MICROCAPITAL BRIEF: Islamic Microfinance Can Spur Development, Argues Khan from Care International UK

Mr Ajaz Khan implies on the “Poverty matters blog” problem on the website of the UK’s Guardian newspaper that Islamic microfinance has strong potential to support socioeconomic development. Mr Khan brings up the fact that there is a growing interest among financial institutions in offering products and services that are shariah-compliant to facilitate development within Muslim communities.
He also adds the fact that Muslims – and non-Muslims – may be attracted to Islamic finance because there is evidence of higher rates of economic growth from Islamic microfinance because it can enable microentrepreneurs to take greater risks than users of standard microfinance products; (2) investment is only permitted in activities deemed socially beneficial; and (3) there is generally an emphasis on fostering a longer-term relationship between lender and borrower.

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