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Islamic Finance and Its Impact on Financial Inclusion

In: Enhancing Financial Inclusion through Islamic Finance, Volume I

Author

Listed:
  • Wissal Msellek

    (Universiti Malaysia Sarawak (Unimas))

Abstract

Islamic banking that advocates risk-sharing and equity finance while prohibiting debt financing and leveraging needs to enhance its current operating model to attract depositors and expand credit services by tailoring its instruments to specific market needs. Given the emphasis on social and economic justice and the eradication of poverty, we would expect Islamic instruments that targeted to address inequity, such as zakat, sadaqah, waqf, and qard al-hasan, to play an important role if the required institutional structures are developed. There is a need to formalize or institutionalize Islamic redistributive mechanisms designed to empower the economically weak segments of the society, and also provide a Shariah-compliant finance company model for microfinance and micro-takaful, remove interest rate caps for microcredit for SMEs, and strengthen customer protection laws.

Suggested Citation

  • Wissal Msellek, 2020. "Islamic Finance and Its Impact on Financial Inclusion," Palgrave Studies in Islamic Banking, Finance and Economics, in: Abdelrahman Elzahi Saaid Ali & Khalifa Mohamed Ali & Muhammad Khaleequzzaman (ed.), Enhancing Financial Inclusion through Islamic Finance, Volume I, chapter 0, pages 81-90, Palgrave Macmillan.
    • Handle: RePEc:pal:psibcp:978-3-030-39935-1_5
    DOI: 10.1007/978-3-030-39935-1_5
    as

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