Potential for Developing Sharia Financial Products for the Agricultural Sector in Ponorogo
Main Article Content
Binti Masruroh*
Ponorogo Regency, a predominantly agrarian area in East Java, faces significant challenges in agricultural financing. Most small-scale farmers rely on informal lenders due to the inaccessibility of conventional financial institutions, which often impose strict requirements and inflexible schemes. This study explores the potential of Islamic finance as a fair and sustainable alternative for agricultural financing in Ponorogo. Using a qualitative descriptive method, data were collected through literature review, field observations, and in-depth interviews with farmers, BMT/LKMS managers, and Islamic banking representatives. The findings reveal that Islamic financial products such as qardhul hasan, mudharabah, and musyarakah have been positively received by farmers due to their alignment with local socio-religious values and their equitable, non-interest-based mechanisms. However, implementation remains limited due to low Islamic financial literacy, restricted institutional outreach, lack of stakeholder coordination, and the absence of risk mitigation tools such as agricultural takaful. To maximize the potential of Islamic finance, the study recommends improving financial literacy, strengthening BMTs and Islamic cooperatives, developing community-based financing models, and fostering synergy among stakeholders. With proper support and policy alignment, Islamic finance can play a key role in empowering farmers, enhancing food security, and promoting rural economic resilience.
Bangash, A. U. J. (2020). Managing the agricultural sector through muzara’ah: Implementing an Islamic economic participatory mode of financing. International Journal of Islamic Business & Management, 4(1), 27–42.
Bromley, D. W., & Cernea, M. M. (1989). The management of common property natural resources: Some conceptual and operational fallacies (Vol. 57). World Bank Publications.
Idris, M. K., Shoim, M., & Najichah, N. (2025). Examining Islamic Legal Implications of Women’s Migrant Workers: Family Dynamics in Rural Central Java, Indonesia. FUQAHA Journal of Islamic Law, 1(1), 41–62.
Khan, M. B., Ghafoorzai, S. A., Patel, I., & Shehbaz, D. M. (2021). Waqf based Islamic fintech model for agriculture sector of Indonesia. International Journal of Business Ethics and Governance (IJBEG), 73–85.
Khatri, P., Kumar, P., Shakya, K. S., Kirlas, M. C., & Tiwari, K. K. (2024). Understanding the intertwined nature of rising multiple risks in modern agriculture and food system. Environment, Development and Sustainability, 26(9), 24107–24150.
Kuyateh, M. A. (2022). Shariah Compliance Prohibitions in Islamic Banking and Finance: The Case of Riba, Gharar and Maysir. Journal of Islamic Banking & Finance, 39(1).
Mubarok, F. (2021). Acceleration of Islamic bank financing in Indonesian agriculture sector. Shirkah: Journal of Economics and Business, 6(2), 185–204.
Nazirwan, M. (2015). The dynamic role and performance of Baitul Maal Wat Tamwil: Islamic community-based microfinance in Central Java. Victoria University.
Niswatin. (2025). Factors Affectıng Non-Performıng Finance in Islamic Bankıng in Indonesıa’s Agrıcultural Sector.
Ojeh, V. N., Origho, T., & John, P. H. (2012). Agriculture as an index of socio-economic development of Delta State of Nigeria. World Environment, 2(4), 62–68.
Shiferaw, B., Obare, G., & Muricho, G. (2008). Rural market imperfections and the role of institutions in collective action to improve markets for the poor. Natural Resources Forum, 32(1), 25–38.
Snyder, H. (2019). Literature review as a research methodology: An overview and guidelines. Journal of Business Research, 104, 333–339.
Sunarmo, S., & Majid, R. (2024). The Role of Knowledge and Trust in Explaining Intention of Performing Waqf in Agricultural Sector. International Journal of Islamic Economics and Finance (IJIEF), 7(1), 51–72.
