QARD-AL-HASSAN AS A TOOL FOR POVERTY ALLEVIATION: A CASE STUDY OF THE FAEL KHAIR WAQF PROGRAM IN BANGLADESH

Farah Muneer () and Foyasal Khan ()
Additional contact information
Farah Muneer: Institute for Inclusive Finance and Development (InM), Bangladesh
Foyasal Khan: International Islamic University Malaysia (IIUM), Malaysia

Journal of Islamic Monetary Economics and Finance, 2019, vol. 5, issue 4, 829-848

Abstract: The central focus of the Islamic economic system is on socioeconomic justice and the overall welfare of society, especially at the bottom of the pyramid segment. Qard-al-Hassan, alongside zakat and sadaqah, is one of the instruments for the redistribution of income and wealth from the rich to the poor in Islam. In 2007, Bangladesh was struck by super cyclone SIDR, leaving 3,406 people dead. Moreover, SIDR caused unprecedented damage to homes, crops and livelihoods. The Fael Khair Waqf (FKW) Program came as a response to the urgent need to assist the victims of the cyclone and initiated an interest-free micro-loan (Qard-al-Hassan) scheme to restore the livelihoods of a large segment of the victims and to lift them out of poverty. While investigating the effectiveness of Qard-al-Hassan in poverty reduction, this paper also examines the FKW program as a case study. Analysis was conducted of 1600 households using an independent sample t-test and logistic regression to investigate to what extent the program has been effective in reducing poverty. The findings of the logistic analysis are that the probability of being poor for FKW participants is around 1.46 times lower than for non-participants. Moreover, the Qard-al-Hassan of FKW lowers the cost of borrowing significantly and hence participants can accumulate more assets, which might help them to improve their economic status. Overall, the effectiveness of the program implies that development practitioners and researchers should promote the outreach of Qard-al-Hassan so that the extreme poor can easily avail themselves of the services.Acknowledgements: The authors are grateful to the Islamic Development Bank for entrusting InM to evaluate the Fael Khair Waqf program in Bangladesh. The study is based on the data collected during the evaluation period.

Keywords: Qard-al-Hassan; Poverty Alleviation, Fael Khair Waqf (FKW) program; Cost of Basic Needs (CBN) method; Logistic analysis (search for similar items in EconPapers)
JEL-codes: D31 G21 I32 (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://jimf-bi.org/index.php/JIMF/article/view/1100/788 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:idn:jimfjn:v:5:y:2019:i:4g:p:829-848

DOI: 10.21098/jimf.v5i4.1100

Access Statistics for this article

Journal of Islamic Monetary Economics and Finance is currently edited by Dr. Ali Sakti

More articles in Journal of Islamic Monetary Economics and Finance from Bank Indonesia Contact information at EDIRC.
Bibliographic data for series maintained by Lutzardo Tobing ( this e-mail address is bad, please contact ) and Jimmy Kathon ().