Creating Sustainability in Islamic Microfinance Institutions Based on a Networking Approach

Purpose — This study aims to find a sustainable development model for Islamic microfinance institutions (Islamic MFIs) based on Islamic networking and the critical factors that support their sustainability. Design/Methodology/Approach — This study uses a qualitative approach by conducting a literature review to find research directions and undertaking focus group discussions (FGD) with a network provider and Baitul Maal wat Tamwil (BMT) managers in Central Java. The FGD involved five stages. The first stage was carried out with a network provider (the Association of Baitul Maal wat Tamwil (or PBMTI)), and the second to fifth stages were carried out with BMT members of PBMTI as Islamic MFIs, whose implementation sequence was based on accreditation ranking (A, B, C, and D categories). The purpose of this grouping was to find the views of different stakeholders on the role of networks. Findings — This study found that Islamic networks have an important role in building the sustainability of Islamic MFIs. This important role is based on Islamic values (i.e., faith, morals, daʿwah (preaching), and social care) and the facilities provided in the network. Originality/Value — This study is unique as it explores the role of networks that develop Islamic values and provide various facilities to develop Islamic MFIs so that they can serve the community better and in a more sustainable way. Research Limitations/Implications — The FGD was conducted with representatives of BMT members of PBMTI whose number and opportunities for communication are limited. Therefore, more intensive studies are needed to determine the impact of the network on the members based on the programmes or facilities offered.