The Effectiveness of Mudharabah Financing in Improving Micro Business Empowerment in Ponorogo Regency

Abstract

This study aims to examine the effectiveness of mudharabah financing in increasing the empowerment of micro businesses in Ponorogo Regency. The research method used in this study is a descriptive qualitative method. The data source used is secondary data obtained from the literature by studying, understanding, and identifying journals or books or other sources relevant to the research. Many micro businesses find it difficult to develop due to limited capital, with mudharabah financing being a sharia loan solution whose profit-sharing system, so it is expected to be fairer and more appropriate to help micro business actors. The results of this study show that: 1) Micro businesses in Ponorogo have great potential to develop and make a significant contribution to the regional economy. 2) Mudharabah financing plays an important role in the sharia economic empowerment instrument which plays a role in increasing financial inclusion and alleviating poverty. 3) lack of understanding of the public and business actors about the concept of mudharabah, unfair profit-sharing ratio, high level of business risk, and regulatory uncertainty. It is a challenge in the implementation of mudarabah financing.