Indonesian Women and Islamic Economy: A Case Study of Islamic Microfinance and Women’s Empowerment in Yogyakarta Inaugural Dissertation to complete doctorate from the Faculty of Arts and Humanities of the University of Cologne in the subject Oriental Philology with the study focus areas Islamic Studies Presented by: Ninik Sri Rahayu Born on 01 June 1977 In Semarang, Central Java, Indonesia Cologne, 22 January 2020 Acknowledgments Women's empowerment has drawn my focus over the past decade. Having the opportunity to raise the issue as the central theme of my dissertation was a great privilege for me, and in many ways engaging with the complexity of 'women’s empowerment' has shaped and continues to shape how I see the world and my identity. I consider myself blessed to have undertaken this research, the greatest intellectual adventure I have ever had. This dissertation is an outcome of collaborative work involving many individuals and institutions to whom I owe sincere gratitude. Firstly, I would like to express my thanks to my principal supervisor, Professor Edwin P. Wieringa, who provided me with the best guidance and support I could have hoped for. I remember how, when I first started this project four years ago (April 2016), I had zero ability to do qualitative research, having previously only conducted quantitative research. However, my supervisor was very patient in guiding me doing my first qualitative study, even with my limitations. His unhesitating support of my work; his careful reading of my many drafts; his comments, suggestions, and critiques have all enabled me to clarify my results, hone my ideas, and develop the organization of my dissertation. My gratitude also goes to Professor Arndt Graf, my second supervisor. I thank him especially for reading through my thesis and providing me with detailed feedback. I am blessed to have Professor Sabine Damir Geilsdorf as the third examiner of my work. I am grateful to have Professor Ulrike Niklas as the chair of my doctoral examination, and I thank her sincerely for opening her heart and allowing me to work at the institute of South and Southeast Asian Studies. I am also indebted to my colleagues Dr. Claudia Webber and Dr. Karl-Heinz Golzio for providing me with their best facilities and companionship while I was working on my thesis in the institute. My studies in Germany would not have been possible without permission from the Rector of Universitas Islam Indonesia (UII), Yogyakarta, the dean of the Faculty of Economics, and the head of the finance and banking department. I therefore thank them for allowing me to temporarily suspend my duties as a lecturer in order to pursue my doctoral studies. I would also like to extend my gratitude to the Indonesian Endowment Fund for Education (LPDP) for their generous support, which made it possible for me to study in Germany as well as carry out fieldwork in Indonesia. Several parts of this dissertation have been presented in conferences held in Leeds, United Kingdom (2018), Toronto, Canada (2018), Yogyakarta, Indonesia (2019) and Istanbul, Turkey (2019). Therefore, I would like to thank the conference participants for their helpful comments and remarks. My doctoral studies have not all been about the academic atmosphere, but also part of a life journey that has enriched my inner experiences. I have met many genuine friends, who have in many ways became my family during my time in Cologne. notably Hasbuna Kamila, Mbak Ayu, Mbak Frieta, Tonggi, Fathoni, and Alfa, thank you for your loving friendship over the years and I wish you all the best for your studies! Special thanks to my dearest friend, Jessica Schmauss; I cannot thank you enough for all that you have done for me, and for always being the first one to offer me help whenever I encountered problems in Germany. I also am thankful to my lovely friends, Daniella Sean and Erin, the first two PhD students I knew at the university and later part of my closest circle. Thank you for the beautiful friendship. While collecting data, I greatly benefited from all those involved. To the research participants, particularly the Baitul Maal wat Tamwil (BMT) clients—the women traders in traditional markets—who welcomed and generously shared their experiences with me, I am tremendously indebted to all of you for opening your homes, lives, and hearts to me. I would also like to thank my colleague at UII, M. Bhekti Hendriato, who gave me access to key members of the BMT movement in Yogyakarta, as well as the BMT managers—especially Pak M. Ridwan (BMT BIF), Pak Rama (BMT Al-Ikhwan), Pak M. Sobari (BMT KUBE Sejahtera 19), Ibu Ekantini (Koperasi Syariah GEMI), Pak Nasrudin, and Pak Edy (Puskopsyah DIY)—who gave me valuable support during my field work. I thank you all from the bottom of my heart for your kindness, help, and hospitality. During my academic life, I spent many years reading, thinking, worrying, analyzing, writing, revising, editing, reediting, ad infinitum. It was sometimes very painful. As such, I am greatly indebted to my loving husband, Adink Masduki, who was a pillar of support over my PhD journey. Thank you, my husband, for everything: your critical feedback, editing help, guidance doing qualitative work, incredible patience (especially when dealing with my mood swings and sleep problems). I fell many times during this process, and you always helped me get back up; you are the best part of me. Finally, I am also extremely grateful to my parents (H. Harjo Waridi and the late Sumarti) and my parents-in-law (H. Baseran and the late Hj. Siti Khadijah) for their inspiration, motivation, and support. To my sisters, brother, in- laws (Mbak Sri, Mbak Utami, Lis, Mas Toto, Mas Heri, and Wiwik), and beloved nephews (Rico, Hendra, Ersa, Bara) and nieces (Caca, Frieta, Quinna), thank you for your continued support, love, prayers, and encouragement. Cologne, 21 January 2020 Ninik Sri Rahayu Abstract Baitul Maal wat Tamwil (BMT), a model of Islamic microfinance institution (IMFI), has emerged in Indonesia in the last two decades. Although BMTs were not initially created for women, they have embraced women as their primary beneficiaries. The main objective of this study is to examine the link between BMTs and women's empowerment. More specifically, this study aims to address three main problems. First, to observe the origins of BMTs and their affiliation, it investigates their institutional missions and their ties with women's empowerment agendas. Second, it analyzes the particular patterns with which BMTs' empower women clients. Third, to investigate the effects of BMTs' services on women. Employing a qualitative approach, this study explores four BMTs operating in Yogyakarta Special Region, Indonesia. Data were collected through semi- structured interviews, focus group discussions, document review, and field observations. Participants included BMT managers, founders, and staffs, as well as women clients and experts. This study has three main findings. First, although the majority of BMTs in Yogyakarta predominantly deal with women, from a historical perspective, there is no indication that the BMT movement in this region is related to a women's empowerment agenda. Moreover, none of the BMT institutions in this research specify women in their goals, objectives, or operations. Targeting of women as primary beneficiaries is merely intended for financial sustainability and not gender concerns. BMTs consider women to be 'a rational economic segment', who can enhance the efficiency of programs and contribute to organizational sustainability. Observing the four selected BMTs, it is found that the service orientation and character of each BMT is significantly affected by its primary affiliation. BMTs that are allied with Islamic mass organization are inclined to accentuate Islamic symbols, while BMTs that work with the government and/or international donors use such symbols less regularly. Second, this thesis demonstrates that women's empowerment in BMTs follows various models, dealing with socio-economic, religious, and environmental issues. For socio-economic empowerment, BMTs employ individual and collective empowerment. Individual empowerment, called jemput bola, is widely used by BMTs as their main means of maintaining personal relationships and member loyalty, as well as to oppose the conventional banking sector. This scheme requires BMTs to arrange rigorous meetings between clients and BMT officers. Meanwhile, collective empowerment is generally facilitated through the creation of independent groups of women based on proximity of residency. BMTs also use religious activities as instruments to deliver their mission of da'wah, to attract new members, and to monitor members' business performance. Supported by its international NGO's partners, one BMT institution has pioneered ecological projects that are integrated at the strategic level into its organizational mission and goals. i Third, according to clients, the effects of BMT projects on their family and personal lives are mostly positive. Respondents reported that access to BMTs' programs and services have fostered socio-economic and psychological benefits for women. Economically, positive outcomes have emerged from increased income, savings, and ownership as a consequence of business growth. Meanwhile, access to credit has given women social advantages, such as increased social mobility. Involvement in BMT programs has expanded women's ability to travel to places outside the province. In addition, women's participation in BMT projects has also had positive psychological contributions. Most respondents reported having more self-esteem and dignity as a result of their economic growth. The involvement of women in BMTs' religious programs also improves their religious knowledge and practice. Nevertheless, this study also demonstrates that BMTs may have a negative effect on women; one of the most apparent harmful effects of women's engagement in BMTs is their continuing dependence on loans. The importance of this study lies in several points: 1) It contributes a new understanding of the intersection between microcredit, women’s empowerment, religious and cultural problems in a Muslim-majority society.