Islamic Finance and Its Impact on Financial Inclusion

Wissal Msellek ()
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Wissal Msellek: Universiti Malaysia Sarawak (Unimas)

Chapter Chapter 5 in Enhancing Financial Inclusion through Islamic Finance, Volume I, 2020, pp 81-90 from Palgrave Macmillan

Abstract: Abstract Islamic banking that advocates risk-sharing and equity finance while prohibiting debt financing and leveraging needs to enhance its current operating model to attract depositors and expand credit services by tailoring its instruments to specific market needs. Given the emphasis on social and economic justice and the eradication of poverty, we would expect Islamic instruments that targeted to address inequity, such as zakat, sadaqah, waqf, and qard al-hasan, to play an important role if the required institutional structures are developed. There is a need to formalize or institutionalize Islamic redistributive mechanisms designed to empower the economically weak segments of the society, and also provide a Shariah-compliant finance company model for microfinance and micro-takaful, remove interest rate caps for microcredit for SMEs, and strengthen customer protection laws.

Keywords: Islamic finance; Impact; Financial inclusions; Social and economic justice (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:pal:psibcp:978-3-030-39935-1_5

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DOI: 10.1007/978-3-030-39935-1_5

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