Imam Wahyudi

Commitment and trust in achieving financial goals of strategic alliance: Case in Islamic microfinance

Purpose - – This paper aims to illustrate theoretically and empirically the decision and result of strategic alliance between baitul maal wa tamwil (BMT) and Islamic banks as a relationship based on trust, mutual-trustworthiness and commitment. This paper also identifies the basic criteria for the resilience of a strategic alliance, the challenges and the barriers in a strategic relationship along with managerial and operational implications. Design/methodology/approach - – In this study, we have chosen to use the confirmatory approach through a structured questionnaire by means of field survey to 131 BMT spread throughout Central Java and Yogyakarta. From the total sample, 89 BMT fulfilled the sampling criteria, that is: has operated for a minimum of two years and does not experience any financial difficulties during those two years; has done a financing contract with an Islamic bank; channels some of its funds to micro, small and medium enterprises; and is in the form of a cooperative, and not a micro financial institute. Data treatment uses the method of listwise deletion. Data analysis uses equation model with the software LISREL version 8.80. To validate the result of data analysis, we have also run a focus group discussion with Directorate of Syariah Banking, Bank of Indonesia, and in-depth interviews with BMT parent cluster (Inkopsyah). Findings - – This research shows that commitment contributes positively in achieving the financial goals of an alliance. Coordination and initial agreement has a positive and significant influence in forming commitment from BMT and trust from Islamic banks. Other than coordination and initial agreement, the trust given by Islamic banks also came from the social capital owned by BMT. Originality/value - – The trust and commitment will assist the building of strategic alliance between Islamic banks and BMT. Apart from financial purposes, the alliance between the two will also encourage natural knowledge-sharing.

Default Risk Analysis in Micro, Small and Medium Enterprises: Does Debt Overhang Theory Occur?

This paper intends to analyse the default risk in micro, small and medium enterprises (MSMEs) and its relation to new debt opportunities, debt overhang theory and growth intention. The results confirm that cash flow, capacity and leverage are the major determinants of firms’ default, while gross margin and efficiency measure are not significant predictors. By analysing the rating transition behaviour, we found that the further the rating migrates, the smaller the probability of transition and that the probability towards default is greater along with the decreased quality rating. By extending the analysis, we found that the debt overhang theory is not applied in relationships between banks and MSMEs.

Realizing knowledge sharing in strategic alliance: case in Islamic microfinance

Purpose - – The purpose of this paper is to understand the influence of social capital, trust and commitment in fusing the various elements in a strategic alliance through the knowledge-sharing process. The unit of analysis is the relationship between Islamic banks and baitul maal wa tamwil (BMT), where each carries with it a back-ground of differing institutional culture and management style. The theory regarding knowledge sharing and interdependence will be developed in the model and tested with structural equation modelling (SEM) to evaluate the direct and indirect effects of the connection between relationship bonding (social capital) and trust and commitment in a formed alliance. Design/methodology/approach - – In this study, we have used a confirmatory approach through survey using a structured questionnaire distributed to 131 BMT throughout the region of Central Java and Yogyakarta. The sampling criteria used are: has operated for a minimum of two years and does not experience any financial problems in those two years; has been in a financing contract with an Islamic bank; has channelled a part of their funds to micro, small and medium enterprises; and is in the form of a cooperative and not micro financial institution. The data treatment used is list-wise deletion. From the initial sample, 89 BMT were found that fulfilled the sampling criteria. Data are analyzed using SEM with linear structural relations (LISREL) software version 8.80. To validate the data analysis result, we have also run a focus group discussion (FGD) with the Directorate of Islamic Banking – Bank Indonesia, as well as in-depth interview (IDI) with the BMT parent cluster (Inkopsyah). Findings - – Empirically, conflict, coordination and trust are a positive and significant contributor in the success of transfer of knowledge. A strategic alliance relationship between Islamic banks and BMT is still contractual in character, where trust is tied down by a contractual agreement. Other than that, trust and transfer of knowledge is significantly influenced positively by the building of coordination, agreement, interdependence and social capital. Originality/value - – The unit of analysis is the relationship between Islamic banks and BMT, where each carries with it a background of differing institutional culture and management style. The theory regarding knowledge sharing and interdependence will be developed in the model and tested with SEM to evaluate the direct and indirect effects of the connection between relationship bonding (social capital) and trust and commitment in a formed alliance.