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Micro-Credit in Conventional Banking: Would Islamic Banking be the Golden Age for Entrepreneurs? -The Mauritius Case Study

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  • Rajendra Parsad GUNPUTH

Abstract

The broad aim of this paper is to make an analogy between conventional banks and Islamic banking in micro-credit and the incentives they may provide for entrepreneurs and small and medium enterprises (SMEs) in a Mauritian perspective? Indeed, in Mauritius traditional or conventional banks are more and more reluctant to give loans to entrepreneurs who are considered as high risk investors (their fragile entrepreneurs may collapse unexpectedly) despite they create jobs and employment. In contrast, in most Islamic countries Islamic banks allow businessmen and investors among others to have loans without interest (or riba) according to sha’ria compliants and tailor made Islamic contracts (mudabara and musarakha) to support their innovations and proposals. Despite Islamic banking is at its burgeoning state it has expanded considerably in most Islamic and Arab countries. Would Islamic banks uproot conventional banks irrespective it is in Islamic countries or Western countries? This paper therefore adds to an already abundant literature on the subject-matter but it enlightens a central issue: would Islamic banking, sha’ria law and Islamic economies be the golden age for entrepreneurs and SMEs in Mauritius and worldwide?

Suggested Citation

  • Rajendra Parsad GUNPUTH, 2014. "Micro-Credit in Conventional Banking: Would Islamic Banking be the Golden Age for Entrepreneurs? -The Mauritius Case Study," Journal of Social and Development Sciences, AMH International, vol. 5(1), pages 14-25.
    • Handle: RePEc:rnd:arjsds:v:5:y:2014:i:1:p:14-25
    DOI: 10.22610/jsds.v5i1.801
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    References listed on IDEAS

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    1. Martin Čihák & Heiko Hesse, 2010. "Islamic Banks and Financial Stability: An Empirical Analysis," Journal of Financial Services Research, Springer;Western Finance Association, vol. 38(2), pages 95-113, December.
    2. Patrick A. Imam & Mr. Kangni R Kpodar, 2010. "Islamic Banking: How Has it Diffused?," IMF Working Papers 2010/195, International Monetary Fund.
    3. Munawar Iqbal & Philip Molyneux, 2005. "Thirty Years of Islamic Banking," Palgrave Macmillan Studies in Banking and Financial Institutions, Palgrave Macmillan, number 978-0-230-50322-9.
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    2. Neifar, Malika, 2020. "Different dimensions Bank performance comparisons IBs vs CBs – Quatar case," MPRA Paper 101375, University Library of Munich, Germany.

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