COMPETITION BETWEEN ISLAMIC VS CONVENTIONAL MFI : ITS IMPACT ON CONSUMER’S ACCESS DECISION

This study uses data from the survey IFLS-4 (Indonesia Family Live Sur-veys-wave 4) to analyze the impact of competition between lenders on cli-ent behaviour. IFLS-4 contains data on self-reported habits of community residents (312 community) decision to access to Islamic Micro Finance Institu-tion (Islamic MFI), named Baitul Maal wat Tamwil (BMT). This data con-tains specific type of BMT’s location which could be accessed by commu-nity, with variously geographical distances. This data also is enriched by the presence of another type of conventional MFI. This study found that in-creased competition suggesting clients to change their behaviour. The pres-ence of conventional MFI and theirs proximity as indicator of competition, very instrumental in determining access to BMT. Interesting finding, for reli-gious type borrowers, they tend to sustain their access to BMT whose more far geographical distance, even conventional MFI presence inside their vil-lage. Thus, this study suggests that the expansion of financial inclusion stra-tegy of Islamic MFI should also be specifically determined by behaviour of and the BMT’s location among the community.