“Pinjol” is a Bad Way to Provide Short-Term Funding for Women Entrepreneurs

Articles in Press

Document Type : Case study

Authors

1 Management, Faculty of Economic and Islamic Business, Universitas Islam Negeri Sumatera Utara, Medan, Indonesia

2 Islamic Economics, Faculty of Economic and Islamic Business, Universitas Islam Negeri Sumatera Utara, Medan, Indonesia

3 Faculty of Economic and Islamic Business, Universitas Islam Negeri Sumatera Utara, Medan, Indonesia

4 Economic development, Faculty of economics and business, Universitas Andalas

Abstract

This study examines whether Pinjaman Online (Pinjol) helps or harms women micro-entrepreneurs in Medan, Indonesia. Using survey data from 302 borrowers, the study employs a two-stage design: Propensity Score Matching (PSM) to estimate the average treatment effect of Pinjol use on business outcomes, and Partial Least Squares Structural Equation Modeling (PLS-SEM) to analyze the behavioral and structural drivers of credit decisions. The findings show that Pinjol users experience short-term gains in sales compared to matched non-users; however, high borrowing costs and tight repayment cycles compress margins and weaken overall performance. Financial literacy and risk perception significantly reduce the likelihood of adopting Pinjol, while larger loan needs increase it; age and education condition these effects. The results indicate that demand-side factors and liquidity pressures have a more substantial influence on digital credit uptake than price awareness. Theoretically, the study integrates credit rationing and behavioral finance by demonstrating a shift from collateral-based exclusion in formal banking to literacy and risk-awareness constraints in fintech borrowing. Policy implications include transparent cost disclosure, repayment schedules aligned with micro-enterprise cash flows, gender-sensitive financial literacy programs, and pathways from high-cost digital credit to safer, lower-cost financing options.

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Interdisciplinary Journal of Management Studies

Articles in Press, Accepted Manuscript
Available Online from 30 November 2025

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