Financial relaxation of Islamic rural banks and private schools resilience during COVID-19

The pandemic of COVID-19 has increased tensions between Islamic rural banks and private schools. Many parents lose their jobs and are thus unable to pay their children’s school tuition. Private schools, on the other hand, are heavily reliant on tuition and bank financing. As a result, student enrollment falls, school finances suffer a deficit, many parents and students lose trust in the school, and some students may wish to drop out. This research aimed to investigate the effectiveness of financial relaxation on schools’ resilience. It was qualitative research with a case study approach focusing on the causal relationship of an Islamic rural banks with a private school affected by the COVID-19 pandemic in Muhammadiyah 1 Yogyakarta Vocational High School and Islamic rural banks’ Bangun Drajat Warga (BDW). The research finding reveals that BDW Islamic rural banks has implemented financing relaxation three times to ease the school’s burden and it has resulted in an improvement in the school’s resilience by as much as 33%. Besides, due to the high ideological commitment and adaptability of Muhammadiyah 1 Yogyakarta Vocational High School as well as the success of gaining parents’ trust regarding online teaching and learning, there has been an increase in the school tuition by as much as 80%. Although though the COVID-19 epidemic is coming to an end, it is still important to study the financial flexibility of Islamic rural banks and private schools in similar crises in the past to better prepare for the future

Waqf as a financial instrument for the development of social enterprises in Pakistan

The aim of this research is to develop an understanding of waqf entrepreneurship and social enterprises. We look into different aspects of these entities their operation, fund management and challenges they face. This paper further applies the waqf model under Islamic financing for social enterprises. This research is fundamentally, descriptive, and Qualitative in nature. Sources of information are both primary and secondary. Primary source includes an interview from a youth-led organization operating in Pakistan. The secondary sources include research articles and archival record. The studied established that in Pakistan, social enterprises have no legal status with only few policies that indirectly apply. Some of the financial sources of social enterprises identified are donations, grants, concessional loans. Social enterprises face several issues in Pakistan. These include lack of funding, social recognition, government support and hardships in doing business. Islamic Financial Institutes also have the potential of playing a key role in financing social enterprise. Through the use of Islamic financial instruments like Zakat, Sadaqah, Waqf, Sukuk etc., Islamic financial institutes can alleviate this sector. We particularly look at waqf-based financing for social enterprises

SUSTAINABLE ISLAMIC MICROFINANCE INSTITUTIONS IN INDONESIA: AN EXPLORATION OF DEMAND & SUPPLY FACTORS AND THE ROLE OF WAQF

Whereas Indonesia is the largest Muslim country in the world, the growth of Islamic microfinance institutions (MFIs) has being sluggish and far behind their conventional MFIs. Islamic MFIs are struggling to survive amid the fierce competition in the provision of microfinance services, from both the conventional and Islamic institutions. Meanwhile the high unemployment rate in Indonesia calls for searching for ways in which financing can be provided to the jobless and poor. One way to resolve this is to provide MFIs with low cost funds that can be used to finance viable micro-businesses. The aim of this thesis is to examine the demand and supply side factors related to operations and growth of Islamic MFIs. It also investigates the scope of integrating microfinance and waqf to enhance the social mission of providing access financial services and opportunities to the needy and the poor. A survey was conducted to explore the perceptions, understanding and preferences of 581 MFI’s borrowers from four MFIs—two Islamic (BMT and BPRS) and two conventional (BRI and BPR) in Indonesia. A total of 18 MFIs’ managers and two waqf managers/nazirs were interviewed. Secondary data, case-study and a focus group discussion (FGD) were also conducted in order to understand the problems. The results show that while the majority of MFI’s clients indicate preference for Islamic MFIs, in reality their choices of MFI are based on economic/finance (low interest rates and size of loan) and non-economic/non-finance factors (quality of services variables easiness, promptness, nearness, method and loan officers’ profile). While the MFIs clients prefer Islamic MFI compared to conventional, in the end, the practical and economic reasons became dominant factors in their choice of MFI. Therefore, the demand for Islamic microfinance can be enhanced if the level of their economic and non-economic factors can be brought to the levels of conventional MFIs. The research reveals that there is still a gap between needs and knowledge of Sharia’h financial products and services. When the practice of murabahah product is considered, there appears to be no difference in substance between conventional and Islamic MFIs. In order to understand the operational structure of each type of MFI, their performance was assessed by using the balanced scorecard (BSC) with four perspectives. A balanced non-financial and financial performance is extremely important to create sustainability for microfinance institutions. The relationships between the different components of BSC indicate strong significant correlations between the internal process and customer’s perspectives. There are also significant correlation between customer’s perspectives and learning-and-growth and slightly significant correlation between learning-and-growth and financial performance. Overall scores of the Balanced Scorecard from the four perspectives for MFIs cemented BRI as the best performer, BPRS in the second place, followed by BPR and BMT in the third and fourth place respectively. The advantage of BRI is partly due to robust government support which makes it difficult for other smaller MFIs to compete. In contrast, BMT showed a weak institutional structure in terms of internal processes, learning-and-growth and customer satisfaction. It seems that BMT is not managed well according to BSC’s key performance indicators. This thesis also proposes to add one more perspective i.e, Social Perspective, for ‘The BSC based Islamic MFIs’ Model’ to help waqf institutions to appraise and choose a MFI in a more balanced and comprehensive way. Social perspective comprises the social mission of Islamic MFIs which can be reflected in providing qard hassan and giving more opportunities to the needy, jobless and the poor to start their own micro business. Indicators of the social perspectives can be the amount of funds contributed for qard hassan, how many needy clients are being served, and how many months a MFI permits clients to use the qard hassan loan. Islamic MFIs such as BPRS and BMT are expected by Muslims to perform more social functions than others. Therefore, one way to implement the social mission is to incorporate qard hassan in BPRS and BMT’s operations to help the poor and jobless with the low cost loans to start their viable micro-businesses

Integration of WAQF, microfinance and micro, small and medium enterprises for poverty alleviation in Sokoto State, Nigeria

There is a growing concern over the alarming prevalence of poverty in Nigeria generally, and in Sokoto State particularly. Ironically, the long existence the Waqf and microfinance institutions which are considered among the most effective poverty-alleviation institutions, of these institutions in Sokoto state are apparently not making any significant impact on poverty alleviation in the area. Similarly, micro, small and medium enterprises (MSMEs) are hampered by acute financial exclusion in Nigeria. Therefore, this study was primarily conducted in order to explore effective mechanisms of harnessing the potentials of waqf, microfinance and MSMEs for sustainable poverty alleviation in Sokoto state. The exploration of these mechanisms has required the adoption of qualitative research method involving series of interview and focus group discussions. Subsequently, the primary data collected was analysed thematically through NVivo 10 computer software. By adopting grounded theory approach in data collection and analysis, capacity-building theory of poverty alleviation was eventually generated for implementation in the state. Based on the findings of the study, a waqf-based Islamic microfinance integrated model (WIMIM) was proposed. This model which is a mix of commercial and investment institution which employs various Islamic financing techniques to develop local MSMEs in the research survey area was empirically justified and practically demonstrated in various entrepreneurial and capacity-building arrangements. The findings of this study covered the alarming prevalence of poverty in Sokoto State, capacity-building theory of poverty alleviation, ideal waqf administration, effective microfinance services, growth of MSMEs and integration of waqf and microfinance for sustainable poverty alleviation in the State. These findings are meant to guide the policy-makers and all stakeholders in rectifying anomalies in the current poverty alleviation schemes in the state

Accountability and governance practices in Islamic microfinance institutions : evidence from Indonesia

This thesis presents an explanatory analysis of the accountability and governance practices within Islamic microfinance institutions in Indonesia, adopting Bourdieu’s theory of practice with the triad of concepts of field, capital and habitus. This study is based on the argument that accountability and governance are socially and subjectively constructed through internal and external mechanisms. The internal mechanism includes the organisational history and its culture, while the external factor is the context in which the organisation operates.The concept of field is a guide to achieving the first research objective in examining the historical development of the Islamic microfinance sector in Indonesia. The changes and developments within the field are the external factors that affect the construction of accountability and governance practices within selected Islamic microfinance institutions in Indonesia (IIMFIs). The historical research method is deemed the most appropriate to provide a narrative history of the development of the field. This was done by interviewing and analysing the secondary data of journal research relating to Indonesia’s socio-political situation over the period, the initiative on microfinance services, the Islamic resurgence movement and the financial reforms. The findings demonstrate that the development of the Islamic microfinance sector is inseparable from the socio-economic and political situation in Indonesia. Therefore, the field of Islamic microfinance is dynamic rather than static: it changes and develops over time.Furthermore, the concept of capital and habitus helps to achieve the second research objective, to examine the construction and re-construction of accountability and governance within selected IMFIs in Indonesia: BMT A and BTM B. The internal factors of the growth of various types of capital (economic, culture, social and symbolic), imbued by the organisational habitus, constructed the accountability and governance practices. Such practices are developed over the period corresponding to the different stages of organisational growth. Both institutions have evolved from small pilot projects into two of the biggest IIMFIs in Indonesia by developing their own mechanisms of accountability and governance to ensure their capability to continue their operations in the future.This study offers a unique lens for exploring, in a specific context, the construction of accountability and governance practices, the dynamic aspects of which traditional governance theories are unable to explain

Recent finance advances in information technology for inclusive development: a survey

The overarching question tackled in this paper is: to what degree has financial development contributed to providing opportunities of human development for those on low-incomes and by what information technology mechanisms? We survey about 180 recently published papers to provide recent information technology advances in finance for inclusive development. Retained financial innovations are structured along three themes. They are: (i) the rural-urban divide, (ii) women empowerment and (iii) human capital in terms of skills and training. The financial instruments are articulated with case studies, innovations and investment strategies with particular emphasis, inter alia on: informal finance, microfinance, mobile banking, crowd funding, microinsurance, Islamic finance, remittances, Payment for Environmental Services (PES) and the Diaspora Investment in Agriculture (DIA) initiative

Reform of financial system in Afghanistan

Thesis(Master) --KDI School:Master of Public Policy,2008masterpublishedby KHELWATI LAILA