A review on literature of Islamic microfinance from 2010-2020: lesson for practitioners and future directions

Abstract

This study reviews the literature related to Islamic microfinance institutions (IMFI) published in reputable international journals. The manuscripts that have been collected consist of 71 papers that are classified into several study topics. The most researched topic is Poverty alleviation with as many as 25 papers (35%). Next are the papers with the topic of Waqf-based microfinance as many as 12 papers (17%). This follows with 11 papers on the topic of Marketing & Fintech (15%), and 10 papers on the topic of Sustainability & Outreach (14%). Meanwhile, the paper with the theme Maqashid Shariah ranks fifth with a total of 7 papers (10%). Finally, there are 6 papers with the theme of Risk management & Governance (8%). At the end of each topic, the essence of research is presented for future research, which will be useful for academics and practitioners.

The Role of Islamic and Conventional Microfinance in Tackling Financial Exclusion in Bangladesh, Nigeria, and Uganda

“…Hassan et al (2021) defined Qard al Hasan as an interest-free loan extended to a borrower from a well-off lender. Adoption of Islamic microfinance could provide an ultimate solution to the segment of the population that has been excluded from financial services (Rohman et al, 2021), however, there is still scanty information regarding Islamic microfinance institutions operating interest-free loans (Razak & Asutay, 2022) but they still held the view that characteristics of Qard al Hasan put it in a better position as a possible financing instrument in microfinance system to offer loans to the poor.…”

Developing an integrated model of Islamic social finance: toward an effective governance framework

“…Islamic microfinance is one of the instruments that can positively contribute to the empowerment of the community by providing welfare, creating value, and increasing people's living standards (Usman & Tasmin, 2016). Additionally, several previous studies, such as the ones by Alaro & Alalubosa (2019), Rohman et al (2021), and Umar et al (2021), state that Islamic microfinance can play a role in reducing the level of poverty that occurred in the community.…”

“…On the other hand, waqf is holding assets to be used for philanthropy, and the benefits of these waqf assets will continuously be distributed for good reasons ( Fauzi et al., 2022 ). Islamic microfinance is socially responsible for providing adequate funding for micro-enterprises ( IRTI, 2020 ; Rohman et al., 2021 ). The existence of various characteristics of Islamic social financial instruments is a force in accelerating the transformation of welfare.…”

Does Islamicity matter for the stability of Islamic banks in dual banking systems?

“…Furthermore, there is consensus among Sharia scholars that the substance of Alfalah can be empirically attained by pursuing the behaviours and policies demonstrated in the Maqasid Sharia approach, developed in the 12 th century by Al-Ghazzali 1 ( Chapra, 2008 ; Hudaefi and Noordin, 2019 ; Kader, 2021 ). Maqasid Sharia provides a “ roadmap ” for the permissible halal and the prohibited haram that Islamic banks apply to develop products and services to alleviate poverty and promote wellbeing ( Ibn Ashur, 2016 ; Alwi et al., 2021 ; Kader, 2021 ; Rohman et al., 2021 ). Like Maslow's Hierarchy of Needs pyramid (1943) , the Al-Ghazzalian paradigm points out that humankind's wellbeing is contingent on preserving five fundamental symbiotic essentials: al-din , al-nafs , al-aql , al-nasl , and al-mal ( Ishak and Asni, 2020 ; Kader, 2021 ).…”