Role of Islamic Cooperatives in Financing Micro and Small Scale Entrepreneurs in Indonesia: Case Study of KOSPIN Jasa Syariah Pekalongan

One of the major problems faced by micro and small scale entrepreneurs (MSE) is lack of financial access. The presence of Islamic microfinancing institution (IMI) is extremely important. IMI offers simpler administrative and requirement procedures as compared to the commercial banks. One of the IMIs that exist in Indonesia is Islamic cooperatives. This paper attempts to observe empirical role of Islamic cooperatives in the country by taking a case study of Kospin Jasa Syariah in Pekalongan city, Central Java. It is the biggest Islamic cooperative based on the assessment of Ministry of Cooperatives and Small and Medium Scale Enterprises. The study aims at analyzing effectiveness level of financing given to the MSI and factors affecting the financing amount taken by these MSE. A survey on 100 micro and small scale entrepreneurs was conducted on February, 2011. Likert scale and path analysis were employed as analytical tools. The study found that financing procedures and financing impact