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Making Development Assistance Sustainable Through Islamic Microfinance


  • Rodney Wilson


Microfinance schemes have been operational since the 1960s, however, they mostly involve conventional finance, whereas many low income Muslims would prefer to have shar¥cah compliant finance. The aim of this paper is to explore how microfinance can be provided on a shar¥cah compliant basis and what instruments and structures could be used. The implication of this paper is that shar¥cah compliant microfinance is best provided by non-banking institutions, which in the case of the wakOElah model, may have links to the waqf and zakOEh authorities.With muèOErabah profit sharing microfinance, there is scope for commercial undertakings, but arguably specialized finance companies rather than banks, even Islamic banks, may be more appropriate institutions to get involved.

Suggested Citation

  • Rodney Wilson, 2007. "Making Development Assistance Sustainable Through Islamic Microfinance," IIUM Journal of Economics and Management, IIUM Journal of Economis and Management, vol. 15(2), pages 177-196, December.
  • Handle: RePEc:ije:journl:v:15:y:2007:i:2:p:177-196

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    References listed on IDEAS

    1. Ahmed, Habib, 2002. "Financing Microenterprises: An Analytical Study Of Islamic Microfinance Institutions," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 9, pages 28-64.
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    Cited by:

    1. Widiarto, Indra & Emrouznejad, Ali, 2015. "Social and financial efficiency of Islamic microfinance institutions: A Data Envelopment Analysis application," Socio-Economic Planning Sciences, Elsevier, vol. 50(C), pages 1-17.
    2. Shahriar Kabir & Ruhul Salim, 2016. "Two-staged Capital Structure: An Operational Guideline for Islamic Microfinance System," Monash Economics Working Papers 05-16, Monash University, Department of Economics.
    3. Abdul Rahim Abdul Rahman, 2010. "Islamic microfinance: an ethical alternative to poverty alleviation," Humanomics: The International Journal of Systems and Ethics, Emerald Group Publishing, vol. 26(4), pages 284-295, November.
    4. Abdul Rahim Abdul Rahman, 2007. "Islamic Banking And Finance: Between Ideals And Realities," IIUM Journal of Economics and Management, IIUM Journal of Economis and Management, vol. 15(2), pages 123-142, December.
    5. repec:rss:jnljef:v3i4p3 is not listed on IDEAS

    More about this item


    Islamic finance; Islamic Economics; Microfinance.;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion


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