The antecedences of investment intention in Islamic Fintech lending among Indonesian MSMEs

Abstract

This research tests the antecedents influencing micro, small, and medium enterprises (MSMEs) in Indonesia to invest in Islamic FinTech loans. The research variables include financial knowledge, personal traits, financial behaviour, Sharia compliance, and investment intention. Previous studies have not integrated religious values, manifested by Sharia compliance, and have not examined the impact of financial knowledge and personal traits on investment intention in Islamic FinTech lending. The Theory of Planned Behaviour (TPB) research framework was employed to address these gaps, using a survey questionnaire and interviews with Islamic finance experts, regulators, and MSME entrepreneurs. There are 400 respondents for the quantitative and 7 respondents for the qualitative. Using Structured Equation Modelling (SEM), utilising AMOS 20 as the main analytical tool, this study reveals that financial knowledge significantly influences Indonesian MSMEs' attitudes and subjective norms, impacting their investment intentions in Islamic FinTech loans. In addition, Sharia compliance negatively moderates the relationship between attitude and investment intention, as personality characteristics negatively affect financial efficacy. Sharia compliance does not strengthen the relationship between attitude and investment intention. The qualitative research found that is consistent with the key issues and challenges of Indonesian MSMEs in investing in Islamic FinTech loans, which have been identified in the literature, namely human resources, regulatory aspects, the role of government, and inadequate capital issues. This research contributes to the TPB by showing that subjective norms can influence the investment intention of Indonesian people (MSMEs) in Islamic FinTech lending services. This research also extends TPB by highlighting the role of Islamic teachings, represented by sharia compliance, which weakens the attitude of Indonesian MSMEs to invest. As a result, the intention to invest in Islamic FinTech lending services is still low, as evidenced by the small number of companies involved in such services from year to year. Future research could expand the scope by increasing the sample size and involving respondents from different religious backgrounds. In addition, this study has not involved entrepreneurs who have run Islamic FinTech lending services as qualitative sources, so technical information has not been answered comprehensively. The study suggests the need for collaboration among government institutions such as the Ministry of Cooperatives and OJK to synergize cooperative law regarding Islamic Fintech lending. This is to minimise overlapping financial regulations and sharia principles. There is a need to provide regular training to upgrade the literacy of Islamic Fintech lending. The study suggests enabling Indonesian MSMEs to stay abreast of technological advancements and recognise the burgeoning business potential.