Incorporation of mudarabah, musharakah and musharakah mutanaqisah with microfinance: A sustainable livelihood approach to poverty alleviation

• Main Authors: Islam, Reazul, Ahmad, Rubi
• Format: Article
• Published: 2022
• Subjects: HB Economic Theory; HJ Public Finance
• Online Access: http://eprints.um.edu.my/43482/
• Institution: Universiti Malaya

In this paper, we have conceptualised an integrated microfinancing model by using mudarabah, musharakah and musharakah mutanaqisah (MM&M) instruments. This model presumably, can ensure sustainable economic livelihoods for the poor entrepreneurs by enhancing their income through higher entrepreneurial exercises while providing them with the ownership of tangible assets. To assess the viability of this model, we conducted a study adopting the qualitative method. We took in-depth interviews of three experts in Islamic finance and banking by using an open-ended questionnaire articulated with the vital issues of MM&M financing. According to experts’ opinions, relevant skills, religiosity, and product knowledge can be considered clients’ primary attributes for letting them access these financing schemes. Nevertheless, the involvement of third-party guarantors, cash waqf, and technology usage will augment the usefulness of this financing approach. Outcomes of this study will help incorporate MM&M within the context of Islamic microfinance while opening windows for further research. © 2022, Statistical Economic and Social Research and. All rights reserved.