Introduction to Islamic Microfinance
Year: 2008
Type: preprint
Abstract: This paper explains the building blocks of a microfinance program targeted at Islamic societies, which are characterized by high and rising levels of poverty and financial exclusion.Conventional microfinance programs often neglect Muslim religious sensitivities. For poverty alleviation efforts to succeed in Muslim societies, there is need for an appropriate model rooted in Islamic beliefs and cultures. The paper states that there are no fundamental contradictions in global microfinance best practices and the Islamic approach to poverty alleviation. It presents the Islamic approach as a composite and compassionate one that is rooted in charity, but permits wealth creation and for-profit enterprise. The paper focuses on mechanisms, models, tools and instruments of the Islamic approach such as: Shariah-compliant mechanisms of microcredit; Partnership modes of equity financing such as trustee-financing, joint venture and share-cropping; Not-for-profit insurance that takes the form of mutual guarantee by members in a cooperative venture.
Source: SSRN Electronic Journal
Author: Mohammed Obaidullah
Institution: Islamic Development Bank
Language: English
Subfield: Accounting
Domain: Social Sciences
SDG: No poverty
Open Access status: green
OpenAlex ID: W1910790912