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The Evaluation of Qard-al-Hasan as a Microfinance Approach in Poverty Alleviation Programs

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  • Mojtahed , Ahmad

    (Allameh Tabatabai University
    Monetary and Banking Research Institute (MBRI), Central Bank of the Islamic Republic of Iran (CBI))

  • Hassanzadeh , Ali

    (Monetary and Banking Research Institute (MBRI), Central Bank of the Islamic Republic of Iran (CBI))

Abstract

Different countries have implemented various methods in their poverty elimination programs. Redistribution policies, financing low income groups, subsidizing, enhancing the capabilities of the poor, and ... are among the traditional policies for poverty elimination programs. The study of concept of poverty is always one of the most important considerations in Islamic thoughts. Islamic Shariat with special consideration of economic poverty roots and causes has introduced numerous bases and tools to cope with this sinister phenomenon in Islamic societies. Ihsan, zakat or alms, Waqf and Qard-al-Hasan are part of principles and economic behaviors of Muslims which have considerable positive effects on poverty elimination in these societies. By emphasizing on Qard-al-Hasan as a means of microfinance in the banking system and Islamic Shariat in order to finance the poor in accordance with modern financing tools, this paper will evaluate the effects and results of the application of interest-free loans in poverty elimination programs in Iran I.R. Accordingly, by compiling data of 28 provinces of the country during 1996-2003, the effects of providing interest-free loans on per-capita income as a proxy variable for poverty elimination indicator will be analyzed and evaluated.

Suggested Citation

  • Mojtahed , Ahmad & Hassanzadeh , Ali, 2009. "The Evaluation of Qard-al-Hasan as a Microfinance Approach in Poverty Alleviation Programs," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 5(2), pages 1-32, April.
    • Handle: RePEc:mbr:jmonec:v:5:y:2009:i:2:p:1-32
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    References listed on IDEAS

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    1. Rafael Gomez & Eric Santor, 2003. "Do Peer Group Members Outperform Individual Borrowers? A Test of Peer Group Lending Using Canadian Micro-Credit Data," Staff Working Papers 03-33, Bank of Canada.
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