Elimination of poverty by Islamic value based cooperative model

Abstract

Purpose The purpose of this paper examines how the challenge of poverty can be effectively addressed by broadly adopting Islamic value based cooperative model (IVCM) where the members come together to overcome and eventually eradicate the curse of poverty for themselves and for their future generations. Design/methodology/approach The elimination of poverty by adopting IVCM and its impact on the cooperative members, as well as its effects on major macroeconomic variables, are examined on the theoretical ground by using the general equilibrium model of demand and supply-side variables. Findings The IVCM for the elimination of poverty reveals that the poverty gap can be eliminated through resource mobilization, as well as by creating new and additional income, wealth and resources through collaborative efforts. Through cooperative organizations based on Islamic values and principles, eventually, the entire poverty pool can enjoy income-earning opportunities through employment or self-employment, as well as promoting skills and education, leading to breaking the vicious cycle of poverty. Originality/value Cooperatives in general and Islamic cooperatives, in particular, are not new in the discourse about poverty. Indeed, there are cooperatives throughout the Muslim world and beyond and there are many studies related to cooperatives and their role in development. However, this might be the first theoretical contribution that models the role and impact of cooperatives in a macroeconomic framework, and thus, advances the scientific repertoire of knowledge and understanding about the related discourse by developing a rigorous mathematical model.

A review on literature of Islamic microfinance from 2010-2020: lesson for practitioners and future directions

“… Nasir and Abdullah (2019) designed Islamic Cooperative Mortgage(ICOM) , a homeownership solution for low-income groups of people. Other researchers, namely Selim and Farooq (2020) , developed the Islamic Value Cooperative Model (IVCM) concept as a solution for the poor to get financing and skills training.…”

“… Nasir and Abdullah (2019) Islamic Cooperative Mortgage (ICOM) is superior to conventional cooperative mortgages. Selim and Farooq (2020) The Islamic Value Cooperative Model (IVCM) allows for poverty alleviation programs. Wulandari and Kassim (2016) BMT not only provides capital but also provides infrastructure and training for the poor.…”

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“…Efforts to alleviate poverty in the field of education, namely allocating funds to finance schools for students (underprivileged children). Poverty alleviation through education is the best decision, because the root of poverty is related to education [40]. Increasing welfare is also carried out through the provision of basic foodstuffs to orphans and widows around the institution.…”

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“…It is also applied to sellers' behavior towards their fellows; for example, sellers apply Islamic values, including not being involved in unfair competition and maintaining good relations among each other. According to Selim & Farooq (2020), a collaboration between people in business (sellers, Hisbah, and government) can eliminate the existing gaps in society and create business success.…”