Integration between Islamic financial technology and Islamic financial principal to improve performance of SMEs in Indonesia

This study investigates the integration of Islamic financial technology and principles and their impact on small and medium enterprise (SME) performance in Indonesia. Utilizing a quantitative research methodology, the study employs a correlational design to examine the relationships between Islamic financial technology adoption, adherence to Islamic financial principles, and SME performance metrics. The research sample comprises 230 Muslim SME owners from Java Island, selected through stratified random sampling. Data collection involved structured questionnaires designed to measure the adoption levels of Islamic financial technology, adherence to Islamic financial principles, and various indicators of SME performance. The study employed multiple regression analysis to assess the relationships between the variables. Results indicate statistically significant positive correlations between the implementation of Islamic financial technology, adherence to Islamic financial principles, and SME performance. The regression model accounts for 79.5% of the variance in SME performance. Islamic financial technology adoption emerged as a particularly strong predictor of improved SME outcomes, suggesting the potential for technological innovation within an Islamic financial framework to drive business success. This research contributes to the growing body of literature on Islamic finance and financial technology in emerging markets. It provides empirical evidence for the potential synergies between Islamic financial principles and modern financial technology in enhancing SME performance in Indonesia. The findings have implications for policymakers, financial institutions, and SME owners in leveraging Islamic financial technology to promote sustainable economic growth.