Title: Prospects and challenges of Islamic Microfinance Programmes: a case study in Bangladesh

Authors: Muhammad Sayeedul Haque, Masahiro Yamao

Addresses: Department of Agricultural Finance, Bangladesh Agricultural University, Mymensingh 2202, Bangladesh. ' Food and Resource Economics Laboratory, Graduate School of Biosphere Science, Hiroshima University, Higashi Hiroshima City 739-8528, Japan

Abstract: Poverty alleviation initiatives with microfinance under Islamic framework are of recent origin in Bangladesh. This study was conducted to assess the prospects and challenges of Islamic microfinance programmes in poverty alleviation. The findings revealed an inelastic demand for Islamic microfinance products over the conventional one. In the absence of Islamic financing sources, almost all Muslim respondents were compelled to borrow from the conventional interest-based lending sources. Lack of funding and support, allegation of involvement with funding and patronising militant activities and dominance of conventional NGO-MFIs were the main barriers for Islamic microfinance programmes in Bangladesh.

Keywords: Islamic microfinance; Islamic finance; inelastic demand; challenges; prospects; Bangladesh; poverty alleviation; Muslim borrowers; barriers.

DOI: 10.1504/IJEPEE.2011.038875

International Journal of Economic Policy in Emerging Economies, 2011 Vol.4 No.1, pp.95 - 111

Published online: 11 Jan 2015 *

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