The Effect of Mudharabah Financing on The Welfare of Youth-Owned MSMES in Aceh Province

Abstract

Although Aceh Province has formally implemented an Islamic financial system, the utilization of mudharabah financing by youth-owned MSMEs remains suboptimal and shows considerable regional variation. This condition raises an empirical question regarding the extent to which mudharabah financing actually affects the welfare of youth MSME actors. This study aims to analyze the effect of mudharabah financing on the welfare level of youth-owned MSMEs in Aceh Province. The research employs a quantitative approach involving 50 youth MSME respondents distributed across Banda Aceh, Aceh Besar, Lhokseumawe, Aceh Barat, and Subulussalam. Data were collected through structured questionnaires and analyzed using descriptive statistics and simple linear regression. The results indicate that the level of mudharabah financing utilization falls within the low to moderate category, with substantial disparities in access across regions. Regression analysis reveals that mudharabah financing has a positive and significant effect on youth welfare, with a coefficient of determination of 41.2 percent. These findings confirm that limited access to mudharabah financing directly contributes to slower improvements in income and business stability among youth entrepreneurs. Therefore, strengthening access to and utilization of mudharabah financing is a key factor in enhancing the welfare of youth-owned MSMEs in Aceh.

Keywords: Aceh, mudharabah financing, youth welfare, youth-owned MSMEs.