Optimization of Fintech to Enhance Participatory Economy in Indonesia: Study Case of IGrow
Iffah Karimah (a*), Rumaisah Azizah Al Adawiyah (b)

a) Faculty of Law, Universitas Indonesia *iffahkarimah[at]ui.ac.id
b) Faculty of Economics and Business Education, Islamic Economics and Finance Department, Universitas Pendidikan Indonesia

Abstract

The crisis caused by the pandemic COVID-19 has forced us to adapt in changing environments. To promote economic recovery post Covid-19, Islamic economics has a significant role. Islamic finance encourages production activities that creates additional value in products and services, creating economic growth in society. Since real economy relies on the local economy, it involves Micro, Small, and Medium Enterprises (MSMEs) as well which suffer a lot due to Covid-19. Thus, they need the economy support to rebuild their business post-pandemic. However, most of the reachable financing option for MSMEs usually involve ribawi interest which against sharia principles. Therefore, the role of Peer-to-Peer Lending in Financial Technology (Fintech) is essential to provide non-ribawi debt to MSMEs. Moreover, it encourages participatory economics as part of moral economy.
The research will be conducted by the study case of igrow as fintech platform in providing micro-financing in Indonesian agriculture, in light of the Islamic moral economy concept. Furthermore, the data will be collected by analysing the Islamic moral economics aspect in igrow. Research findings suggest that igrow platform reflected the primary modes of production of Islamic moral economy through the participatory economy and profit-loss sharing. Besides overcoming capital problems, this fintech innovation succeeds to develop the participatory economy by involving urban society that does not have the farming skill and lack of land access as well as through the usage of unutilized land resources. The originality of this paper shows that participatory economy could be attained by the optimization of fintech by revealing how igrow method can be applied in re-embedding economy value in society and empowering agricultural sector in Indonesia. This study aprovides insights how government and other parties could utilize and optimize fintech as one of tools in alleviating poverty and encouraging inclusivity.

Keywords: Embeddedness, participatory economy, Islamic Moral Economy, Peer-to-peer Lending

Topic: Recent technological development