IDEAS home Printed from https://ideas.repec.org/a/lrc/larijb/v3y2013i5p218-233.html
   My bibliography  Save this article

Islamic vs Conventional Microfinance Institutions: Performance analysis in MENA countries

Author

Listed:
  • Ines Ben Abdelkader

    (PhD student in Accounting and Financial Methods,Member of the research laboratory LAMIDED,Higher Institute of Management of Sousse,University of Sousse, Tunisia)

  • Asma Ben Salem

    (Assistant Professor, University of Sousse,Faculty of Economics and Management Sousse, Tunisia,)

Abstract

Microfinance has been identified as an important policy instrument that allows greater financial and social independence for women and poor by facilitating access to financial services for the poorest and destitute. Microfinance institutions (MFIs) have mostly a high concentration of women beneficiaries and aim at alleviation of poverty in all its forms. Accordingly, the principal purpose of microfinance institutions is to be social performing by reducing poverty. However, they have to reconcile this objective with financial performance by trying to be profitable and sustainable. On other side, Islamic Microfinance has progressively growing in the world, particularly in poor countries, as credible alternative which allows poor populations to have access to basic financial services at low cost. The integration of Islamic finance concepts to microfinance was one of the valuable reasons in attracting poor to get advantage of these services. Whereas the complexity of these methods in microfinance and lack of transparency in profit distribution, there are some challenges about their efficiency. It is therefore of utmost interest to consider if the financial performance of Islamic microfinance institutions will be negatively correlated with the depth of outreach. The aim of this paper is to examine the performance of Islamic microfinance institutions in comparison with conventional institutions. This study focuses analysis on the MENA region, where a large proportion of the poor are practicing Muslims and are thus unable to take advantage of traditional microfinance contracts which are incompatible with Sharia’. Using a non parametric data envelopment analysis (DEA) to estimate the efficiency of the microfinance institutions, our study provides the empirical evidence from Islamic and conventional microfinance institutions in MENA region.

Suggested Citation

  • Ines Ben Abdelkader & Asma Ben Salem, 2013. "Islamic vs Conventional Microfinance Institutions: Performance analysis in MENA countries," International Journal of Business and Social Research, LAR Center Press, vol. 3(5), pages 218-233, May.
  • Handle: RePEc:lrc:larijb:v:3:y:2013:i:5:p:218-233
    as

    Download full text from publisher

    File URL: http://thejournalofbusiness.org/index.php/site/article/view/21/20
    Download Restriction: no
    ---><---

    Citations

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


    Cited by:

    1. Ismail Abdulnasir Garane & Abdoul Rahman Mhd Ramez Al Jounaidi, 2020. "The Impact of Islamic Microfinance Institutions on Poverty Alleviation in Mogadishu-Somalia," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 7(4), pages 253-262, April.
    2. repec:ksp:journ3:v:1:y:2015:i:3:p:193-211 is not listed on IDEAS
    3. Imène Berguiga & Yosra Said & Philippe Adair, 2017. "The social and financial performance of Microfinance institutions in the MENA region: Do Islamic institutions perform better?," Post-Print hal-01667406, HAL.
    4. Amidou Ayinla Akangbe Fadikpe & Richard Danquah & Mohammed Aidoo & Dejene Adugna Chomen & Richard Yankey & Xie Dongmei, 2022. "Linkages between social and financial performance: Evidence from Sub-Saharan Africa microfinance institutions," PLOS ONE, Public Library of Science, vol. 17(3), pages 1-23, March.
    5. Surajo Musa Yakubu & Asmadi Mohamed Naim & Rosemaliza Ab Rashid, 2020. "Empirical Study on Corporate image, Customer Perceived Value and Customers’ Acceptance of Islamic Micro finance in Kano State Nigeria: The Moderating Effect of Religiosity," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 6(1), pages 78-84, March.
    6. I. Berguiga & Y.Ben Said & P. Adair, 2020. "The Social and Financial Performance of Microfinance Institutions in the Middle East and North Africa Region: Do Islamic Institutions Outperform Conventional Institutions?," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(7), pages 1075-1100, October.
    7. Khalifa M HASSANAIN, 2015. "Integrating Zakah, Awqaf and IMF for Poverty Alleviation: Three Models of Islamic Micro Finance," Journal of Economic and Social Thought, KSP Journals, vol. 2(3), pages 193-211, September.
    8. Anas Alhifni & Nurul Huda & Muslich Anshori & Biyati Ahwarumi, 2018. "Product Design Mall of Islamic Microfinance Institutions Supporting Economic Empowerment Islamic Boarding School Indonesia (Case Study Islamic Boarding School Abdussalam)," International Journal of Economics and Financial Issues, Econjournals, vol. 8(4), pages 250-255.
    9. Sultan, Yousuf & Masih, Mansur, 2016. "Does microfinance affect economic growth? Evidence from Bangladesh based on ARDL approach," MPRA Paper 72123, University Library of Munich, Germany.

    More about this item

    Keywords

    Microfinance Institutions; Islamic finance; MENA region; Poverty; financial performance; social performance. JEL Classification: G21; D21; I32; L25.;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

    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:lrc:larijb:v:3:y:2013:i:5:p:218-233. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Al Hossain (email available below). General contact details of provider: http://www.thejournalofbusiness.org .

    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.