Financial Inclusion through Islamic Microfinance: Empirical Evidence from Developing Countries

Muhammad Syahrul Hidayat; Nurul Mazidah; Didik Supardana Setia Aksana; Nurhayati

doi:10.18535/ijsrm/v11i11.em03

Abstract

This study explores the important role played by Islamic microfinance in promoting financial inclusion in developing countries. Using empirical evidence, this research shows how Islamic microfinance institutions have helped in reducing poverty and improving the economic welfare of underprivileged communities. Through secondary data analysis and case studies, this research highlights how sharia economic principles such as the prohibition of riba (interest) and the emphasis on asset-based contracts have facilitated access to financial services for individuals previously underserved by conventional financial institutions. This research also discusses the challenges faced by the Islamic microfinance sector and provides recommendations for the future

Keywords

Financial InclusionIslamic Microfinance

References

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[refR-2] Anon. 2015. “Islamic Microfinance.” Islamic Finance : Instruments and Markets (February). doi: 10.5040/9781472920379.0039.DOI ↗Google Scholar ↗

[refR-3] Ascarya, A., and A. Sakti. 2022. “Designing Micro-Fintech Models for Islamic Micro Financial Institutions in Indonesia.” doi: 10.1108/imefm-05-2020-0233.DOI ↗Google Scholar ↗

[refR-4] Ayu, Fuis Sukma, and Dian Filianti. 2022. “Determinants of Financial Inclusion Information Disclosure of Islamic Rural Banks in Indonesia.”Google Scholar ↗

[refR-5] Azrak, Tawfik, and Muzamil Edema. 2022. “The Role of Islamic and Conventional Microfinance in Tackling Financial Exclusion in Bangladesh, Nigeria, and Uganda.” Shirkah: Journal of Economics and Business 7(2):113–23. doi: 10.22515/shirkah.v7i2.478.DOI ↗Google Scholar ↗

[refR-6] Darmawan, Andre Pupung, A. Erlando, Dwi Budi, and Santoso. 2023. “Examining an Islamic Financial Inclusivity and Its Impact on Fundamental Economic Variables in Indonesia (An Approach of Static Panel Data Analysis).”Google Scholar ↗

[refR-7] Eldomiaty, Tarek, Rasha Hammam, and Rawan El Bakry. 2020. “Institutional Determinants of Financial Inclusion: Evidence from World Economies.” International Journal of Development Issues 19(2):217–28.Google Scholar ↗

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[refR-9] Ginanjar, Adhitya, and Salina Hj Kassim. 2021. “Roles of Islamic Microfinance Institutions in Improving Financial Inclusion in Indonesia: Empirical Evidence from Baitulmaal Wa Tamwil.” Al-Iqtishad: Jurnal Ilmu Ekonomi Syariah 13(1):87–108. doi: 10.15408/aiq.v13i1.19842.DOI ↗Google Scholar ↗

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[refR-11] Hassan, M. Kabir, Ammar Jreisat, Mustafa Raza Rabbani, and Somar Al-Mohamed. 2022. “Islamic Fintech and Bahrain: An Opportunity for Global Financial Services.” FinTech in Islamic Financial Institutions 65–87. doi: 10.1007/978-3-031-14941-2_4.DOI ↗Google Scholar ↗

[refR-12] Hassouba, Taghreed Abdelaziz. 2023. “Financial Inclusion in Egypt: The Road Ahead.” Review of Economics and Political Science. doi: 10.1108/REPS-06-2022-0034.DOI ↗Google Scholar ↗

[refR-13] Hejazziey, Djawahir. 2015. “THE ESTABLISHMENT OF ISLAMIC BANKING LAW IN POLITICAL PERSPECTIVE.”Google Scholar ↗

[refR-14] Herispon, Herispon. 2019. “PENDEKATAN INKLUSI KEUANGAN DAN TEORI PERILAKU TERENCANA DALAM ANALISIS PERILAKU UTANG.”Google Scholar ↗

[refR-15] Hudaefi, Fahmi Ali. 2020. “How Does Islamic Fintech Promote the SDGs? Qualitative Evidence from Indonesia.” doi: 10.1108/qrfm-05-2019-0058.DOI ↗Google Scholar ↗

[refR-16] Jayanthi, M., and S. S. Rau. 2017. “Financial Inclusion in India.” International Journal of Applied Business and Economic Research 15(22):11–16. doi: 10.12724/ajss.53.3.DOI ↗Google Scholar ↗

[refR-17] Jones, L. 2018. “Guest Editorial: Poverty Reduction in the FinTech Age.” doi: 10.3362/1755-1986.2018.29-2.ED.DOI ↗Google Scholar ↗

[refR-18] Kanta. n.d. “Financial Inclusion Perspective of Reserve Bank of India.”Google Scholar ↗

[refR-19] Mandira Sarma, Jesim Pais. 2011. “Financial Inclusion and Development.” Pp. 613–28 in Challenges in Economic and Financial Policy Formulation. Palgrave Macmillan.Google Scholar ↗

[refR-20] Mehboob ul-Hassan, and M. Usman. n.d. “Building the Entrepreneurship Through Non -Banking Institution: An Empirical Study on the Contribution of GEAR for Economic Development in Islamic Way.”Google Scholar ↗

[refR-21] Ozili, Peterson K. 2023. “Can Social Inclusion Policies Promote Financial Inclusion?” International Journal of Sociology and Social Policy (116971). doi: 10.1108/IJSSP-03-2023-0054.DOI ↗Google Scholar ↗

[refR-22] Pati, U., Pujiyono Pujiyono, and Pranoto Pranoto. 2021. “Sharia Fintech as a Sharia Compliance Solution in the Optimization of Electronic-Based Mosque’s Ziswaf Management.” doi: 10.22304/PJIH.V8N1.A3.DOI ↗Google Scholar ↗

[refR-23] Pu, Ruihui, D. Teresienė, Ina Pieczulis, Jie Kong, and Xiao-Guang Yue. 2021. “The Interaction between Banking Sector and Financial Technology Companies: Qualitative Assessment—A Case of Lithuania.” doi: 10.3390/RISKS9010021.DOI ↗Google Scholar ↗

[refR-24] Sari, Elizabeth Amelia Permata. 2022. “Peran Fintech Syariah Dalam Ekonomi Islam Di Indonesia.” Prosiding National Seminar on Accounting, Finance and Economics (NSAFE) 2(2):122–32.Google Scholar ↗

[refR-25] Sari, yunita resmi, Ika Tejaningrum, Asep Ramdan, Hamidatul Imamah, and dara ayu Lestari. 2016. “Kajian Peningkatan Akses Keuangan Kelompok Masyarakat Atau Pelaku Usaha Melalui Pemanfaatan Produk / Jasa Layanan Keuangan Syariah.” Indonesia Bank 1–82.Google Scholar ↗

[refR-26] Savaşan, Fatih, and Salih Ulev D. O. 10. 1016/j. bir. 2023. 01. 01. E. R. -. n.d. “No Title.”Google Scholar ↗

[refR-27] Sen, G. 2019. “Gender Equality and Women’s Empowerment: Feminist Mobilization for the SDG S.”Google Scholar ↗

[refR-28] Soemitra, Andri. 2018. Peran Pemberdayaan Masyarakat Oleh Lembaga Keuangan Mikro Syariah Dalam Perspektif Sustainable Development Goals (SDGs).Google Scholar ↗

[refR-29] Sugiyono. 2017. Metode Penelitian Kuantitatif, Kualitatif, Dan R&D. Bandung : Alfabeta, CV.Google Scholar ↗

[refR-30] Tajamul Khurshid Bhat, and Imtiyaz Hussain Ganaie. n.d. “Financial Inclusion: A Primary Study on District Anantnag with Special Reference to J&K Bank.”Google Scholar ↗

[refR-31] Widyandri, Dahayu Bethari, and Nisfu Laila. 2022. “ANALISIS PENGARUH MOBILE BANKING DAN KEUANGAN INKLUSIF TERHADAP KINERJA KEUANGAN BANK SYARIAH DI INDONESIA PERIODE 2014-2019.”Google Scholar ↗

[refR-32] Yusop, Zulkornain, and Muzafar Shah Habibullah D. O. 10. 1108/ijoe. 11-2021-1751 E. R. -. n.d. “No Title.”Google Scholar ↗

[refR-33] Zitouni, Takwa, and Khoutem Ben Jedidia. 2022. “Does Islamic Microfinance Contribute to Economic Empowerment in Tunisia?: A Case Study of Zitouna Tamkeen.” Journal of Business and Socio-Economic Development 2(1):67–81. doi: 10.1108/jbsed-10-2021-0143.DOI ↗Google Scholar ↗

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