IDEAS home Printed from https://ideas.repec.org/a/arp/tjssrr/2019p931-938.html
   My bibliography  Save this article

Alleviating Poverty Through Islamic Microfinance: Factors and Measures of Financial Performance, and Roles of Islamic Values and Financial Policies

Author

Listed:
  • Adhitya Ginanjar*

    (Department of Sharia Banking Syarif Hidayatullah State Islamic University, Indonesia)

  • Salina Kassim

    (IIUM Institute of Islamic Banking and Finance International Islamic University, Malaysia)

Abstract

Indonesia has a strong presence of microfinance sector with the number of Islamic Microfinance Institutions (IMFIs) estimated to be around 5,000 currently. Microfinance is an effective tool in alleviating poverty in Indonesia due to the limited access to financial services by the poor who accounted for approximately 96 million Indonesians (or 37% of the total population), living on less than USD 1.90 a day. In the absence of collateral and steady income, the poor are considered too risky to be given credit facilities by the formal financial services providers and living in remote areas has also limited their access to formal financial services. This study aims to examine the poverty alleviation efforts from the perspective of the IMFIs in view of their direct involvement in the process and having rich information about financial issues facing the borrowers. The managers also understand about financial inclusion agenda as well as financial guidelines and regulations issued by the relevant authorities. A total of 34 managers of Baitulmaal Wa Tamwil (BMTs), which registered under the Sharia Cooperative Centre (INKOPSYAH) are taken as respondents from the Jakarta, Bogor, Depok, Tangerang and Bekasi (JABODETABEK) areas. The first instrument was a survey questionnaire, and the second one was an in-depth interview to outline data related to the model design. The findings of this research are expected to contribute to better decision-making for the BMTs to further enhance its role in alleviating poverty. The findings also elaborate several dimensions to improving financial inclusion among the poor including providing financial services, implementing Islamic principles, significant policies, community-based framework concept and training financial education. This research highlights the need for a variety of strategies to warrant success of poverty alleviation efforts by BMT.

Suggested Citation

  • Adhitya Ginanjar* & Salina Kassim, 2019. "Alleviating Poverty Through Islamic Microfinance: Factors and Measures of Financial Performance, and Roles of Islamic Values and Financial Policies," The Journal of Social Sciences Research, Academic Research Publishing Group, vol. 5(4), pages 931-938, 04-2019.
    • Handle: RePEc:arp:tjssrr:2019:p:931-938
    as

    Download full text from publisher

    File URL: https://www.arpgweb.com/pdf-files/jssr5(4)931-938.pdf
    Download Restriction: no
    File URL: https://www.arpgweb.com/journal/7/archive/04-2019/4/5
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kramer, Daniel Boyd & Urquhart, Gerald & Schmitt, Kristen, 2009. "Globalization and the connection of remote communities: A review of household effects and their biodiversity implications," Ecological Economics, Elsevier, vol. 68(12), pages 2897-2909, October.
    2. Bose, Pinaki, 1998. "Formal-informal sector interaction in rural credit markets," Journal of Development Economics, Elsevier, vol. 56(2), pages 265-280, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Islam, Asadul & Nguyen, Chau & Smyth, Russell, 2015. "Does microfinance change informal lending in village economies? Evidence from Bangladesh," Journal of Banking & Finance, Elsevier, vol. 50(C), pages 141-156.
    2. Abhirupa Das & Uday Bhanu Sinha, 2022. "Microfinance institution and moneylenders in a segmented rural credit market," Working papers 324, Centre for Development Economics, Delhi School of Economics.
    3. Allen Blackman, 2001. "Why don't Lenders Finance High-Return Technological Change in Developing-Country Agriculture?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(4), pages 1024-1035.
    4. Sengupta, Atanu & De, Sanjoy, 2018. "Formal Informal Interactions: A Simple Chayanov Model," MPRA Paper 88241, University Library of Munich, Germany.
    5. Roumasset, James A., 2006. "The Economics of Agricultural Development: What Have We Learned?," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25598, International Association of Agricultural Economists.
    6. Mallick, Debdulal, 2012. "Microfinance and Moneylender Interest Rate: Evidence from Bangladesh," World Development, Elsevier, vol. 40(6), pages 1181-1189.
    7. Chaudhuri, Sarbajit & Dastidar, Krishnendu Ghosh, 2011. "Corruption in a model of vertical linkage between formal and informal credit sources and credit subsidy policy," Economic Modelling, Elsevier, vol. 28(6), pages 2596-2599.
    8. Solomon Zena Walelign & Martin Reinhardt Nielsen & Jette Bredahl Jacobsen, 2019. "Roads and livelihood activity choices in the Greater Serengeti Ecosystem, Tanzania," PLOS ONE, Public Library of Science, vol. 14(3), pages 1-21, March.
    9. Chaudhuri, Sarbajit & Ghosh Dastidar, Krishnendu, 2011. "Vertical linkage between formal and informal credit markets: corruption and credit subsidy policy," MPRA Paper 35563, University Library of Munich, Germany.
    10. Karel Janda, 2003. "Credit guarantees in a credit market with adverse selection," Prague Economic Papers, Prague University of Economics and Business, vol. 2003(4), pages 331-349.
    11. Ibanez, Marcela & Dietrich, Stephan, 2015. "Impact of Weather Insurance on Small Scale Farmers: A Natural Experiment," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112887, Verein für Socialpolitik / German Economic Association.
    12. Magnus Hatlebakk, 2009. "Capacity‐constrained Collusive Price Discrimination in the Informal Rural Credit Markets of Nepal," Review of Development Economics, Wiley Blackwell, vol. 13(1), pages 70-86, February.
    13. Beck, Thorsten & Lu, Liping & Yang, Rudai, 2015. "Finance and Growth for Microenterprises: Evidence from Rural China," World Development, Elsevier, vol. 67(C), pages 38-56.
    14. Oestreicher, Jordan Sky & Fatorelli, Leandra & Mertens, Fréderic & Lucotte, Marc & Béliveau, Annie & Tremblay, Stéphane & Saint-Charles, Johanne & Davidson, Robert & Romaña, Christina A., 2018. "Rural livelihood trajectories in the central Brazilian Amazon: Growing inequalities, changing practices, and emerging rural-urban relationships over nearly a decade," World Development Perspectives, Elsevier, vol. 10, pages 34-43.
    15. Ceyhun Elgin & Burak Uras, 2013. "Is informality a barrier to financial development?," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 4(3), pages 309-331, August.
    16. Anthony Howell, 2019. "Ethnic entrepreneurship, initial financing, and business performance in China," Small Business Economics, Springer, vol. 52(3), pages 697-712, March.
    17. Chaudhuri, Sarbajit & Gupta, Manash Ranjan, 2013. "Endogenous Capital Market Imperfection, Informal Interest Rate Determination and International Factor mobility in a General Equilibrium Model," MPRA Paper 51157, University Library of Munich, Germany.
    18. He, Qing & Lu, Liping & Ongena, Steven, 2015. "Who gains from credit granted between firms? Evidence from inter-corporate loan announcements made in China," BOFIT Discussion Papers 1/2015, Bank of Finland Institute for Emerging Economies (BOFIT).
    19. Meghana Ayyagari & Asli Demirgüç-Kunt & Vojislav Maksimovic, 2010. "Formal versus Informal Finance: Evidence from China," The Review of Financial Studies, Society for Financial Studies, vol. 23(8), pages 3048-3097, August.
    20. Augendra Bhukuth & Jérôme Ballet & Katia Radja, 2018. "An Analysis of Social Proximity and Interest Rate in Rural South India," Post-Print hal-01877007, HAL.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arp:tjssrr:2019:p:931-938. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Managing Editor (email available below). General contact details of provider: http://arpgweb.com/?ic=journal&journal=7&info=aims .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.