Islamic Microfinance

With the exponential growth in Sharī'ah‐compliant assets, which has recently surpassed a $1.7 trillion mark, there is an increasing call for the assessment of the impact of this growth on the less privileged in the society, particularly, in Muslim countries. Both the classical history and the most recent history of Islamic finance reveal elements of microfinance as the crux of the initiatives. Against this backdrop, this article examines Islamic microfinance as a major component of the global Islamic finance industry. As a value‐oriented industry guided by specific rules, the Islamic finance industry has at its core the objectives of microfinance, which represents the original value proposition of Islamic financial intermediation. While examining the key Islamic finance products that are utilized in the existing microfinance initiatives, it is argued that Islamic financial institutions should brace up to play its original role of financing microenterprises. The ethical objective of Islamic finance and the imperativeness of social responsibility are the essential values that drive the Islamic microfinance framework. The article concludes that considering the original value proposition of Islamic financial intermediation, Islamic microfinance is structured to fulfill the social and developmental expectations of the financially excluded people.

Business · Economic growth · Economics · Financial intermediary · Financial services · Financial system · Intermediation · Islam · Islamic finance · Management · Microfinance · Value (mathematics) · Value proposition · Accounting · Finance · Islamic Finance and Banking Studies · Microfinance and Financial Inclusion · Urban and Rural Development Challenges

• Islamic Microfinance in Indonesia

  Hans Dieter Seibel•Journal of Social Issues in…•2008

  Add to list