TRANSACTION COSTS OF SMALL MICRO ENTERPRISES (SMES) FINANCING IN SHARIA MICROFINANCE INSTITUTION

Microfinance Institution (MFI) is a hope to overcome the problems of capital for SMEs in Indonesia. In Indonesia, it is not only in the form of conventional microfinance institution, but there is also a Sharia microfinance institution in the form of Baitul Mal Wat Tamwil (BMT). Although BMT implements a system without interest, but the transaction costs of the financing should be a separate focus. This research aims to identify and analyze the transaction costs incurred in the Sharia MFIs in the SME financing, to analyze the transaction costs that dominate throughout the transaction process of SME financing, and to formulate the suggestions on minimizing the transaction costs in the Sharia financing for SMEs. The case study becomes the method to analyze the transaction cost of the Sharia financing for SMEs in BMT, with one BMT in Semarang as the location of the case study. The result research is as follows: on the side of BMT, the transaction costs incurred in the Sharia finance for SMEs are still dominated by the ex post transaction costs, which amounted to 96.7% of the total of the overall transaction cost. On the side of the members, the transaction costs for the financing process are dominated by the disbursement process.