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A Framework for Regulating Islamic Microfinance Institutions

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  • Ismail, Abdul Ghafar

    (The Islamic Research and Teaching Institute (IRTI))

Abstract

Regulation is crucial for many reasons. More important than that is to produce an effective regulatory framework. In this paper, we will find that the first step in this framework is the philosophical foundation of Islamic microfinance institution’s establishment that is formulated in their operations and incentives. Second, the policy issues related to regulations need to be addressed, among others: Islamic microfinance institution activities and Islamic microfinance institution-philanthropy links; effectiveness and sustainability; shariah based business model; who are the regulators; and ownership. Finally, several guidelines will be introduced to produce environmentally effective regulations, among others are the guideline on: the shariah advisory council, corporate governance, group lending policy, loan loss financing, minimum capital and micro-takaful scheme.

Suggested Citation

  • Ismail, Abdul Ghafar, 2015. "A Framework for Regulating Islamic Microfinance Institutions," Policy Papers 1435-5, The Islamic Research and Teaching Institute (IRTI).
    • Handle: RePEc:ris:irtipp:1435_005
    as

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    References listed on IDEAS

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    1. Orazio Attanasio & Britta Augsburg & Ralph De Haas & Emla Fitzsimons & Heike Harmgart, 2011. "Group lending or individual lending? Evidence from a randomised field experiment in Mongolia," IFS Working Papers W11/20, Institute for Fiscal Studies.
    2. Islahi, Abdul Azim & Ghazanfar, Shaikh Mohammad, 1998. "Economic Thought of al-Ghazali," MPRA Paper 53465, University Library of Munich, Germany, revised 2011.
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    Keywords

    regulation policy; Islamic microfinance institutions; regulatory philosophy; shariah;
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