Role of Islamic Banking in Agriculture Development in Bahawalpur, Pakistan

Abstract

Purpose -The basic purpose of this research paper conducted is to report the findings of this experimental study conducted in Bahawalpur region, about the role of Islamic banking in agriculture sector from the users and non-users (users of conventional banking) of Islamic banking. Design/methodology/approach -This descriptive and qualitative research is conducted and focuses on two main groups of banking customer's users and non users of Islamic banking and also informal interview with managers of some banks. A survey questionnaire was developed that subsequently get response from 120 respondents. Hypothesis analysis is the main tool of analysis in which mean, standard deviation; variance and chi-square tests are applied using SPSS 16.0. Findings -After the through study of body of knowledge we find that there is significant relationship between Islamic banking and agriculture sector. Islamic banking is providing easy terms of financing like Ijarah, Diminishing musharaka, Murabaha, salam and bai salam and similarly providing different types of working capital like Murabaha, Musawamah, Salam, Muzara'a. These terms of financing increase the asset ownership, yield and income of farmers. Islamic banking is not providing any financing for irrigation system and farmers are facing problem of credit standing and problem of collateral. Practical Limitations/Implication -Most of the concerned articles are taken from the Pakistan, Malaysia, etc. there was limited time for conducting research and receiving response from respondents. The sample size is of small size subsequently of 120 respondents and applicable to Bahawalpur region. As this result is implemented to Bahawalpur region only so therefore pilot study to whole Pakistan is suggested. Originality/Value -The aim of this paper is to provide and make attention toward of role of Islamic banking the Bahawalpur region of southern Punjab, Pakistan as the previous studies

Viability of Muzara’ah Contract on Agro-financing in Alleviating Rural Poverty in Kano State, Nigeria

“…Similar studies were conducted in Pakistan by Hassan et al (2012) and Tahir (1996). The former's is titled; Role of Islamic Banking in Agriculture Development in Bahawalpur, Pakistan.…”

“…Muzara'ah Agricultural Financing Scale (MAFS) was the structured questionnaire used for collecting primary data from the target respondents in Kura Local government area from the total sample size of 250 farmers. Furthermore, Chi square test of goodness of fit was adopted for data analysis and justified in line with the previous researchers, such as Hassan et al (2012).…”

Significance of Murabahah Finance towards the Imrovement of Agricultural Productivity in Kano State, Nigeria

“…Murabahah finance is an Islamic financial product used in the purchase of goods and sells it to the client on agreed price and profit margin (5). Also, Hassan et al (13) refer Murabahah finance as a mutually stipulated margin of profit in a sale transaction, where the cost of the commodity is known or made known to the buyer. The parties negotiate the profit margin on cost and not the cost per se.…”

“…In addition, it is empirically revealed that Murabahah financing is the most popular credit sales or deferred sale in relations to empowering both farmers and traders in accordance to the Qur'anic legitimacy (1, 3, 15-18). More so, (8,13) stated that, Murabahah financing has two different modes of payment: either paying the total amount at the time of the sale in cash or paying on credit. Additionally, clients can pay on credit, also known as bay' al-muajjil in Arabic, in two ways: payment of the lump sum at some point in the future or payments in instalments.…”

“…Murabahah financing was approved by the Prophet as part of Shariah oriented public policy (23). The most underlying cause of initiating Murabahah financing was to aid the small scale farmers (poor farmers) and traders who lack money to sustain crops and their trading (13). It is a business of crop growing, animal and poultry base on the Shariah guide (1).…”