Unit 8c: Islamic Microfinance
This unit gives an overview on the Islamic finance and microfinance market. It describes the way Islamic microfinance functions, the alternative products they offer and how they manage risk.
The Islamic Microfinance market has gained a lot of importance in the last few years and showed to be a fast growing market. But, why Islamic Microfinance?
About 700 million of the world’s poor live in predominantly Muslim-populated countries. Yet, only very few of them have an account at a formal financial institution. When asked why they do not have a bank account, quite a few cite religious reasons. Hence, we can assume that many of these people voluntary exclude themselves from formal financial markets because of Shariah requirements.
Islamic Finance and especially Microfinance has already made a significant contribution to financial inclusion of the poor offering them an alternative to conventional finance and microfinance.