ABSTRACT
Baitul Maal wa Tamwil (BMT), which is a form of Islamic microfinance institution in Indonesia, faces liquidity problems. This study aims to map out the liquidity problems faced by BMTs, to discover how BMTs are addressing the different problems and to find a BMT model of liquidity management. This study used a qualitative approach using the case study analysis techniques of Robert K. Yin. Subjects of this study are BMTs in East Java, which were selected purposively with ten BMT managers as key informants. The results show that there are five different ways used by BMTs in overcoming liquidity. BMTs were established as formal securities guarantor institutions, in the form of a secondary cooperative that consists of BMTs, taking a standby loan from Islamic banks which can be taken when needing liquidity, establishing non-formal inter-BMT relations, borrowing from other financial institutions, and having individual backing that can be borrowed at any time. The best way to manage the liquidity of BMTs is to form a secondary cooperative, because it can also act as an alternative for BMTs to save funds when there is excess liquidity.
