A theory and contractual framework of Islamic micro-financial institutions’ operations

The role of Islamic microfinance in poverty alleviation and environmental awareness in Pasuruan, East Java, Indonesia

“…Only one respondent (4.55%) said that Islamic microfinance did not affect poverty alleviation, while another (4.55%) did not know. These percentages support the conclusions of Widiyanto, Mutamimah, and Hendar (2011) and Smolo and Ghafar (2011), who conducted studies in central Java and Malaysia, respectively, and found that Islamic MFIs were effective in empowering the needy, while still having the potential to do more.…”

“…These charity funds are generally distributed by Islamic MFIs in the form of qard al hasan schemes. Through this social scheme, Islamic MFIs increase the potential of not just reaching the poorest, but helping them become credit-worthy and minimizing the unequal distribution of wealth within society (Smolo and Ghafar 2011;Widiyanto, Mutamimah, and Hendar 2011).…”

“…A significant majority of the key informants (90.91%) in our in-depth interviews stated that Islamic microfinance reduces the poverty level of clients. Widiyanto, Mutamimah, and Hendar (2011), and Smolo and Ghafar (2011), who conducted studies in central Java and Malaysia, respectively, revealed the effectiveness of Islamic MFIs in empowering the needy, although the institutions still had the potential to do more. In our own findings, seven (31.82%) of our expert respondents recommended that Islamic MFIs provide their financial services to a wider range of communities and collaborate with all related financial agencies.…”

The Role of Islamic Microfinance for Poverty Alleviation in Mogadishu, Somalia: An Exploratory Study

“…Furthermore, Ahmed (2002) noted that microfinance has a high drop out rate and rate of nongraduation from poverty. This view is supported by other researchers such as Abdul Rahman and Dean (2013) as well as Smolo and Ismail (2011).…”

“…Microfinance is a way of helping financially disadvantaged individuals to improve their economic well being. Group-based lending, small loans, periodic frequent repayment and being collateral-free are among the features of microfinance (Abdul Rahman, 2010;Ahmed, 2002;Smolo and Ismail, 2011). To obtain a loan, a prospective borrower has to join a microfinance recipient group.…”