainable Development Goal 2 (SDGs) were among the factors investigated as part of food security goals. This study contained six research objectives with a Mixed-Methods Research Design as the approach of the analysis. This research also has chosen an explanatory sequential design, which means the quantitative stage is the first stage of analysis, followed by qualitative findings as the second stage. The findings of the first research objectives explained that Sharia Compliance (SHC), Perceived Information (INF), Perceived Accreditation ( ACC), and Third Party Sealed were determined that Information Asymmetric has significant mutual influence on the other variables, such as Trust (TRU) and Commitment (CMT), while Perceived Information (INF) does not affect the other variables. The meaning is that this study indicates that the availability of information is insufficient to increase investors’ confidence. Then, for the second research objective, it was found that the indicators of Investors' Intention (INT) have shown Commitment (CMT) and Sharia Compliance (SHC) positive effects on Investor Intention (INT) in Islamic crowd-investing. With Commitment as a moderating variable, Trust (TRU) also positively affects Investor Intention. Then it's followed by Communication COM), Shared Value (SHV), and Third-Party Seal (TPS), which influence Trust (TRU) positively. However, neither Perceived Informativeness (INF) nor Perceived Accreditation (ACC) influences. Based on the third research objective, this study described that the implementation of the sandbox regulatory framework from the investor perspective should be clarified and declared by the financial technology, particularly in the Islamic crowd-investing industry. Then, for the investor, they must be aware of the risks associated with the platform related to the sandbox by the Financial Services Authority. Then, for the fourth research objective, this research revealed that the Islamic crowd-investing in the agriculture sector had implemented the Sharia principles and its system and procedure. Then the results for qualitative were also found in the fifth research objective, based on the informants' answers that Islamic crowd-investing in the agriculture sector had organised and programmes to achieve food security as Sustainable Development Goals (SDGs), such as making an ecotourism campaign and plantingsuperior seeds with farmers and industry. And the last of the sixth research objective revealed the landscape of Islamic crowd-investing from many perspectives, that is, investors, farmers, and regulators. Other variables examined and tested included the investment intention demonstrating a willingness to invest, investment performance in Islamic crowd-investing, and the impact of information asymmetry. The stakeholders must acknowledge that the platform is oriented toward online commerce and complies with the rules. In addition, financial performance reflects the company's funding and capacity to disburse funds. Based on an in-depth review of current literature on online crowd-investing, financial technology, SDGs theory on agriculture, and expert interviews, this research employed both qualitative and quantitative methods (mixed methods). Based on existing literature, this research employed a comprehensive survey with questionnaires regarding the investment intention of Islamic crowd-investing Nonetheless, apart from these determining factors, other factors can be realised and potentially developed and improved, namely literacy regarding regulations on implementing Sharia principles and optimising food security programmes. Based on the development of SET (Social Exchange Theory), this research has extended the variables, namely Sharia compliance, into the SET framework and elaborated the variables in SET to analyse them using Structural Equation Modelling (SEM). Fourthly, this research uncovered an intriguing investor viewpoint regarding sandbox regulations. This also emphasised that regulation is one of the most crucial factors in implementing financial technology, particularly in the agricultural sector for Islamic crowd-investing. This research suggested that the fintech company or platform provider establish and involve other institutions as legality-ensuring third parties. Aspects of consumer protection and capital guarantee mechanisms increase investor confidence. In addition, platform providers should follow the direction of digital financial innovation in the form of a regulatory sandbox mechanism issued by the Financial Service Authority (OJK), even if the platform provider already has a transparent business model, to prevent and minimise future fraud.