Experiments in Islamic microfinance

El-Komi, Mohamed; Croson, Rachel

doi:10.1016/j.jebo.2012.08.009

Cited by 66 publications

(49 citation statements)

References 27 publications

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“…This difference can be explained by the IBs delay in their appearance compared to their counterparts, the CBs (Čihák & Hesse, 2010). Although Islamic finance has developed as a fast-growing industry with an estimated one trillion dollars in assets, El-Komi and Croson (2013) noted that this industry remains a niche market compared to conventional finance.…”

Section: Descriptive Statisticsmentioning

confidence: 99%

Banks and economic growth in developing countries: What about Islamic banks?

Daly

Frikha

2016

Cogent Economics & Finance

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Islamic banks (IBs) have a significant role in the growth of gross domestic product of the developing countries. The Islamic participatory schemes integrate the assets of lenders and borrowers. They allow enable IBs to lend on a longer term basis to create projects with higher risk-return profiles and, thus, to support economic growth. Our investigation examines the contribution of Islamic finance in economic growth. Using a panel data-set, we compare between IBs and conventional banks in their adding to economic growth. We studied a sample of 120 banks between 2005 and 2012. By means of three ordinary least-square regressions, our empirical investigation reveals that the development of non-usurious banks supports economic growth. Moreover, the cooperation between the two financing modes improves economic growth. The integration of this new funding never neglected the role of the conventional method of financing. The practice of IBs is also away from their theoretical mode in terms of participation results.

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Section: Descriptive Statisticsmentioning

confidence: 99%

Banks and economic growth in developing countries: What about Islamic banks?

Daly

Frikha

2016

Cogent Economics & Finance

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“…Islamic microfinance has the ability to stop fund deviation and multiple borrowing as it is an asset-based, i.e. non-monetary based, financing system (El- Komi & Croson, 2012;Ahmed, 2002). Skill building training or several non-financial training is one of the procedures adopted by microfinance programs to reduce involuntary default.…”

Section: Literature Reviewmentioning

confidence: 99%

“…With the potential to solve religious restrictions, Islamic microfinance has the advantage of reducing fungibility of borrowed funds and increasing the willingness to repay the loan through its interest-free asset based financing mode (El-Komi & Croson, 2012). Islamic microfinance is a Shari'ah (Islamic laws) compliant method of providing microfinance which increases the productivity of the poor, empowers them, and assists in socio-economic development.…”

Section: Introductionmentioning

confidence: 99%

Effect of Household Factors on Repayment Ability among Islamic Microfinance Borrowers in Bangladesh

Sharmin¹,

Bakar²

2018

IJBM

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The paper aims to discuss the effect of household factors on repayment ability among borrowers of Islamic microfinance in Bangladesh. Cross-sectional survey was used on borrowers who have been involved for more than two years in rural development scheme. Data was collected from 507 households through a close-ended questionnaire. The survey found that household income increased significantly after access to the Islamic microfinance program. The structural equation model analysis shows that household income has a significant positive effect on repayment ability. Household savings and consumption were also found to have a significant positive relationship with household income. Household savings also has a significant positive relationship with repayment ability when it is negative with the household consumption. Unlike conventional studies, this study found that borrowers involved in farm activities have a better repayment ability. The emerging result contributes to the research regarding repayment problems and the findings demonstrate that the adoption of Islamic microfinance could be a better solution. It is also anticipated that the empirical result will contribute to the furtherance of literature on Islamic microfinance.

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“…The non-participatory modes on the contrary do not involve profit and loss sharing and usually entail a rather predetermined return. These modes include Murabahah ('mark-up' or cost plus sale), Ijarah (lease), Salam (differed delivery), Istisna' (commission to manufacture), Bai Muajjal (deferred payment), Jo'alah (service fee), and Qard Al Hasana (charity loan) (El-Komi & Croson, 2013;Khan, 2010).…”

Section: Introductionmentioning

confidence: 99%

“…The IFIs, particularly Islamic banks, adopt partnership contracts for the scheme of deposits, especially for term deposit accounts (Nouman & Ullah, 2014. However, it is usually claimed that they do not adopt participatory financing as the main financing scheme due to their inherent high risks (Abdul-Rahman, Latif, Muda, & Abdullah, 2014;Abdul-Rahman & Nor, 2016;Al-Muharrami & Hardy, 2013;El-Komi & Croson, 2013;Sadique, 2012;Shaikh, 2011).…”

Section: Introductionmentioning

confidence: 99%

Variants of Participatory Financing for Risk Assessment and Mitigation in Islamic Banking

Nouman¹,

Ullah²,

Jan³

2019

BER

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The participatory modes of Islamic financing including Musharakah and Mudarabah are widely accepted as the ideal modes of financing among the jurists of Islamic banking and finance. However, paradoxically, these are not the most popular modes of financing in practice. The practice of the participatory financing in Islamic banking is constrained by several factors. Therefore, Islamic banks are applying the adapted variants of Musharakah. The present study aims to explore the prevailing variants of participatory financing in the Islamic banking industry of Pakistan using multiple case studies strategy. Findings suggest that Islamic banks adapt the participatory financing to make these fit for SME financing, corporate financing, consumer financing, and commodity operations financing within the embedded contractual variants of Musharakah namely diminishing Musharakah and running Musharakah, while pure Musharakah and Mudarabah are not applied in practice. The study also provides insights into the design of participatory financing arrangements and the procedures adopted by Islamic banks for assessing and mitigating the underlying risks associated to the participatory financing, particularly the risk induced by asymmetric information including adverse selection, and moral hazards.

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Experiments in Islamic microfinance

Cited by 66 publications

References 27 publications

Banks and economic growth in developing countries: What about Islamic banks?

Banks and economic growth in developing countries: What about Islamic banks?

Effect of Household Factors on Repayment Ability among Islamic Microfinance Borrowers in Bangladesh

Variants of Participatory Financing for Risk Assessment and Mitigation in Islamic Banking

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