Al-Tawhid in relation to the economic order of microfinance institutions. Issue 4 (4th November 2014)

• Record Type: Journal Article
• Authors: Alam Choudhury, Masudul; Abdullah, Rose
• Is Part Of: Humanomics. Volume 30:Issue 4(2014)
• Page Start: 325
• Page End: 348
• Publication Date: 2014-11-04
• Subjects: Economic development -- Moral and ethical aspects -- Periodicals; Economic policy -- Moral and ethical aspects -- Periodicals; Social change -- Moral and ethical aspects -- Periodicals; 338.9001
• DOI: 10.1108/H-01-2014-0006
• Languages: English
• ISSNs: 0828-8666

Abstract

<abstract> <title> <x content-type="archive" xml:space="preserve">Abstract</x> </title> <sec> <title content-type="abstract-heading">Purpose</title> <p> – This paper aims to study the problems faced by microfinance institutions (MFIs) and relates it with <italic>Al-Tawhid</italic> to see the solutions. </p> </sec> <sec> <title content-type="abstract-heading">Design/methodology/approach</title> <p> – An exploratory method was used to examine various literature that discuss MFIs, the challenge issues growing in tandem with the growth of the microfinance sector and the economic order of MFIs and tries to link it to <italic>Al-Tawhid</italic>. </p> </sec> <sec> <title content-type="abstract-heading">Findings</title> <p> – The absence of <italic>Al-Tawhid</italic> concept in the practice of conventional MFIs caused the practices are not acceptable to Muslim micro entrepreneurs. Hence, the use of <italic>Al-Tawhid</italic> principles of contract suggested practices that are fair and free from elements of riba and gharar. It relates to the economics order by looking into the aims of providing finance up to reaching the consensus process or shuratic. Cash waqf is suggested as a source of fund for Islamic MFI for sustainability. </p> </sec> <sec> <title content-type="abstract-heading">Research limitations/implications</title> <p> – The findings need to be supported with empirical study to come up with suitable models. </p> </sec> <sec> <title content-type="abstract-heading">Practical implications</title> <p> – Alternative sustainable source of funds for the Islamic MFI is suggested. </p> </sec> <sec> <title content-type="abstract-heading">Social implications</title> <p> – Activating the cash waqf will involve the society in large to contribute to the economic development. The beneficiaries, such as the poor and needy, will be able to find a source of living and be actively involved in generating income activities. </p> </sec> <sec> <title content-type="abstract-heading">Originality/value</title> <p> – This paper highlights the cause of problems faced by conventional microfinance and relats the <italic>Al-Tawhid</italic> to overcome those problem conceptually.</p> </sec> </abstract>