Aliyu Dahiru Muhammad

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 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.

Micro-entrepreneurs’ intention to use Islamic micro-investment model (IMIM) in Bangladesh

Purpose - The aim of this paper is to propose and verify a structured model for Islamic micro-finance in Bangladesh. The Islamic micro-investment model (IMIM) aims to harness the role of the Design/methodology/approach - The researchers use the survey technique to investigate the micro-entrepreneurs’ intention to adopt the model. A total of 400 questionnaires are distributed with 207 responses being returned (51.75 per cent). In this study, a structural model is tested to examine the relationship of the behavioural intention to adopt Islamic micro-investment with the attitude towards behaviour, subjective norm, normative belief and behavioural belief. Findings - The findings of the research show that, overall, the model fits the data and can be used to advance Islamic micro-finance in Bangladesh. However, out of the four hypotheses tested, only two are accepted Research limitations/implications - The research suggests the need for an awareness programme on Islamic micro-finance and the role of Practical implications - The IMIM aims to harness the role of the Social implications - The model of Islamic micro-finance may empower poor micro-entrepreneurs and harnesses the potential of Originality/value - Only a few studies have been conducted on micro-finance from an Islamic perspective in Bangladesh. The IMIM, which has been developed by Muhammad (2012) and tested in Nigeria, is the first to be validated through an empirical study in Bangladesh. Thus, testing the viability of IMIM in the Bangladesh context will certainly add value for the clients, institutions and policymakers in Islamic micro-finance.

Intention to use the Islamic micro-investment model in Nigeria: empirical evidence

Microfinance was celebrated as an effective tool for poverty alleviation. However, evidence shows that it has been charging high interest rates and exploiting poor income earners. Islamic microfinance, on the other hand, appears too expensive and pursues debt-like contracts that are tantamount to riba. In the case of Nigeria, conventional microfinance has failed to serve the needs of majority poor. Developing an Islamic micro-investment model (IMIM) based on genuine partnership contracts is deemed an appropriate option to overcome the challenges of the existing microfinance institutions. This study develops and tests the Islamic micro-investment model [IMIM based on the theory of reasoned action (TRA)]. The study uses structural equation modelling to examine the applicability and acceptance of the model in Kano State, Nigeria. The result shows that the model fits the data well and that attitude is the major determinant of intention to accept the IMIM among users.