Improving the effectiveness of Islamic micro-financing

Learning from BMT experience

Widiyanto Bin Mislan Cokro Hadisumarto, Abd. Ghafar Ismail

Research output: Contribution to journalArticle

15 Citations (Scopus)

Abstract

Purpose – The purpose of this paper is to suggest a way to improve the effectiveness of Islamic microfinancing in Indonesia. Design/methodology/approach – The approach taken to measure and evaluate the effectiveness of microfinancing is to point out the change of microenterprises' business performance and then develop a concept based on the research findings and literature review. Findings – The implementation of Islamic microfinancing, which was preceded by selection process of microenterprises and also accompanied by business control, incentive system, and construct good relationship, is effective in developing microenterprises and improving the household income. However, an integrated program as an effort to improve the effectiveness of Islamic microfinancing is still necessary. Practical implications – Microenterprises' development requires not only provision of financing in an interest freebased system, but it also needs the provision of other services. For the purpose of holistic approach for microenterprises' development and poverty alleviation, the spiritual development, especially via internalizing Islamic moral values in an entrepreneur's consciousness, is also necessary. In addition, poverty alleviation will be successful if Islamic financing is conducted in many areas, and the government takes part in this program. Originality/value – This paper shows how, in the Islamic perspective, spiritual development is necessary in improving the effectiveness of financing.

Original languageEnglish
Pages (from-to)65-75
Number of pages11
JournalHumanomics
Volume26
Issue number1
DOIs
Publication statusPublished - 23 Feb 2010

Fingerprint

Financing
Micro-enterprises
Learning from Experience
Poverty alleviation
Poverty
Spiritual Development
Incentive systems
Entrepreneurs
Consciousness
Integrated
Household income
Literature review
Selection process
Indonesia
Holistic approach
Moral values
Design methodology
Business performance
Government
Moral Values

Keywords

  • Business development
  • Indonesia
  • Islam
  • Microeconomics
  • Poverty

ASJC Scopus subject areas

  • Philosophy
  • Economics and Econometrics

Cite this

Improving the effectiveness of Islamic micro-financing : Learning from BMT experience. / Bin Mislan Cokro Hadisumarto, Widiyanto; Ismail, Abd. Ghafar.

In: Humanomics, Vol. 26, No. 1, 23.02.2010, p. 65-75.

Research output: Contribution to journalArticle

Bin Mislan Cokro Hadisumarto, Widiyanto ; Ismail, Abd. Ghafar. / Improving the effectiveness of Islamic micro-financing : Learning from BMT experience. In: Humanomics. 2010 ; Vol. 26, No. 1. pp. 65-75.
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