The Examination of Shariah Compliance of Equity Crowdfunding Companies in Indonesia

Abstract

Purpose: Equity crowdfunding is one type of crowdfunding that is growing rapidly in Indonesia. Equity crowdfunding can be considered for startups and SMEs because the costs are relatively cheaper than loans. But until now there are no regulations governing Shariah compliance in the application of equity crowdfunding in Indonesia. This paper aims to analyze the operation of equity crowdfunding companies in Indonesia, to evaluate the equity crowdfunding in term of Shariah compliance model with qualitative and quantitative approaches. Design/Methodology/Approach: This paper is qualitative research with inductive and deductive analysis, by assessing Shariah compliance aspects in Small Medium Enterprises (SMEs). The data used are primer and secondary data and the data collection techniques that carried out by the researcher directly to the platform of equity crowdfunding while secondary data from the existing literature. Findings: For the core businesses run by SMEs in equity crowdfunding in Indonesia, 154 SMEs registered on the equity crowdfunding platform. According to qualitative analysis, all of companies are in accordance with Shariah rules where no activities prohibited by Shariah. In terms of quantitative, it can be seen that there are no specific regulations that require listed businesses to follow. Originality/Value: This research provides results about the equity crowdfunding system in Indonesia, analysis of Shariah compliance in terms of qualitative and quantitative aspects of SMEs registered on equity crowdfunding platforms in Indonesia