scholarly journals The Role of Islamic Microfinance For Poverty Alleviation in Bandung, Indonesia

2019 ◽  
Vol 2 (1) ◽  
pp. 55
Author(s):  
Irawan Febianto ◽  
Fuadah Binti Johari ◽  
Zurina Binti Kefeli @Zulkefli
Keyword(s):  
Poverty Alleviation ◽  
Financial Institution ◽  
Capital City ◽  
Primary Data ◽  
Microfinance Institutions ◽  
Poverty Level ◽  
Level Indicator ◽  
Microfinance Institution ◽  
Islamic Microfinance ◽  
The Impact

The emergence of Islamic micro financial institution becomes the alternative solution for the micro-entrepreneurs who need working capital assistance. However, the impact of Islamic microfinance institution in reducing poverty level is somewhat still debatable. In Indonesia, Islamic microfinance established through the presence of Baitul Mal wa Tamwil (BMT), the most popular type of Islamic microfinance institutions. BMT providing financing for the micro-entrepreneurs, as their potential clients, that operates their activities mostly at the traditional markets. The purpose of this study is to measure the impact of BMT for poverty alleviation in Bandung as the capital city of West Java as the biggest population province in Indonesia, not only based on material level but also on spiritual level. This study is looking at income variables of micro-entrepreneur’s household, as well as the spiritual level indicator of micro-entrepreneur before and after they received financing from BMT. The primary data obtained through in-depth questionnaires in Bandung, Indonesia.

A Study of Outcomes of the Poverty Alleviation Programme In Batticaloa District Of Sri Lanka

GIS Business ◽  
2019 ◽  
Vol 13 (4) ◽  
pp. 41-53
Author(s):  
V. Navirathan ◽  
A.M. M. Mustafa
Keyword(s):  
Poverty Alleviation ◽  
Research Question ◽  
Development Program ◽  
Lessons Learned ◽  
Standard Of Living ◽  
Primary Data ◽  
Poverty Level ◽  
Actual Impact ◽  
Future Economic Development ◽  
The Impact

The major aim of this thesis was to explore the impact of poverty alleviation programmes on poverty alleviation in Batticaloa district. The objective of this study is to examine whether the Poverty alleviation Programmes increase the income level of the beneficiaries in Batticaloa District and examinewhether the contribution of Poverty alleviation Programme to increasethe standard of living of the beneficiaries living in the Batticaloa District. The research question developed for this study was what are the outcomes of poverty alleviation programmes on poverty alleviation of Samurdhi beneficiaries in Batticaloa district? There are many poverty alleviation institutions and other institutions which are providing livelihood support to improve the standard of living and to alleviate the poverty level. But, the actual impact of those facilities on poverty alleviation was not known. To find the actual impact, the above research question was developed. Primary data were collected from people who were Samurdhi beneficiaries from Manmunai South Eruvil PattuDS Division, Koralaipattu South DS division and Manmunai South West DS Division in Batticaloa District. The proportionate random sampling method was used to obtain 200 responses from the population. Completed questionnaires were analyzed using SPSS-20 tool package and the collected data were used to test the model using univariate and multiple regression analysis. The coefficient of the constant was positive and statistically significant in the model. All independent variables such as Income, Saving, Wellbeing, Coping Strategies, Entrepreneurial Skill, Employment and Gender Balance of the respondent in the research had a positive and statistically significant coefficient at 5% level. This result revealed that the Poverty alleviation programme moderately impacts on poverty alleviation in Batticaloa district. In order to alleviate the poverty, the identification and formulation of the efficient Samurdhi Programme areessential. Therefore, the major purpose of this study is to analyze the outcomes of Poverty alleviation programme and lessons learned to future economic development program which could be implemented effectively, and economical.

scholarly journals Innovation of Risk Mitigation Model for Islamic Equaty-Based Financing in Islamic Microfinance Institutions in Indonesia

2021 ◽  
Vol 124 ◽  
pp. 10004
Author(s):  
Muhammad Pisol Bin Mat Isa ◽  
Naelati Tubastuvi ◽  
Sri Wahyuni ◽  
Maran Marimuthu ◽  
Ridhuan Tony ◽  
...  
Keyword(s):  
Business Strategy ◽  
Financial Institution ◽  
Risk Mitigation ◽  
Structured Interview ◽  
Payment System ◽  
Business Failure ◽  
Microfinance Institutions ◽  
Microfinance Institution ◽  
Islamic Microfinance ◽  
Selection Of

Islamic Microfinance institution (MFI) funded either by government or private financial institutions are playing an instrumental role in discharging business fund to the eligible micro entrepreneurs (ME). The potential of micro entrepreneurs to succeed in their business is always becoming a central issue, this is due to the ability to manage the business strategy in a sustainable manner. The fund transacted in micro financing industry is small in term of quantity, therefore it also generates small profit to both parties MFI and ME, it may not be profitable in the eye of financial institution such as bank or Microfinance institution such as Baitul Mal wa Tamwil, moreover the financing risk is always high because some of the financing given without proper risk mitigation could lead into financial failure. The above reasons have influenced most of the MFIs’s decision to abstain from providing equity-based financing, where the concept very much suitable and workable to bring out the groups of MEs from poverty list in comparison to debt-based financing. Equity-based financing require bigger commitment and intervention from MFI in business in term of coaching, training and managing cash flow of the business. Islamic equity-based financing is about profit and loss sharing (PLS) financing. Where both parties have to bear financial consequences in the event of business failure. The failure in business would cause non-performing financing (NPF) to the financial institution and could effect the financial position for that particular year of report. The continuous NPF to the MFI can risk the company future plan. Thus, this study aimed to explore the mechanism of risk mitigation for equity-based financing which can be adopted by Islamic microfinance institutions around the would. The mechanism used to suggest in area of governance, selection of entreprenuer, financing arrangement, payment system and business business sectors. The study applied content analysis to collect the history data of equity-based financing as offered by BMT and MFIs in Indonesia, the data informed researcher on the success and failure story, the study also applied structured interview with managers who are responsible on risk mitigation. The study found that BMT and MFIs in Indonesia are well-organized, the governance and selection of entreprenuer are palying significant role while the payment system which includes the collatoral against any negligence posits an effective way in mircofinance mitigation model.

scholarly journals Role of Microfinance in Poverty Alleviation: Evidence from Pakistan

2015 ◽  
Vol 2 (1) ◽  
pp. 37-44 ◽  
Author(s):  
Abdul Ghafoor Awan ◽  
Muhammad Javed Iqbal Juiya
Keyword(s):  
Logit Model ◽  
Poverty Alleviation ◽  
Poverty Line ◽  
Primary Data ◽  
Living Standard ◽  
Survey Method ◽  
Poverty Level ◽  
Household Poverty ◽  
The Impact

This study has empirically measured the role of microfinance in poverty alleviation and has examined its impact on household poverty level. The factors that can affect the household poverty and living standard have been investigated with innovative econometric technique that is binary logit model and ordered logit model by using Stata software. The empirical analysis of this study is based on fresh data. The data is collected through a household survey method from the rural and urban areas of district Lodhran of Pakistan. A questionnaire was developed to collect primary data which covered the household loan amount, household assets, and household expenditures. The questionnaires were distributed among 220 respondents. We selected total 19 variables: eleven variables to analyze the factors responsible for household poverty and eight variables to measure the household living standard. High value of Living standard shows high living standard and low value shows lower living standard. The empirical evidence shows that the variables such as gender, married status, chronicle diseases, purpose of loans, number of loans taken, amount of loan, Lives Stock, Monthly savings, total number of household members are found impacting poverty significantly while the impact of transport facility, years of schooling and ownership of land were found insignificant. While measuring poverty level we followed World Bank poverty line which is $ 1.25 (Rs.3750) per capita per adult monthly income and expenditure. The data shows that 137 (62.3 percent) households are living below poverty line while 83 households are living above poverty line. We find that 169 households (76.8 percent of the total sample) have good living standard while 20 households (9.1 percent) have high living standard whereas 31 households (14.1 percent), have very low living standard. JEL Classifications Code: E6

scholarly journals Microfinance Banks, Small and Medium Scale Enterprises and COVID-19 Pandemic in Nigeria

2021 ◽  
Vol 8 (2) ◽  
pp. 1-10
Author(s):  
Bako Yusuf Adebola ◽  
Oyegoke Adebusola Adebola ◽  
Idowu Afolasade Florence ◽  
Aderemi Timothy Ayomitunde
Keyword(s):  
Oil And Gas ◽  
Global Financial Crisis ◽  
Financial Institution ◽  
Small And Medium Enterprises ◽  
Primary Data ◽  
Human Beings ◽  
Economic Activities ◽  
Ogun State ◽  
Microfinance Institution ◽  
The Impact

Corona virus otherwise known as COVID-19 has left indelible marks on both human beings and businesses globally. When the virus emerged in Wuhan, China in late 2019, it was viewed as China`s problem. Nobody ever envisioned that the novel virus could spread and result into global pandemic within few months. Meanwhile, the aftermath effects of COVID-19 on various socio-economic activities might not be different from global financial crisis of 2008, which left no economy unaffected. Against this backdrop this study was carried out with a view to investigating the impact of microfinance credit on entrepreneurship development amidst COVID-19 pandemic using some selected small and medium enterprises engaging in essentials such as food and consumables, oil and gas and pharmaceuticals in Sango-Ota industrial estate of Ogun state, Nigeria. Primary data were collected with the aid of well-structured set of questionnaire from 100 SMEs which was done purposively. After subjecting the collected data to a rigorous analysis, it was discovered that over 90% of enterprises under investigation used microfinance credit for their businesses during COVID-19 pandemic. Similarly, the study submitted that micro credit increased the stock of goods of the selected and at same time orchestrated a moderate rise in profit for the majority of the SMEs selected for the survey. Consequently, the important findings that originated from this study brought the following recommendations for the policy makers, financial institution and all the stakeholders engaging in SMEs in Nigeria that credit from micro finance has the capacity to facilitate the development of entrepreneurship through expansion of outputs and profitability of SMEs in Nigeria. And as such, the policymakers in Nigeria should create an enabling environment that will facilitate microfinance institution to provide better credit and other financial facilities to SMEs in the country.

scholarly journals Poverty Alleviation and Microfinance for the Economy of Pakistan: A Case Study of Khushhali Bank in Sargodha

Economies ◽  
2020 ◽  
Vol 8 (3) ◽  
pp. 63
Author(s):  
Stylianou Tasos ◽  
Muhammad Ijaz Amjad ◽  
Masood Sarwar Awan ◽  
Muhammad Waqas
Keyword(s):  
Poverty Alleviation ◽  
National Development ◽  
Poverty Line ◽  
Negative Association ◽  
Primary Data ◽  
Human Beings ◽  
Poverty Level ◽  
The Poor ◽  
The World ◽  
The Impact

Poverty is a universal reality, and no one can deny the omnipresence of it all over the world. It is considered as the most harmful economic and social problem of human beings since their creation. It affects individuals as well as society as a whole in a very destructive way, and it is considered that poverty is the mother of all human rights violations. Perhaps no one would argue against the notion that microfinance can be a very useful apparatus in human, social, economic, political and national development. Microfinance has been established to fill the gap of a missing credit market for the poor. Among all other anti-poverty strategies, it has become one of the most important and successful tools for poverty elimination throughout the world. In this study, we investigate the impact of microfinance on poverty alleviation for the economy of Pakistan. The literacy is very poor for the area of Pakistan, so our research will help policy makers in making the right decisions in order to help the people that are living below the poverty line. Primary data of 300 households from Khushhali Microfinance Bank Limited were collected. The findings reveal that microfinance imparts a vital role in poverty eradication where the poverty level has decreased from 42.67% in comparison household (CHH) to 29.33% in the program household (PHH). Finally, it unveils the fact that there is a negative association between the provision of microfinance and poverty level of the household. The availability of micro financing facilities to the poor has declined the poverty rate from 42.67 percent to 29.33 percent. The Logistic Regression model implies that poverty has a negative association with the duration of microfinance, education and existence of a market in the locality, whereas it is positively related to family size and gender of the respondent.

Islamic microfinance in Mauritania: an investigation into involuntary factors affecting usage

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Vatimetou Mokhtar Maouloud ◽  
Salina Kassim ◽  
Anwar Hasan Abdullah Othman
Keyword(s):  
Structural Equation ◽  
Financial Inclusion ◽  
Primary Data ◽  
Microfinance Institutions ◽  
Cross Sectional ◽  
Content Type ◽  
Factors Affecting ◽  
Specific Dimension ◽  
Islamic Microfinance ◽  
The Impact

Purpose This study aims to identify the involuntary barriers of financial inclusion which are affecting the usage of Islamic microfinance services in PROCAPEC institution located in Nouakchott-Mauritania. Subsequently, it also examines the effect of gender as a moderator in the model. Design/methodology/approach Primary data was collected through a cross-sectional questionnaire from 381 beneficiaries of PROCAPEC – a major Islamic microfinance provider in Mauritania. In methodology, the study uses confirmatory factor analysis to identify relevant involuntary factors affecting usage, followed by structural equation modelling to test the impact of these factors on the usage of Islamic microfinance (IsMF) products. Findings Two of the four factors are statistically significant in affecting the usage of IsMF products, namely, affordability and eligibility. Gender is a moderator in the relationship between affordability and usage, as well as eligibility and usage. Practical implications Policymakers, practitioners and managers of Islamic microfinance institutions can consider these factors and focus on strategies, including pricing and promotion, which aim to further develop the Islamic microfinance industry in Mauritania. Also, reducing documentation required from clients and adopting lenient rules to provide suitable products will enhance the use of IsMF products, which may lead to more customers’ attraction. Originality/value Although several researchers have articulated financial inclusion, this study sheds light on a specific dimension of financial inclusion to determine the factors impacting IsMF products’ usage. In Mauritania, there are few studies about microfinance. This study will be amongst the pioneer contribution to the geographical gap.

scholarly journals Total Quality Management Development and Sharia Governance Efforts in Sharia Micro Financial Institutions to Improve Market Share

2019 ◽  
Vol 2 (1) ◽  
pp. 27-35
Author(s):  
Ervicaninda Herry ◽  
Pramudia Yuli Eka Permana ◽  
Wisnu Bayu Aji ◽  
Ridan Muhtadi
Keyword(s):  
Quality Management ◽  
Total Quality Management ◽  
Market Share ◽  
Good Governance ◽  
Financial Institution ◽  
Supervisory Board ◽  
Microfinance Institutions ◽  
Total Quality ◽  
Microfinance Institution ◽  
Islamic Microfinance

An important pillar in the development of Islamic microfinance institutions is Total Quality Management and Sharia Governance. This pillar is the main differentiator between conventional Islamic finance institutions. Institutional efforts to provide satisfaction to customers. The concept of quality (quality) for service and non-service basically includes various things that are focused on the customer. Shari'ah supervision is needed to ensure the implementation of Shari'ah principles in the financial institution, which is played by the Shari'ah Supervisory Board. Implicitly this shows that the practice of shari'ah microfinance institutions has not been concerned with shari'ah principles and the quality of good governance, one of the causes of reputation and public trust in Islamic microfinance institutions will also have an impact on community loyalty use the services of a Shari'ah microfinance institution. Improved reputation and customer trust can be used as an indicator of the success of the development of Islamic microfinance institutions and at the same time predicting their future success in order to increase market share.

Effects of Financial Innovations on Profitability for Deposit Taking Microfinancing Institutions in Kenya

2018 ◽  
Vol 9 (6) ◽  
pp. 529-536
Author(s):  
Martin Khoya Odipo ◽  
Keyword(s):  
Financial Institutions ◽  
Positive Relationship ◽  
Financial Institution ◽  
Secondary Data ◽  
Financial Statements ◽  
Descriptive Statistics ◽  
Primary Data ◽  
Microfinance Institutions ◽  
Financial Innovations ◽  
Strong Positive Relationship

Recent studies have documented that innovations improve profitability of firms. This article documents that deposit taking micro financial institutions that have adopted financial innovations have increased their profitability. The study covered five years between 2009-2013. Both primary and secondary data were used in the study. Primary data was obtained through administration of drop and pick questionnaires to selected employees of the institutions. Secondary data was obtained from financial statements and management reports of these deposit taking microfinance institutions. Data was analyzed using descriptive statistics, return on asset and multi-liner regression model to determine the effect of each financial innovation applied on profitability on the micro-financial institution. The results showed that most deposit taking microfinance institutions adopted these financial innovations in their current operations. There was strong positive relationship between individual innovations and profitability. In line with profitability ROA also showed improvement each year after the adoption of these financial innovations.

Financial and social efficiency analysis of Islamic microfinance institutions

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Marwa Fersi ◽  
Mouna Bougelbène
Keyword(s):  
Capital Structure ◽  
Credit Risk ◽  
Risk Taking ◽  
Negative Impact ◽  
Microfinance Institutions ◽  
Social Efficiency ◽  
Content Type ◽  
Islamic Microfinance ◽  
The Impact ◽  
The Relationship

PurposeThe purpose of this paper was to investigate the impact of credit risk-taking on financial and social efficiency and examine the relationship between credit risk, capital structure and efficiency in the context of Islamic microfinance institutions (MFIs) compared to their conventional counterparts.Design/methodology/approachThe stochastic frontier approach was used to estimate the financial and social efficiency scores, in a first step. In a second step, the impact of risk-taking on efficiency was evaluated. The authors also took into account the moderating role of capital structure in this effect using the fixed and random effects generalized least squares (GLS) with a first-order autoregressive disturbance. The used dataset covers 326 conventional MFIs and 57 Islamic MFIs in six different regions of the world over the period of 2005–2015.FindingsThe overall average efficiency scores are less than 50%, where CMFIs could have produced their outputs using 48% of their actual inputs. IMFIs record the lowest financial (cost) efficiency that is equal to 28% on average. The estimation results also reveal a negative impact of nonperforming loan on financial and social efficiency. Finally, the moderating effect of leverage funding on the relationship between credit risk-taking and financial efficiency was confirmed in CMFIs. However, leverage seems to moderate the effect of risk-taking behavior on social efficiency for IMFIs.Originality/valueThis paper makes an initial attempt to evaluate the effect of risk-taking decision and its implication on efficiency and MFIs' sustainability. Besides, it takes into consideration the role played by the mode of governance through the ownership structure. In addition, this research study sheds light on the importance of the financial support for the development and sustainability of these institutions, which in return, contributes to a sustainable economic development.

scholarly journals Sakofa: Evaluating Zakat Microfinance Program

2018 ◽  
Vol 2 (3) ◽  
Author(s):  
Rakhmawati
Keyword(s):  
Poverty Alleviation ◽  
Primary Data ◽  
Economic Empowerment ◽  
Poverty Index ◽  
Benefit Evaluation ◽  
The Poor ◽  
Microfinance Institution ◽  
Saving Behavior ◽  
Empowerment Program

Zakat microfinance (ZMF) is an alternative to the limitation of zakat institution and microfinance institution in empowerment program. To make sure the zakat microfinance is on the track and to boost its performance and its benefit, evaluation is needed. This study aims to do an operational evaluation of productive zakat program formed in the micro-economic empowerment program named Sakofa (Madrasah Ekonomi Dhuafa/ School for Economics of the Poor) of Dompet Dhuafa Yogyakarta. Primary data were gathered from Sakofa beneficiaries in Sleman, Bantul, and Gunung Kidul. The findings show that all monetary aspects are better after running the program. Using ADePT software, headcount index, poverty gap, poverty severity, Watts index, and the average time taken to exit poverty are lower after doing the program. Altruism and saving behavior are better after Sakofa Program is implemented. Unfortunately, mustahiq were lack of discipline and desire to be independent. The effectiveness of counseling material on religiosity is the lowest. In short, Sakofa Program has a good performance in improving their prosperity. Keywords: productive zakat, zakat microfinance, poverty alleviation, empowerment, poverty index

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