Inclusive Islamic financial planning: a conceptual framework

Habib Ahmed and Ak Md Hasnol Alwee Pg Md Salleh

International Journal of Islamic and Middle Eastern Finance and Management, 2016, vol. 9, issue 2, 170-189

Abstract: Purpose - This paper aims to develop a conceptual framework of inclusive Islamic financial planning (IFP) by combining the traditional Islamic institutions ofzakatandawqafwith contemporary notions of financial planning, financial inclusion and financial literacy that caters to the short-term and long-term financial goals of the poor. Design/methodology/approach - Being a conceptual article, an inclusive IFP framework is described, analyzed and developed by integrating modern notions of financial inclusion, financial planning and financial literacy with the concepts ofzakatandawqaf. Findings - Using the notion of a hierarchy of needs and a financial planning model, an inclusive IFP framework that can be used by the poor is outlined. The complementary role of the non-poor households who provide funds forzakatandawqafis also identified. Research limitations/implications - The applicability of an inclusive IFP would require Islamic financial instruments and products, institutional development and existence of a social planner who can integratezakat,awqafand financial planning to serve the financial needs of the poor. Social implications - Application of an inclusive IFP that can mitigate poverty would necessitate integrating financial planning skills and knowledge with traditional institutions ofzakatandawqafto provide holistic financial advice and services to the poor households. Originality/value - Discussion of financial planning in financial inclusion literature is scant. The paper explores and offers a novel approach of poverty mitigation by utilizing the full spectrum of IFP that considers the financial needs and allows for the creation of a personalized financial plan for low-income households.

Keywords: Waqf; Zakat; Financial inclusion; Financial planning; Hierarchy of needs (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:eme:imefmp:v:9:y:2016:i:2:p:170-189

DOI: 10.1108/IMEFM-01-2015-0006

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