Integration of waqf-Islamic microfinance model for poverty reduction: the case of Bangladesh
Purpose – This paper aims to develop an integrated waqf-based Islamic microfinance (IsMF) for poverty reduction in Bangladesh. Microfinance institutions (MFIs) have been constrained by the high cost of funds, high interest rate charges and poor human resource quality of the recipients. Islamic MFI...
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| Main Authors: | , , , , |
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| Format: | Article |
| Language: | English English |
| Published: |
Emerald Group Publishing
2015
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| Subjects: | |
| Online Access: | http://irep.iium.edu.my/43487/1/Emerald_-_IMEFM-03-2014-0029.pdf http://irep.iium.edu.my/43487/4/43487_Integration%20of%20waqf-Islamic%20microfinance%20model%20for%20poverty%20reduction_SCOPUS.pdf http://irep.iium.edu.my/43487/ http://www.emeraldinsight.com/1753-8394.htm |
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| Summary: | Purpose – This paper aims to develop an integrated waqf-based Islamic microfinance (IsMF) for
poverty reduction in Bangladesh. Microfinance institutions (MFIs) have been constrained by the high
cost of funds, high interest rate charges and poor human resource quality of the recipients. Islamic MFIs
have recently evolved with the hope of overcoming these financial, ethical and human capital
deficiencies faced by the conventional financial institutions. Moreover, a good number of integrated
models have been proposed to enhance the role played by Islamic MFIs. Most of these models, however,
lack empirical justifications.
Design/methodology/approach – The research uses survey techniques. A total of 381 respondents
were included in the survey. The integrated waqf-based Islamic microfinance model (IWIMM) was
earlier on developed using literature and intellectual discussions. There are six constructs presenting
the IWIMM, namely, waqf resources, IsMF, takaful, project financing, human resource development
and poverty alleviation. In the survey instrument, 45 items represent the six constructs, but only 26
items have been retained after factor analysis. Structural equation modelling has been adopted to
examine the relationship among the constructs.
Findings – The results show that there are significant relationships between IsMF and takaful, waqf
resources and human resource development, takaful and human resource development, IsMF and
human resource development and, waqf resources and project financing. The results also indicate that
poverty alleviation is possible through the integration of these constructs.
Research limitations/implications – Though the paper has studied conventional and Islamic
MFIs in Bangladesh, one of the populated Organisation of Islamic Cooperation (OIC) member countries
and also where poverty incidence is high, further studies need to be conducted in other OIC member
countries to adopt the model in line with practical and regulatory environment of those countries.
Similarly, the study is based on the perception of the respondents, which limits the generalization of the
result.
Practical implications – The paper proposed a model that has the potential of being applied for
poverty alleviation programmes in most of the OIC member states.
Originality/value – The present paper has developed an IWIMM for poverty reduction. |
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