Islamic Accounting Innovations in Small and Medium Enterprises (SMEs): A Literature Review on Financial Inclusion and Sustainability

Abstract

SMEs play a crucial role in the national economy but continue to face challenges such as limited financial access, financial literacy gaps, and weak governance that affect their sustainability. Islamic accounting innovation has emerged as a potential solution by utilizing Islamic fintech, financial literacy, and digitalized accounting practices to strengthen financial inclusion and SME competitiveness. This study aims to review the literature on Islamic accounting innovation and its implications for financial inclusion and sustainability using a literature review method based on ten research articles published between 2021 and 2025. The articles were categorized by identity, theory, methodology, and key findings to obtain a comprehensive mapping. The results indicate that Islamic accounting innovation positively contributes to improving business performance, financial reporting quality, and SME sustainability, although challenges remain in terms of digital literacy gaps, human resource readiness, and regulatory support. These findings provide theoretical contributions to the development of Islamic accounting scholarship and practical recommendations for SMEs, policymakers, and Islamic financial institutions to strengthen financial inclusion and sustainability strategies.