The Approaches of Islamic and Conventional Microfinancing for Poverty Alleviation and Sustainable Livelihood (original) (raw)
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Development of Islamic microfinance: a sustainable poverty reduction approach
Journal of Economic and Administrative Sciences, 2019
Purpose-Though microfinance has been working for many years as a tool to eradicate poverty from its root, most of the least developed and developing countries are yet to significantly alleviate it from the society. The purpose of this paper is to focus on Shariah-based microfinance products in the context of sustainable poverty alleviation approach and provide them financial benefits to enhance their livelihoods. Design/methodology/approach-Here, this qualitative study critically analyzes the basics of the sustainable Islamic microfinance to exterminate the level of poverty. Findings-Islamic microfinance is a more ethical practice than the traditional motives of profit maximization, and it encourages extending the time of repayment if the debtors are in hardship. In some case, it suggests to give charity if the creditor has capability. Research limitations/implications-Most importantly, research scholars and experts have already criticized the concept of conventional microfinance on the basis of various points, especially for its high rate of interest. Social implications-Islamic microfinance is provided with a view to fulfill two tools simultaneously, i.e., social and financial inclusion. In this case, credits and Zakah can be given to the extreme poor people for satisfying basic needs. In terms of social responsibility, Islam encourages the people to be soft in case of collecting the lending money. Originality/value-The study discoursed that sustainable Islamic Microfinance (IM) may be a promising future option to draw the attention of the religiously sensitive people toward the Shariah-based microfinance which can, in turn, mitigate the poverty level.
Do Islamic Microfinance Practise Descrease the Level of Three Aspects of Poverty
IQTISHADIA, 2019
Islamic microfinance institutions such as Baitu Tamkin is one of Koperasi Syariah at Lombok Timur practising islamic value. In practising islamic value, Baitu Tamkin insert this value in line with three aspect including commercial finance, social aspect, and spiritual awareness. But the evaluation of this islamic microfinance practise has not been conducted yet. Therefor we conducted a research to evaluate the curent impact of this program wheter there was improvement and how the conditions of poverty in the member self before and after taking part in empowerment programs on Baitut Tamkin. Poverty condition that we observed not only financial aspect but also social and spiritual aspect. This research used parametric including Multiple Linear regression, a simple Linear Regression, t-test and non parametric test using Wilcoxon test. We conclude that the level of poverty at local region decreased at three aspects but with various condition. First, the islamic commercial financing...
ISLAMIC MICROFINANCE: HOW WILL IT HELPINDIA IN POVERTY REDUCTION
Poverty in world is still a major issue even in this day and age. The population of people living below the poverty line in world is astonishing and the problem is not going away. Poverty is general scarcity or the state of one who lacks a certain amount of material possessions or money. It is a multifaceted concept, which includes social, economic, and political elements. Poverty alleviation remains the most important challenge before policy makers in the world that is characterized by high and rising poverty levels. The purpose of this paper is to demonstrate the potential of Islamic Microfinance as an alternative tool for poverty alleviation. While poverty is a common problem faced by all countries, the efforts and actions has not reached the purpose yet. Still, it calls more attention from majority of government and development oriented organization to alleviate it in an effective and comprehensive approach. We focus on basic tenants of the Islamic ethical system and treat the Islamic ethos as an ideal, through which socioeconomic policies dealing with poverty elimination are assessed. Islam views society as a unified equity in which individual freedom and human dignity is supreme although subject to the axiom of responsibility. In Islamic perspective, poverty is not just viewed from material aspect but also moral/spiritual, thus, any poverty alleviation strategy should reflect on both aspects. It might be argued that while conventional approach on poverty left the importance of committing to moral/spiritual, Islamic approach has more attention on that aspect. Islamic microfinance, having a unique feature compare to the conventional counterpart, offers apotential solution to poverty alleviation.
Islamic Economic Concept in Poverty Alleviation
Journal of Asian Multicultural Research for Economy and Management Study
This study aims to describe the concept of Islamic economics in poverty alleviation. This research method is descriptive qualitative research using data sources from literature or library research (library research). The research approach uses a normative approach and a historical approach. The normative approach is used to examine the ideals of the Islamic Economic conception and then analyze how it is applied. Meanwhile, the historical approach is used to study empirical facts about poverty alleviation. The results showed that the stagnant distribution will cause inequality and social inequality. For this reason, the implementation of the zakat obligation is a very urgent need. The priority of poverty alleviation according to the concept of Islamic economics is to overcome the causes of poverty, namely improving the distribution of wealth. Zakat is the main instrument which is a solution to these various problems, especially in dealing with poverty and social inequality. In Islam,...
Islamic Microfinance System and Poverty Alleviation in Somaliland
Poverty prevalence dates back to the existence of human being and today it has occupied foremost place on human development agendas of virtually all countries of the world. In the Republic of Somaliland it has been a main challenge since the restoration of independence in 1991 and its alleviation is in the first pillar of the National Development Plan (NDP) and National Vision 2030, and also one of the country’s strategic goals to achieve MDGs by 2015 to fight poverty and improve the standard of living of underprivileged population. Nonetheless, actual achievements are still limited. Islamic Microfinance which involves Shari’ah-compliant way of financing and providing credit without collateral or any property for guarantee to the marginally poor (too poor to have access to banks) for their business, is one of the most popular tools employed as part of a poverty reduction strategy, empowering and increasing the productivity of poor, giving social benefits to them in a sustainable way, and aiding economic development. However, in Somaliland it still remains fairly the same effect over the years due to misconceptions in Shari’ah-compliance, the institutions lagging behind and the like. This study determined the role of the Islamic microfinance in poverty alleviation efforts in Somaliland and how this role can be enhanced. It was intended to establish and recommend Islamic microfinance and its principles that could raise poverty reduction and economic development in the country. This was in view of the fact that conventional microfinance that charges the prohibited interest cannot be used by and for the Somaliland population which are 100% Muslims. The study was conducted through descriptive survey research design; data was collected in April 2012 to June 2012, using questionnaire, interview and document review techniques from two Islamic Financial Institutions of Kaaba Microfinance Institution and Salaam Financial Services, data was analyzed using descriptive quantitative methods and presented in tables and figures. The paper finds that the two institutions have envisaged, as their prime objectives, to serve to the vulnerable poor and to have positive impact on their incomes. However, it concludes that the institutions partially address in practice the issue of financial exclusion of the poor. They do not tap the wide variety of financial products and services which comply with Islamic law for the benefit of their clients particularly the hardcore poor and limited attention is paid to targeting the poor with their needs of financial services and products. This research recommends that the government should establish an enabling framework for the institutions providing Islamic microfinance, and K-MFI and Salaam Financial Services should intensify their contribution to poverty alleviation by incorporating new pro-poor financial development policies and by expanding their financial activities into rural areas. Donor agencies including UN and other INGOs to make their income-generating activities in line with Shari’ah and comply with national policies in improving the standard of living of the poor people.
Islamic Microfinance Model and the Hypothesis of Poverty Alleviation
European Journal of Marketing and Economics, 2020
Efforts to alleviate poverty in the world have the most perilous impact in human history. Contrary to the prevailing paradigms in public and private policies, the erosion of poverty remains very shocking. The Islamic finance model tried to present its alternative vision and to participate in international efforts to at least help the poor in Muslim countries. This paper is an essay among others that analyzes the effectiveness of this system based on official data.
Poverty Reduction through Islamic Modes of Finance; the Way Forward
The Journal of Social Sciences Research, 2018
The purpose of this paper is to share the conceptual overview of the role that Islamic modes of finance can play in the reduction of poverty. The underpinning principles of Islamic finance modes is the adherence of Islamic values and to promote economic and social justice in the society. This study is aimed at providing insights on the prevailing poverty reduction strategies and their respective impact on poverty eradicate alongside proposing an alternative Islamic model of poverty reduction. For this purpose, the present study overviews the existing literature and textual analysis of the subject to emphasize the significance of poverty as an issue around the globe along with the critical review of the strategies currently considered to eradicate poverty. Poverty has now been emerged as a global phenomenon, which is common across many nations and, perhaps, not surprisingly, a tough challenge to governments and community development-oriented organizations which have been striving to eradicate. The present paper is, therefore, an effort to propose a possible alternative approach for poverty reduction. Subsequently, some discussion has been made on the application of Islamic approaches of welfare and poverty reduction. Islam, as a religion, encourages healthy competition, private ownership, and allows demand and supply rule of working independently. Islamic approach to poverty reduction has multiple facets and it is aimed at reducing the gap between haves and have not"s through optimum circulation of wealth in the economy and by restricting capital to generate capital and allowing other factors of production along with the risk of loss to play their due role. Keeping in view the prevailing models of poverty reduction and critical evaluation of these models, the study has proposed Islamic modes of finance as a workable plan to reduce poverty and spread social justice in the society.
HYBRID MODEL OF ZAKAH, WAQF, QARD-HASSAN & ISLAMIC FINANCE FOR A JUST AND SUSTAINABLE MICROFINANCE
Purpose - The failure of interest based programmes, such as micro-finance and anti-poverty programmes, in assisting the destitute, eradicating poverty and reducing income inequality encouraged the authors to study in depth the alternative financial institutions to interest/riba that can solve such problems rather than harming individuals, communities, societies and countries. This raises the question of whether the different Islamic financial institutions can provide microfinance with zero-interest to eradicate poverty and reduce inequalities This paper attempts to propose a hybrid model integrating four religious financial institutions to eradicate poverty within a very short period of time in a just manner and in a sustainable way for generations to come. We shall use both primary sources including text from the Quran and the Hadith, and data collected from secondary sources including books, articles, and journals besides World Bank reports from the web sites. The paper intends to create awareness of the meaningful approach of religion in terms of eradicating poverty, reducing inequalities and creating a fair and just society for all, rather than following man-made system which hurt all societies. Moreover, this paper is also intended to open the door wider for more researchers and postgraduate students to explore their knowledge in depth on these religious institutions and to adjust them according to the current needs of the different societies. We hope to revitalize four neglected Islamic financial institutions and integrating them into a hybrid model for a promising way to eradicate poverty in a just and ethical manner.
The aim of this study is to discuss about the conceptual explanation of microcredit and sustainable livelihood Moreover, this study also described about conceptual linkages of microcredit towards a sustainable livelihood framework. The study found that the providing accesses of microfinancing are potentially working in the way of ensuring sustainable livelihood of the poor women in the world. The study recommended that zakat based Islamic mode of financing and Qard-al-Hasan on the basis of spiritual values would be an alternative model for poverty alleviation and ensuring sustainable livelihood.