Joint Liability Based Financing To Prevent Non-Performing Financing In Bank Wakaf Mikro

• Published in: International journal of Islamic business and economics (IJIBEC) (Online) Vol. 6; no. 1
• Main Authors: Purwanto Purwanto, Abdul Ghofur, Shodiq Abdullah
• Format: Journal Article
• Language: English
• Published: Faculty of Islamic Economics and Business - Universitas Islam Negeri K.H. Abdurrahman Wahid Pekalongan 02-06-2022
• Subjects: Bank Wakaf Mikro; Joint Liability; Non- Performing Financing
• ISSN: 2599-3216; 2615-420X
• DOI: 10.28918/ijibec.v6i1.4361

The Indonesian government has made various efforts to reduce it, one of which is establishing a Micro Waqf Bank. The focus of the establishment of the Bank Wakaf Mikro is to empower the poor by providing assistance and providing microfinance for productive activities. Interesting to assess is the financing mechanism applied, namely joint liability (tanggung renteng). The purpose of this study is to examine whether joint liability-based financing can prevent non-performing financing. Data were collected from 215 respondents from Micro Waqf Bank customers in Magelang Regency. Data analysis was carried out statistically by using Structural Equation Model (SEM) Partial Least Square. The results show that joint liability-based financing has a significant effect in preventing non-performing financing. This means that joint liability based on Bank Wakaf Mikro can prevent defaults or non-performing financing.