Simulated Strategies to Customer Preferences in Determining The Amount of Bank Financing: Small and Medium Industries in Indonesia

DOI

10.2991/icigr-17.2018.10How to use a DOI?

Keywords

Islamic banks, SME, financing system

Abstract

The present study addressed the simulation of conventional and Islamic bank financing systems. This simulation involved 20 small SMEs which were divided into 2 groups: salt farming SMEs (low-risk business) and shrimp farming SMEs (high-risk business). The three principles of experiment design applied in this study were randomness, repetition, and environmental control. The SME actors were required to borrow from the bank in order to run their business. By fulfilling the 3 principles of the experimental design the simulation can be run. The present study was conducted by having any of the SME actors to borrow additional capital from banks, which were the conventional banks with its interest rate system and the Islamic banks with its profit-sharing system. Results showed that the high-risk actors of SMEs tended to borrow more from Islamic banks than conventional banks. This was due to the probability of larger operating losses, leading the SME actors to minimize losses by borrowing from Islamic banks due to the sharing of gains and losses.

Copyright

© 2018, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Download article (PDF)

TY  - CONF
AU  - Rachmad Hidayat
AU  - Muhammad Azmi Alamsyah
PY  - 2018/01
DA  - 2018/01
TI  - Simulated Strategies to Customer Preferences in Determining The Amount of Bank Financing: Small and Medium Industries in Indonesia
BT  - Proceedings of the 1st International Conference on Intellectuals' Global Responsibility (ICIGR 2017)
PB  - Atlantis Press
SP  - 41
EP  - 44
SN  - 2352-5398
UR  - https://doi.org/10.2991/icigr-17.2018.10
DO  - 10.2991/icigr-17.2018.10
ID  - Hidayat2018/01
ER  -