Do Islamic Microfinance Practise Descrease the Level of Three Aspects of Poverty (original) (raw)
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The Role of Islamic Microfinance For Poverty Alleviation in Bandung, Indonesia
Ihtifaz : Journal of Islamic Economics, Finance, and Banking, 2019
The emergence of Islamic micro financial institution becomes the alternative solution for the micro-entrepreneurs who need working capital assistance. However, the impact of Islamic microfinance institution in reducing poverty level is somewhat still debatable. In Indonesia, Islamic microfinance established through the presence of Baitul Mal wa Tamwil (BMT), the most popular type of Islamic microfinance institutions. BMT providing financing for the micro-entrepreneurs, as their potential clients, that operates their activities mostly at the traditional markets. The purpose of this study is to measure the impact of BMT for poverty alleviation in Bandung as the capital city of West Java as the biggest population province in Indonesia, not only based on material level but also on spiritual level. This study is looking at income variables of micro-entrepreneur’s household, as well as the spiritual level indicator of micro-entrepreneur before and after they received financing from BMT. The primary data obtained through in-depth questionnaires in Bandung, Indonesia.
Purpose -This paper aims to investigate the effectiveness of Baitul Maal wat Tamwil (BMT) in reducing poverty. Design/methodology/approach -The case study approach on BMT MMU Sidogiri (located at East Java Province) is taken. Two important and dominating products of BMT MMU Sidogiri (i.e. ba'i bithaman 'ajil (BBA) and mudarabah) are examined carefully on how much they have helped the customers in reducing their poverty. The paper goes beyond data measurement using descriptive statistics, paired t-test and some poverty measurement indexes such as headcount index; poverty gap; Sen index; and Foster, Greer and Thorbecke Index to investigate the effectiveness of the BMT in reducing poverty. Findings -This paper reveals that BMT financing is effective in reducing poverty. Most of respondents can increase their income after receiving BMT financing. Products of BMT, especially BBA and mudarabah, to empower the poor in various productive businesses have been able to reduce the extent and severity of poverty. This paper also discloses some interesting and important findings related with how BMT's work, so that it can contribute more to the knowledge enrichment, as well as the development of BMTs, in general, in realising their mission. Originality/value -The establishment of the so-called BMT in the form of an Islamic microfinance is intended initially to effectively help the poor. At present, there are around 3,874 BMTs operating around the country. Although the BMTs have been existing since more than ten years, no research has been conducted to examine their effectiveness in alleviating the poverty. This study in aimed at fulfilling this important gap.
The Journal of Social Sciences Research
Indonesia has a strong presence of microfinance sector with the number of Islamic Microfinance Institutions (IMFIs) estimated to be around 5,000 currently. Microfinance is an effective tool in alleviating poverty in Indonesia due to the limited access to financial services by the poor who accounted for approximately 96 million Indonesians (or 37% of the total population), living on less than USD 1.90 a day. In the absence of collateral and steady income, the poor are considered too risky to be given credit facilities by the formal financial services providers and living in remote areas has also limited their access to formal financial services. This study aims to examine the poverty alleviation efforts from the perspective of the IMFIs in view of their direct involvement in the process and having rich information about financial issues facing the borrowers. The managers also understand about financial inclusion agenda as well as financial guidelines and regulations issued by the rel...
Afkaruna, 2018
The objective of the study is to analyze the effectiveness of Islamic microfinance distribution and its impact on microbusiness owners' poverty alleviation in Purworejo. This study used descriptive analysis method that is Likert scale and ordinary least square method (OLS) to analyze the influence of Islamic Microfinance Institution's financing to microbusiness performance. The impact on the poverty alleviation is indicated by the change of microbusiness owners' income. The results indicate that Islamic micro-financing is considered to be effective in several aspects, they are proposal aspect, disbursement aspect, utilization aspect, and pay-back aspect of financing. In addition, Islamic microfinance has a positive impact on microbusiness performance and poverty alleviation.
AFEBI Islamic Finance and Economic Review
This research motivated by Islamic Microfinance performance measurement which still adopting on the performance measurement of microfinance in general that limited to the measurement of material. Therefore, efforts urgently needed to introduce more holistic measurement in assessing the performance of Islamic Microfinance based on tawheed principle. Thus, this study aims to measure the performance of Islamic Microfinance institutions based on Maqashid Al-Sharia. This research method uses quantitative approach with descriptive quantitative research design, which measures variables based on certain indicators. The location of the research is KOPMU-DT as one of the Islamic Microfinance institutions located in Bandung. The population of the study was the members KOPMU-DT wide-spread, among thousand people, but the withdrawal sample technique uses non-probability sampling with a sample of 100 members, based on the criteria that have been determined. Based on the research result, generally...
American Journal of Applied Sciences, 2012
Poverty is the main illness for sustainable livelihood because it destroyed human basic rights for surviving with minimum opportunities especially political, social stability and economic processes, literature and environment. The aims of this study are to discuss about existing approaches of poverty alleviation and sustainable livelihood. The study found throughout the discussion of the theoretical sources i.e., participatory approaches have determined as a good way of poverty alleviation and sustainable livelihood especially zakat based Islamic mode of financing and Qard-al-Hasan on the basis of spiritual values as an alternative model for poverty alleviation and ensuring sustainable livelihood.
2020
The fields of zakat-based microfinance and community development are not often placed under the same theoretical lens that both aim to empower disadvantaged people. This study investigates the experiences of borrowers in the implementation of zakat-based microfinance and analyses the different driving factors they applied in their choice of the zakat-based microfinance of Daarut Tauhid Peduli in Bandung, Indonesia. It applies a community development framework, based on the five characteristics, to explore this Islamic microfinance approach as an effective community development program, which has a religious dimension. Primary data were obtained from semi-structured interviews with the borrowers along with participant observation at a weekly majelis meeting, and these were triangulated with information cross-checked with the management staff of the institution. The findings demonstrate three out of five characteristics of the zakat-based microfinance approach as an effective communit...
2017
Since 1995 Baitul Qiradhhas been serving low - income people who most lywork asmicro enterprises by providing microfinance in Province Aceh. This study was conducted to assessand analy se the impactofbaitulqiradh’ micro finance services to increase the income andreduce povertyamong therecipients. Primary data were collected from 208 completed questionairres distributed to the clients of 8 BQ in six district/city in Province Aceh, in order to find out their perceptions on their impacts they observed on their socio-economic lives after receiving financing from the institutions in question. The finding show that the average mean income after financing was increased significantly IDR 838.221 (42.92%) than before financing. Socio-economicfactorsthatinfluence the increasecustomer income inthisstudyis thelevelof education, number Offinancing andinvest ment sinen trepreneurial training. The results importantly also found that the financing has help in decrease in poverty among the clients...
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.