Islamic Micro Financing: Crowd-Funding as a Drive to Improve Financial Inclusion in Malaysia

  • Authors

    • Salizatul Aizah binti Ibrahim
    • Siti Nurhidayah Mohd Roslen
    • bt Mohamad Salleh
    • Tung Soon Theam
    • Khong Yeen Lai
    2018-11-26
    https://doi.org/10.14419/ijet.v7i4.29.21591
  • Micro-financing, crowd-funding, financial inclusion, Islamic banking and finance

  • Micro-financing is one of the least developed areas in Islamic finance as it stands at less than 1 percent of the global Islamic finance services industry. Given a huge financial inclusion in most of the Muslim-majority countries, Islamic micro-finance has a major role to play for the economics development of Muslim societies. Islamic financial system promotes equity-based and risk sharing instruments to comply with Shari’ah principles. Therefore, the equity-based crowd-funding is seen to be the best alternative form of financing that meets the general Shari’ah requirements. As crowd-funding platforms is gaining momentum in European countries, following an initial success in the USA, the Islamic banking and finance industry in Malaysia should explore the possibilities of implementing their models into our Islamic micro-financing facilities. This concept paper outlines the few factors that lead to the formation of crowd-funding, the benefits and the barriers of crowd-funding, as well as the recommendations to think the vision and mission of making crowd-funding as a drive to improve financial inclusion in Malaysia.

  • References

    1. [1] Abdullah, A. Crowdfunding as an Emerging Fundraising Tool: With Special Reference to the Malaysian Regulatory Framework. Islam and Civilisational Renewal (ICR), 7(1),(2016).

      [2] Achsien, I. & Purnamasari, D. Islamic Crowd-funding as The Next Financial Innovation in Islamic Finance: Potential and Anticipated Regulation in Indonesia. European Journal of Islamic Finance, (5), (2016).

      [3]. Adnan, A. A., Ghani, B. A., Zin, S. M., & Aziz, I. A. The Disciplinary Status of Islamic Consumer Behavior. International Journal of Asian Social Science, 7(12), 949-962,(2017).

      [4]. Bank Negara Malaysia (n.d.). Malaysia Experience in Financial Inclusion: Unlocking Shared Benefits for All through Inclusive Finance. Retrieved from https://www.bnm.gov.my/index.php?rp=malaysia_experience_in_financial

      [5] Chowdhury, A., & Shil, N. C. Public Sector Reforms and New Public Management: Exploratory Evidence from Australian Public Sector. Asian Development Policy Review, 5(1), 1-16, (2017).

      [6]. Mahadi, R., Sariman, N. K., Noordin, R., Mail, R., & Ab Fatah, N. S. Corporate Governance Structure of State Islamic Religious Councils in Malaysia. International Journal of Asian Social Science, 8(7), 388-395, (2018).

      [7] Freedman, D. & Nutting, M. A Brief History of Crowdfunding: Including Rewards, Donation, Debt, and ,(2015).

      [8] Ghani, Z. A New Milestone in Islamic Finance. Financial 1St. Retrieved from (2016). http://mfpc.org.my/wp-content/uploads/Financial1st/2016/Vol4F1st2016.pdf

      [9] Hassan, M. Entrepreneurship, Islamic Finance and SME Financing. IFSB 7th Public Lecture on Financial Policy and Stability. Jakarta, Indonesia,(2015).

      [10] Nazal, A. I. Added Value of Ijarah Tamwilia Service in Jordanian Islamic Bank (Case Study of Contract No: 2012/500). Humanities and Social Sciences Letters, 5(1), 11-17, (2017).

      [11] Javaid, S., & Alalawi, S. Performance and Profitability of Islamic Banks in Saudi Arabia: An Empirical Analysis. Asian Economic and Financial Review, 8(1), 38-51,(2018).

      [12] Monavvarian, A. A Model of Strategic Thinking: Islamic and Iranian Perspective. International Journal of Business, Economics and Management, 1(10), 316-328, (2014).

      [13] Sulaiman, A. A., Yunus, M. A., & Umar, A. Effective Application of Local Teaching Aids for Cost Control in Learning Islamic Studies in Nasarawa State, Nigeria. International Journal of Education and Practice, 5(3), 40-44, (2017).

      [14] Mas, I. Using Broadband to Enhance Financial Inclusion. Institutions for Development Sector, Capital Markets and Financial Institutions Division, Discussion Paper No. IDB-DP-427. 2016, (2017).

      [15] Ishomuddin. The Implementation of the English Curriculum at Private School in Islamic Boarding School in Rural Areas Indonesia", International Journal of English Language and Literature Studies, 5(3),154-162, (2016).

      [16] Moisseyev, A. Effect of Social Media on Crowdfunding project results. Dissertations and Theses from the College Of Business Administration, (2013).

      [17] Moudud-Ul-Huq, S., Zheng, C., & Gupta, A. D. Does bank corporate governance matter for bank performance and risk-taking? New insights of an emerging economy. Asian Economic and Financial Review, 8(2), 205-230,(2018).

      [18] Naceur, S., Barajas, A., & Massara, A. Can Islamic Banking Increase Financial Inclusion?. Working Paper, 15/31,(2015).

      [19] Park, C. & Mercado Jr, R. Financial Inclusion, Poverty, and Income Inequality in Developing Asia. ADB Economics Working Paper Series, 426,(2015).

      Sallam, S. Productivity and Technical Efficiency in Islamic Banks: Cross-Country Analysis. Asian Journal of Economic Modelling, 6(1), 1-7, (2018).

  • Downloads

  • How to Cite

    binti Ibrahim, S. A., Roslen, S. N. M., Salleh, bt M., Theam, T. S., & Lai, K. Y. (2018). Islamic Micro Financing: Crowd-Funding as a Drive to Improve Financial Inclusion in Malaysia. International Journal of Engineering & Technology, 7(4.29), 18-20. https://doi.org/10.14419/ijet.v7i4.29.21591