IDEAS home Printed from https://ideas.repec.org/a/bpj/lawdev/v13y2020i1p265-319n9.html

Islamic Social Finance in Bangladesh: Challenges and Opportunities of the Institutional and Regulatory Landscape

Author

Listed:
  • Uddin Tanvir Ahmed

    (University of Sydney Law School, University of Sydney, New South Wales2006, Australia)

  • Mohiuddin Md Fazla

    (BRAC Business School, BRAC University, Dhaka, Dhaka, Bangladesh)

Abstract

From the end of World War Two, the core methodology of law and development projects has been to transplant the best legal institutions of Western capitalism to poor and emerging economies. In many post-colonial contemporary Muslim-majority countries, such programs have not adequately engaged with local legal systems, cultures and traditions. Contrary to the restrictive modernist approach to law and development, and inspired by the Sharia, there are numerous Islamic social finance mechanisms that can be utilised for poverty alleviation and their existence is evident across Bangladesh. These cover the full spectrum of philanthropic to financing, investments and insurance built upon Sharia norms and principles. Unfortunately, the true potential of Islamic social finance is considerably constrained by the weak regulatory and policy environment. Islamic social finance does not feature in national development plans, is regulated through a patchwork framework, and operates at a negligible scale. This paper provides a detailed analysis of the existing regulatory and institutional landscape of Zakah (obligatory almsgiving), awqaf (perpetual endowments), Islamic microfinance and microtakaful (microinsurance) in Bangladesh and examines the potential and challenges for Islamic social finance to reduce poverty. Thereafter, several pertinent policy and institutional recommendations are provided to effectively modernise and advance the effectiveness of Islamic social finance institutions. The methodology employed is a mixed approach incorporating literature review, legal analysis of laws and regulation and contextual analysis and field interviews among industry stakeholders. Ultimately, while private investment and initiatives are always able to support the Islamic social finance sector, this paper focuses on the extent to which the regulatory and policy environment is a crucial enabler for widespread and sustained development impact.

Suggested Citation

  • Uddin Tanvir Ahmed & Mohiuddin Md Fazla, 2020. "Islamic Social Finance in Bangladesh: Challenges and Opportunities of the Institutional and Regulatory Landscape," The Law and Development Review, De Gruyter, vol. 13(1), pages 265-319, January.
    • Handle: RePEc:bpj:lawdev:v:13:y:2020:i:1:p:265-319:n:9
    DOI: 10.1515/ldr-2019-0072
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/ldr-2019-0072
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/ldr-2019-0072?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Islahi, Abdul Azim, 2006. "Cash waqf: is it a usurious piety?," MPRA Paper 43610, University Library of Munich, Germany, revised 2006.
    2. M. Mizanur Rahman & M. Jafrullah & ANM Tawhidul Islam, 2008. "Rural Development Scheme Of Islami Bank Bangladesh Limited (Ibbl): Assessment And Challenes," IIUM Journal of Economics and Management, IIUM Journal of Economis and Management, vol. 16(2), pages 139-163, December.
    3. Nadeem, Azhar, 2010. "Islamic Business Contracts and Microfinance-A Case of Mudaraba," MPRA Paper 27194, University Library of Munich, Germany, revised 2010.
    4. C. Peter Timmer, 2008. "Agriculture and Pro-Poor Growth: An Asian Perspective," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 5(1), pages 1-27, June.
    5. Uddin, Md Akther, 2015. "Principles of Islamic Finance: Prohibition of Riba, Gharar and Maysir," MPRA Paper 67711, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gehad Mohammed Sultan Saif & Ardiani Ika Sulistyawati & Abdul Karim & Happy Sista Devy, 2024. "Impact of Shari’ah Supervisory Board Diversity on the Performance of Islamic Banks: Evidence from Yemen Emerging Economy," Jurnal International Economic Sharia, PT. Inovasi Analisis Data, vol. 1(2), pages 101-120.
    2. Muneer M. Alshater & M. Kabir Hassan & Mamunur Rashid & Rashedul Hasan, 2022. "A bibliometric review of the Waqf literature," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 12(2), pages 213-239, June.

    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. Bianca AVRAM POP & Simona SABOU, 2018. "The Role Of Agriculture In Romanian Development," Business Excellence and Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 8(1), pages 5-18, March.
    2. Md. Masud Parvej & Md. Asad Iqbal Chowdhury & Md. Kazi Golam Azam & Md. Musharof Hossain & Abdullah Mohammad Ahshanul Mamun, 2020. "Role of Islamic Microfinance in Alleviating Poverty in Bangladesh: A Study on RDS of IBBL," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(4), pages 111-129, July.
    3. Suttie, D. & Vargas-Lundius, R., "undated". "IFAD RESEARCH SERIES 2 - Migration and transformative pathways: a rural perspective," IFAD Research Series 280036, International Fund for Agricultural Development (IFAD).
    4. Moumita Poddar Rana & Tanmoyee Banerjee (Chatterjee) & Ajitava Raychaudhuri, 2023. "Religious And Social Group Diversity In Borrowing And Spending Behaviour: Analysis Of Survey Results From Rural West Bengal, India," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 68(236), pages 51-79, January –.
    5. Ahmad, Munir & Iqbal, Muhammad & Farooq, Umar, 2015. "Food Security and its Constraining Factors in South Asia: Challenges and Opportunities," MPRA Paper 72868, University Library of Munich, Germany.
    6. Benjamin N. Dennis & Talan B. Işcan, 2007. "Agricultural Distortions, Structural Change, and Economics Growth: A Cross-Country Analysis," Working Papers daleconwp2007-03, Dalhousie University, Department of Economics.
    7. Anriquez, Gustavo & Stamoulis, Kostas G., 2007. "Rural Development and Poverty Reduction: Is Agriculture Still Key?," eJADE: electronic Journal of Agricultural and Development Economics, Food and Agriculture Organization of the United Nations (FAO), Agricultural and Development Economics Division (ESA), vol. 4(01), pages 1-42.
    8. Ozgur Kaya & Ilker Kaya, 2019. "Aid To Agriculture And Aggregate Welfare," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(02), pages 281-300, March.
    9. Fahami Muhammad Anis & Salina H. Kassim, 2016. "Effectiveness Of Zakat-Based Programs On Poverty Alleviation And Economic Empowerment Of Poor Women: A Case Study Of Bangladesh," Journal of Islamic Monetary Economics and Finance, Bank Indonesia, vol. 1(2), pages 229-258, February.
    10. Muhammad Ashfaque & Syed Mohsin Ali Shah & Fahad Sultan & Haider Khalil & Arif Hussain & Muhammad Khan, 2020. "Ethical Value Propositions of Islamic Banking Products: A Phenomenological Inquiry of Relationship Managers Perspective," International Review of Management and Marketing, Econjournals, vol. 10(2), pages 8-14.
    11. Martine Audibert, 2011. "Endemic diseases and agricultural productivity: Challenges and policy response," CERDI Working papers halshs-00563389, HAL.
    12. Abebayehu Girma Geffersa, 2023. "Agricultural productivity, land use intensification and rural household welfare: evidence from Ethiopia," Agrekon, Taylor & Francis Journals, vol. 62(3-4), pages 309-327, October.
    13. Dayah Abdi Kulmie & Mohamed Abdirahman Abdulle & Mukhtar Sheikh Hussein & Hussein Abdi Mohamud, 2023. "Effects of Islamic Modes of Financing on Profitability of Banking Institutions," International Journal of Business and Management, Canadian Center of Science and Education, vol. 18(5), pages 237-237, October.
    14. repec:arp:sjbmms:2021:p:27-34 is not listed on IDEAS
    15. Fred M. Dzanku, 2015. "Household Welfare Effects of Agricultural Productivity: A Multidimensional Perspective from Ghana," Journal of Development Studies, Taylor & Francis Journals, vol. 51(9), pages 1139-1154, September.
    16. ERREYGERS, Guido & FEREDE, Tadele, 2009. "The end of subsistence farming: Growth dynamics and investments in human and environmental capital in rural Ethiopia," Working Papers 2009008, University of Antwerp, Faculty of Business and Economics.
    17. Mercedita Sombilla & Dennis Mapa & Sharon Piza, 2013. "Overcoming Critical Constraints to Sustaining Productivity Growth in Key Commodities of Asia and the Pacific," ADB Economics Working Paper Series 376, Asian Development Bank.
    18. Catalina Gutierrez & Pierella Paci & Marco Ranzani, 2008. "Making Work Pay in Nicaragua : Employment, Growth, and Poverty Reduction," World Bank Publications - Books, The World Bank Group, number 6472, April.
    19. Munir Ahmad & Umar Farooq, 2010. "The State of Food Security in Pakistan: Future Challenges and Coping Strategies," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 49(4), pages 903-923.
    20. Martine AUDIBERT, 2008. "Endemic diseases and agricultural productivity: Challenges and policy response," Working Papers 200823, CERDI.
    21. repec:idn:jimfjn:v:1:y:2016:i:2d:p:1-30 is not listed on IDEAS
    22. Moon, Wanki, "undated". "The Lack of Dynamic Gains from Trade in Agriculture: Implications for Governing Agricultural Trade," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266613, Southern Agricultural Economics Association.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    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:bpj:lawdev:v:13:y:2020:i:1:p:265-319:n:9. 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: Peter Golla (email available below). General contact details of provider: https://www.degruyterbrill.com .

    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.