Effectiveness Financing in Agriculture Sector: A Comparative Study between Conventional and Islamic Bank

Abstract

This study aims to identify the effectiveness of financing provided by conventional and Islamic banks to Micro Small Medium Enterprises in the agricultural sector in South Sumatra. The study uses multiple linear regressions to identify the effect of financing on productivity.  Musi Banyuasin Regency was chosen as a research location because based on data from Bank Indonesia 2016 is the district that has the largest loan for agricultural / plantation SME sector in South Sumatera. A total of 128 farmers were sampled in this study. Research respondents are farmers who have been or are getting loans either from conventional banks or from Islamic banks. This study found that neither simultaneous nor partial types of banks and loan amounts were not proven to significantly affect productivity. These findings indicate that the behavior of Islamic and conventional banks in disbursing loans to the agricultural sector is no different.Keywords: Agricultural Financing, Islamic Bank, Conventional Bank,JEL Classifications: G21, Q14, O13.DOI: https://doi.org/10.32479/ijefi.7403