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Taking stock of the waqf-based Islamic microfinance model

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  • Rose Abdullah
  • Abdul Ghafar Ismail

Abstract

Purpose - The purpose of this paper is to explore two main aspects of waqf: the characteristics of waqf property and the management of waqf. This paper also discusses the governance of waqf management as a source of funds for Islamic microfinance institutions (MFIs). Design/methodology/approach - This research uses content analysis method to examine various literatures that discuss the concept and management of waqf. Findings - The characteristics of cash waqf such as permanence, irrevocability and perpetuity differentiate waqf from other type of donations. Therefore, cash waqf-based Islamic microfinance needs to be sustainable. Good corporate governance is vital to ensure the sustainability. As the donors of cash waqf do not aim to make financial profit, waqf-based Islamic MFIs will be able to provide low-cost capital to the poor entrepreneurs. Furthermore, to ensure the perpetuity of the waqf, it is suggested that only revenue from the waqf property should be used for microfinance fund. Social implications - The cash waqf-based Islamic microfinance will help the micro entrepreneurs to get low-cost capital without collateral. At the same time, public can donate any amount they afford to contribute to cash waqf. Originality/value - The creation of a cash waqf-based Islamic MFI must observe the issues of agency conflicts and the right of stakeholders to a transparent management. This paper emphasizes the importance of good governance in managing the waqf property as a source of fund for Islamic MFIs.

Suggested Citation

  • Rose Abdullah & Abdul Ghafar Ismail, 2017. "Taking stock of the waqf-based Islamic microfinance model," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 44(8), pages 1018-1031, August.
    • Handle: RePEc:eme:ijsepp:ijse-06-2015-0176
    DOI: 10.1108/IJSE-06-2015-0176
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    Citations

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    Cited by:

    1. Sanchita Bansal & Isha Garg & Gagan Deep Sharma, 2019. "Social Entrepreneurship as a Path for Social Change and Driver of Sustainable Development: A Systematic Review and Research Agenda," Sustainability, MDPI, vol. 11(4), pages 1-28, February.
    2. Sakina Anzar Basha & Ezzedine Ghlamallah, 2023. "The conditions for implementing Islamic banking in France [Les conditions de mise en oeuvre de la banque islamique en France]," Post-Print hal-04140771, HAL.
    3. Ahmad Wira & Hulwati & Huriyatul Akmal & Riandy Mardhika Adif & Jufriadif Na`am*, 2019. "Islamic Economic Orientation Model for Microfinance Institution," The Journal of Social Sciences Research, Academic Research Publishing Group, vol. 5(3), pages 676-682, 03-2019.
    4. Suha Alawi, 2024. "The Role of Corporate Social Responsibility, Ownership Structure, and Gender Diversity in Firm Performance," International Journal of Economics and Financial Issues, Econjournals, vol. 14(2), pages 97-110, March.
    5. Mohammad Manzoor Alam, 2018. "Potent Potential of Awqaf in Social and Economic Development إمكانيات قوية للأوقاف في التنمية الاجتماعية والاقتصادية," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 31(2), pages 101-108, July.

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