Issues and Challenges in Financing the Poor: Lessons Learned from Islamic Microfinance Institutions

Authors

  • Norizan Satar International Islamic University of Malaysia
  • Salina Kassim International Islamic University of Malaysia

DOI:

https://doi.org/10.13135/2421-2172/2832

Keywords:

Microfinance, Baitul Maat Wat Tamwil (BMT), Amanah Ikhtiar Malaysia (AIM), Islamic finance

Abstract

Islamic microfinance institutions (IMFIs) play a very important role in contributing towards higher financial inclusion among the poor, especially in the Muslim countries. Despite their importance, the IMFIs face wide ranging issues especially in the operational and regulatory aspects, and these issues hinder the effective development of the IMFIs. By examining the experience of two major IMFIs in Indonesia and Malaysia, namely Baitul Maal Wat Tamwil (BMT) and Amanah Ikhtiar Malaysia (AIM), this study offers a new perspective by making a comparative study between the two IMFIs with the aim of understanding the peculiarities facing each institution, unlike the earlier studies which commonly focusing on a particular institution only. The study finds that sustainability and human resource are the main issues facing both IMFIs. While structural issue such as reliance on subsidies could jeopardise the sustainability in the long run, human resource is highly critical in ensuring smooth functioning of the IMFIs as well as their sustainability even in the short run. Findings of this study contribute to highlight the critical factors to be emphasized in ensuring sustainability of IMFIs.

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Published

2020-08-25

How to Cite

Satar, N., & Kassim, S. (2020). Issues and Challenges in Financing the Poor: Lessons Learned from Islamic Microfinance Institutions. European Journal of Islamic Finance, (15). https://doi.org/10.13135/2421-2172/2832

Issue

No. 15 (2020): EJIF - European Journal of Islamic Finance, 15, 2020

Section

Peer-reviewed Articles

License

Authors keep the copyrights for their work and give the journal the work's first publication copyright, which is at the same time licensed under a Creative Commons License – Attribution, which in turn allows other parties to share the work with an acknowledgement of the work's authorship and initial publication in this journal.

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