The The transformation of the role of Sharia microfinance institutions in improving the quality of life of the community: Empirical evidence from BMTS in South Tangerang

Abstract

This study aims to analyze the role of Islamic Microfinance Institutions (LKMS) in improving community welfare, particularly in terms of access to healthcare and the reduction of social inequality, in line with Sustainable Development Goals (SDGs) 3 and 10. This research employs a descriptive qualitative approach, with data collected through in-depth interviews with management and members, as well as observations of financing activities at Baitul Maal wat Tamwil (BMT) Universitas Muhammadiyah Jakarta (UMJ). The findings reveal that LKMS plays a significant role in enhancing financial inclusion by providing accessible financing based on Islamic principles. The financing is utilized not only for productive purposes but also for education and healthcare needs, thereby contributing to improved household economic resilience. In addition to its commercial function, LKMS also performs a social role by providing qardhul hasan financing for vulnerable groups, serving as a protective alternative against exploitative online lending practices.

Public interest statements

The study identifies several challenges, including perceptions of relatively high financing costs, limited service outreach, and suboptimal use of technology to support access and service efficiency. This study contributes by reinforcing the role of LKMS as an instrument of socio-economic empowerment based on maqashid sharia, particularly in safeguarding wealth (hifz al-mal) and life (hifz al-nafs), in supporting inclusive and equitable sustainable development.