scholarly journals A Proposed Framework on the Relationship between Islamic Microfinance Related Factors and Women Entrepreneurs Business Performance in Nigeria

2015 ◽  
Vol 6 (4) ◽  
pp. 38-44
Author(s):  
Farida Mohammed Shehu ◽  
Al-Hasan Al-Aidaros .
Keyword(s):  
Women Entrepreneurs ◽  
Business Performance ◽  
Raw Materials ◽  
Islamic Banking ◽  
Urban Migration ◽  
Microfinance Institutions ◽  
Related Factors ◽  
Islamic Microfinance ◽  
Conventional Banks ◽  
The Impact

Microfinance plays a key role in poverty alleviation, employment generation, mitigating rural urban migration, utilization of local resources and raw materials and contributing to the gross domestic product (GDP) of Nigeria. Women, majority of who are poor and engaged in informal micro, small and medium scale businesses are mostly the target of microfinance institutions. However, women entrepreneurs find it difficult to have access to the products and services of the conventional banks due to their stringent lending requirement. The presence of Islamic banking which promotes the profit and loss sharing (PLS) concept increases the awareness among women entrepreneurs to alternative funding sources. Despite availability of financing options, women entrepreneurs are constrained by their reluctance to use interest based microfinance services. This paper aims to provide a proposed framework that examines the impact of Islamic investment and financing contracts (Murabaha financing and Mudharabah savings) and other microfinance related factors (training, social capital and self-esteem) on women entrepreneurs business performance. Religiosity is a new moderating variable within the framework that is hypothesized to enhance business performance of women entrepreneurs. The proposed framework will fill the gap in Islamic banking and finance studies since the area of Islamic microfinance and the moderating effect of religiosity has not been empirically investigated.

scholarly journals Islamic Micro Finance and Its Impact on Poverty Reduction of Two Village Models in Bogor, Indonesia

2017 ◽  
Vol 6 (1) ◽  
pp. 87-102
Author(s):  
Mustica Bintang Sabiti ◽  
Jaenal Effendi
Keyword(s):  
Multiple Regression ◽  
Rural Areas ◽  
Business Performance ◽  
Poverty Reduction ◽  
Descriptive Analysis ◽  
Positive Influence ◽  
Microfinance Institutions ◽  
Paired Sample ◽  
Islamic Microfinance ◽  
The Impact

The purpose of this paper is to identify the effectiveness of Islamic microfinance institutions and their impact on poverty reduction in two types of rural areas in the district of Bogor, Indonesia. This research uses descriptive analysis, using a likert’s scale and with a paired sample t test to determine the impact of Islamic micro finance to micro business performance. Multiple regression is also used to see the effect of the types of villages in the implementation of micro-enterprise businesses. The results show that the Islamic micro financing has affected the effectiveness of the income and expenditure aspects, but also quite effective in the aspect of profit and use in expenditure. Furthermore, funding-based Islamic microfinance also has a positive influence on business micro and poverty reduction.DOI:  10.15408/sjie.v6i1.4337

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 Alleviating Poverty through Islamic Microfinance: Outreach and Efficiency (Study on BMT and Islamic Cooperatives in Indonesia)

2020 ◽  
Vol 16 ◽  
pp. 1362-1376
Author(s):  
Purwanto Purwanto ◽  
Ina Primiana ◽  
Dian Masyita ◽  
Erie Febrian
Keyword(s):  
Coefficient Of Determination ◽  
Data Envelopment ◽  
Strong Positive Correlation ◽  
Microfinance Institutions ◽  
Social Efficiency ◽  
Qualitative Approaches ◽  
The Social ◽  
Dependent Variables ◽  
Islamic Microfinance ◽  
The Impact

The involvement of Islamic Microfinance Institutions (IMFI) in building the national economy is paramount to help the poor. However, provision of access and services to lower-level households can potentially conflict with the sustainability of the institutions. This study analyses the social outreach factors that determine financial and social efficiencies. To reach the set goal and solve this issue, we used mixed methodology combining quantitative (statistical instruments, such as Data Envelopment Analysis (DEA) and multivariate analysis) and qualitative approaches (interviews to clarify or deepen the existing information). The assessment of the dependent variables is influenced by proxies of depth, breadth, length, scope, and cost. The results showed that the average loan instalments and the number of offices and branches significantly influence financial and social efficiency. The age of the institution only has an effect on financial efficiency. Simultaneously, profit orientation, the amount and type of financing and the amount and type of savings only have a high impact on social efficiency, whereas the impact of fund collection and cost per borrower is insignificant. There is a strong positive correlation between the two dependent variables. The influence of independent variables on financial and social efficiency is significant with the coefficient of determination 23.1274 % and 53.2941 %, respectively.

scholarly journals Restructuring and Bank Performance in Dual Banking System

2021 ◽  
Vol 10 (2) ◽  
pp. 223-247
Author(s):  
Raditya Sukmana ◽  
Mansor H Ibrahim
Keyword(s):  
Banking System ◽  
Extensive Study ◽  
Bank Risk ◽  
Bank Performance ◽  
Islamic Banking ◽  
Panel Var ◽  
Bank Competition ◽  
Islamic Bank ◽  
Conventional Banks ◽  
The Impact

While extensive study deals with bank competition and performance relationship, this study pioneers in focusing the existence Islamic bank in the presence of well established conventional banking system in Malaysia. This paper assesses the impact of changing competition landscape and Islamic bank penetration on bank risk, profitability and capitalization.  This study utilizes an unbalanced panel dataset consisting of 37 commercial banks over the period 1997 to 2015. the paper uses a panel VAR methodology to discern the interactions between bank competition and Islamic banking presence on one hand and bank performance on the other hand.Findings: We find evidence supportive of both competition – stability and competition – fragility views for conventional banks. The results suggest that bank competition improves conventional bank risk and, at the same time, lower profitability and capital holdings.  As for Islamic banks, competition seems to robustly influence only bank profitability.  Finally, we note that increasing Islamic bank penetration improves the risk profile of conventional banks and, as expected, reduces their market power.  These results bear important implications on the design of competition policies in a dual banking system as well as on the development of the Islamic banking sector.JEL Classification: C23, G21, G28How to Cite:Sukmana, R., & Ibrahim, M. H.. (2021). Restructuring and Bank Performance in Dual Banking System. Signifikan: Jurnal Ilmu Ekonomi, 10 (2), 223-247. https://doi.org/10.15408/sjie.v10i2.20740. 

Profitability vs Poverty alleviation: has banking logic influences Islamic microfinance institutions?

2019 ◽  
Vol 4 (2) ◽  
pp. 260-279
Author(s):  
Luqyan Tamanni ◽  
Mohd Hairul Azrin Haji Besar
Keyword(s):  
Mission Statements ◽  
Annual Reports ◽  
Microfinance Institutions ◽  
Local Data ◽  
Content Type ◽  
Related Information ◽  
The Poor ◽  
Islamic Microfinance ◽  
The Impact ◽  
Primary Mission

Purpose The purpose of this paper is to shed some lights on the process of mission drifting or abandoning poverty objective by Islamic microfinance institutions (IMFs). The paper investigates whether the extensive use of banking logic changes IMFs, from focusing on both development and financial objectives to only considering sustainability as their primary mission. Design/methodology/approach This paper adopts mixed methods by analyzing 7,200 microfinance data from Microfinance Exchange Market and reviewing annual reports and websites of 25 IMFs to examine their vision and mission statements and other related information. Findings The finding shows Islamic microfinance has not changed, despite increasing adoption of financial or banking performance measures. However, size and age of the institutions may affect the outcome in the future. The authors find that smaller microfinance institutions maintain genuine objective to serve the poor, as the grow larger they would be more inclined toward sustainability objectives. Research limitations/implications The research is limited on the sample size as data on Islamic microfinance globally is limited. However, the paper looked at the global data rather than local data to compensate for this limitation. Future study would be further taking the study through qualitative methods to support the study. Originality/value This paper aims to shed some lights on the process of mission drifting or abandoning poverty objective by IMFIs. The paper investigates how has the extensive use of financing logic has changed IMFIs from focusing on both development and financial objectives to only considering sustainability as their primary mission. Arun and Hulme (2009) argued that the interaction of multiple logic within microfinance institutions, i.e. financial vs social, could pose some serious management dilemmas within microfinance institutions. Further, commercialization puts pressure on the field staffs to achieve financial targets and often neglect their poverty outreach mission to the poor. The well-known crisis in Andhra Pradesh, India where clients of microfinance institutions committed suicide after being shamed by field officers who tried to collect payments of loans (Mader, 2013; Taylor, 2011), provides a powerful case of the impact of financialization to microfinance clients.

scholarly journals Islamic Banking in Global Economic Context (Critical Studies of Operational System and Performance of Islamic Banking)

2018 ◽  
Vol 12 (2) ◽  
pp. 343-361
Author(s):  
Jamal Abdul Aziz
Keyword(s):  
Global Scale ◽  
Islamic Banking ◽  
Business Practices ◽  
Distribution Of Wealth ◽  
Islamic Bank ◽  
Need To Evaluate ◽  
Modern Business ◽  
And Performance ◽  
Conventional Banks ◽  
The Impact

Berdasarkan kajian terhadap sejarah kemunculan dan sistem operasional Bank Islam beserta kinerjanya, penulis menyimpulkan bahwa konsep bank Islam pada hakekatnya merupakan bentuk islamisasi terhadap institusi perbankan. Hanya saja proses islamisasi yang terjadi baru sebatas pada aspek-aspek yang bersifat marginal, artifisial, dan formal-institusional, seperti penggantian istilah-istilah teknis dalam dunia perbankan dengan istilah yang berasal dari fikih muamalah, penghapusan bunga, dan penolakan terhadap praktek-praktek bisnis yang haram. Selebihnya, bank Islam tidak berbeda dengan bank konvensional. Dampak dari islamisasi yang kurang substansial-komprehensif tersebut adalah timbulnya kesan bahwa bank Islam justru ‘terbelenggu’ oleh konsep-konsep fikih klasik yang mendasarinya, di mana ia cenderung kontra produktif dengan tren  bisnis moderen yang senantiasa menuntut efisiensi dan fleksibilitas. Agar tetap dapat survive di masa-masa mendatang, bank Islam perlu mengevaluasi diri secara terus menerus dengan selalu membuka diri terhadap berbagai kritikan yang dialamatkan kepadanya. Konsepsi yang terlalu berorientasi kepada doktrin harus diimbangi dengan kesadaran akan fakta-fakta dan tuntutan bisnis moderen, baik yang berskala lokal maupun global. Sementara itu cita-cita Islam yang ideal, seperti pemberantasan kemiskinan, pendistribusian kekayaan secara adil, dan penciptaan lapangan kerja, harus tetap menjadi orientasi utamanya. Kata Kunci:Riba, Profit and Loss Sharing, Mudlârabah, Murâbahah, Artificial Aspects of Islam  Abstract:Based on the study of the history of emergence and operation of Islamic Bank and its system performance, the author conclude that the concept of Islamic bank is essentially a form of Islamization of the banking institutions. Such Islamization are limited to the marginal, artificial, and formal-institutional aspects, such as the replacement of technical terms in the banking world with a term derived from the fiqh al-mu’âmalah, the abolition of interest, and the rejection of unlawful business practices. Moreover, the Islamic bank is no different from conventional banks. The impact of such less substantial and comprehensive islamization is the perception that Islamic bank is precisely 'shackled' by the concepts underlying classical fiqh, where it tends to be counter-productive with modern business trends which are constantly demanding efficiency and flexibility. In order to remain able to survive in the future, Islamic banks need to evaluate itself continuously by always open to criticism addressed to them. The conception of Islamic banking oriented too much to the doctrine must be balanced with an awareness of the facts and the demands of modern business, both local and global scale. While the ideals of the Islamic ideal, such as the eradication of poverty, equitable distribution of wealth and job creation, should remain the main orientation.

scholarly journals The impact of microfinance on microenterprises

2017 ◽  
Vol 14 (3) ◽  
pp. 82-92 ◽  
Author(s):  
Sanya Olugbenga ◽  
Polly Mashigo
Keyword(s):  
South Africa ◽  
Financial Services ◽  
Mixed Method Research ◽  
Microfinance Institutions ◽  
Gauteng Province ◽  
Development Activity ◽  
Study Approach ◽  
Wide Range ◽  
Conventional Banks ◽  
The Impact

The provision of and access to financial services, particularly credit, can contribute greatly to the development of microenterprises in South Africa. Such provision has been an issue ignored by conventional banks or formal financial institutions. The problem associated with this ignorance includes high transaction and operation costs, lack of collateral, and the inability to obtain information about microenterprises resulting in difficulties to extend such credit. Microfinance therefore becomes an alternative to conventional banking and a mainstream and sustainable development activity for extending credit to microenterprises. However, the benefits of microfinance, which include, among others, the ability to provide the much-needed financial support for microenterprises, have not been fully harnessed in South Africa. The objective of this article is to evaluate the impact of microfinance on microenterprises in a typical South African township and to propose specialized financial mechanisms to support and improve the provision of credit to microenterprises. The article draws on the findings of a study undertaken in the Ga-Rankuwa township located in the Tshwane Metropolitan area in the Gauteng province of South Africa. It further draws on a wide range of extensive review of literature that documents the impact of microfinance on microenterprises. A case study approach is adopted and mixed method research paradigm (qualitative and quantitative) is used to gather information. Structured questionnaires and interviews were used to solicit information from the randomly selected microfinance institutions and microenterprises in the Ga-Rankuwa township.

scholarly journals The Islamic Microfinance System And Its Ultimate Impact On The Poor In Bauchi Metropolis In The Context Of Socio-Economic Challenges

2021 ◽  
Vol 5 (1) ◽  
pp. 95-101
Author(s):  
Hashim Sabo Bello ◽  
Shamsuddeen Abubakar ◽  
Sunusi Abdulkadir Fateh
Keyword(s):  
Social Services ◽  
Low Income ◽  
Financial Services ◽  
Poor People ◽  
Microfinance Institutions ◽  
Islamic Microfinance ◽  
And Gender ◽  
High Level ◽  
Financial Transactions ◽  
The Impact

One of the conditions for providing social services to the population, reducing the differentiation of their incomes, as well as reducing poverty is to provide equal access to financial services for all segments of the population. Despite high unemployment and a significant number of poor people, only about a few thousand Nigerians today use Islamic microfinance services. The main purpose of this study is to study the impact of the Islamic microfinance system on the financial situation of the population. The study is based on the principles of the theory of positivism. Methods of deduction, statistical analysis, and survey served as methodological tools. The authors of the article developed a structured questionnaire, the analysis of which allowed to analyze the attitude of citizens to Islamic microfinance services. A representative sample of citizens of the metropolis Bauchi with different levels of wealth, age and gender was selected for the study. According to the results of the survey, the development of special microcredit programs for low-income people allowed to finance the start of their own business, thus providing their own and household members’ employment. The main factors hindering the development of microfinance in Muslim countries are the high level of non-repayment of borrowed funds, imperfect infrastructure, the presence of Sharia bans on certain types of financial transactions. The results of the study showed the need for an active information campaign aimed at explaining the benefits of using macro-financial services and their accessibility for low-income citizens, as well as expanding the network of microfinance institutions throughout the metropolis. These measures will create conditions for the development of small business in the country, and as a consequence reduce poverty and reduce the number of unemployed in the country.

scholarly journals Impact of Basel Accord on Banking System (Evidence from Islamic Banks of Pakistan)

2015 ◽  
Vol 1 (2) ◽  
pp. 1
Author(s):  
Muhammad Mehtab Azeem ◽  
Akin Marsap ◽  
Cigdem Ozari
Keyword(s):  
Banking System ◽  
Islamic Banking ◽  
Basel Iii ◽  
Islamic Banks ◽  
Basel Accord ◽  
Trade Off ◽  
Financial Anomalies ◽  
Conventional Banks ◽  
The Stability ◽  
The Impact

Banks and bank regulatory authorities are vital players for the stability of economy and financial system in potential way. Basel III and its related to capital’s requirement obligations have been effective useful tool for the banking system. Since, this is tough job for the bankers to maintain the liquidity for hedging the future risk but it also been expensive for bankers to keep the extra capital and become more liquid since this discourage the provision of loans but promote the credit ratings. However, it has become necessary to investigate the impact of Basel III on Islamic banking system and analyze the trade off. The study analyzes empirically on the (Financial) anomalies in term of three factors (i) Financial size (ii) Spread and (iii) Provisions for non performing financing. The study also discusses the impact of Basel III on Islamic banking performance if applicable, in context of trade off and impact on country’s economy. We can ask that Basel III framework is difficult to be consistent for conventional banks; we can also realize that either new regulation will be flexible for Islamic banks under Basel III while Islamic and Conventional banks are totally different. Further, we shall estimate if the Basel III is more or less important in Islamic banks of Pakistan than conventional banks. At the end, we shall see from theoretical framework either the impact of Basel III is important for Islamic banks if and only if Islamic banks adopt to follow Basel III regulations and analyzing the potential influence on conventional banks.

scholarly journals The Effectiveness Of Application Of The Leadership Style And Entrepreneurial Orientation To Improve Business Performance

2020 ◽  
Author(s):  
Budi Alamsyah Siregar
Keyword(s):  
Transformational Leadership ◽  
Leadership Style ◽  
Entrepreneurial Orientation ◽  
Business Performance ◽  
Raw Materials ◽  
Business Growth ◽  
Business Behavior ◽  
Transformational Leadership Style ◽  
The Impact

Abstract An owner's leadership style determines how the company carries out the activities in achieving its performance. The entrepreneurial orientation behavior present in an owner also determines how higher business performance can improve success. This study aims to understand how the role of a manager's leadership style and entrepreneurial orientation in improving his business performance. This research used a qualitative Delphi method by collecting in-depth data from 20 company owner. The results indicate the owner's transformational leadership style, a group of medium-sized enterprises that have developed and are beginning to be established, directly determines the applied entrepreneurial orientation. Finally, the application can affect the performance of the business. Behavior entrepreneurial orientation; not only promotes business growth medium, but it can also affect large enterprises' profitability due to the indirect impact achieved by large companies through cooperation in the supply of raw materials for products. The impact of increasing innovation power, proactive power, and risk-taking power on business performance arise from the support of a transformational leadership style. When transformational leadership styles and entrepreneurial orientations combine, medium-sized enterprises will achieve higher performance.

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