ABSTRACT
Islamic financial practices have become the main motor of Islamic economics, which is believed to be a potential alternative for the development of a more applicable and sustainable economic system in this disruptive era. One of financial practices based on Sharia or Islamic Compliances was Sharia Microfinance Institutions (MFIs), which had been appearing throughout Indonesia. Indonesia’s Sharia financial industry style is driven by community preferences or market forces from the demand side, making the industry grow bottom-up, which provides a strong foundation for further development. Since its financial activities are registered and overseen at the Financial Services Authority (OJK), the community feels secure and comfortable to conduct financial transactions, especially for Muslim communities, in this disruptive era, owing to the impact of globalization in response to a rapidly changing business and economic environment (dynamic). The purpose of this study was to measure the correlations among factors that influenced the investment decisions of the community in Islamic MFIs in Indonesia, with funding placement activities, financing, and receipt of funds determined by financial performances of Sharia MFIs as the intervening variables. This study used quantitative methods of research. By collecting secondary data on a group of Islamic MFIs in Indonesia listed in the OJK, this research analyzed the effects of funding placements, financing, and receiving funds in Sharia MFI financial statements on the financial performance of Islamic MFIs that affected investment decisions over three years. This study used path analysis to measure the effect of the financial performances of Islamic MFIs on investment decisions so as to provide an overview to investors who will make financial investments in Sharia MFIs.
