Evaluating the Economic Impact of Interest-free Microfinance Institutions in Kerala: An Analysis of Variance

International Journal of Economics and Management Studies

© 2022 by SSRG - IJEMS Journal

Volume 9 Issue 11

Year of Publication : 2022

Authors : P. A. Ameer, P. Arunachalam

10.14445/23939125/IJEMS-V9I11P101

How to Cite?

P. A. Ameer, P. Arunachalam, "Evaluating the Economic Impact of Interest-free Microfinance Institutions in Kerala: An Analysis of Variance," SSRG International Journal of Economics and Management Studies, vol. 9,  no. 11, pp. 1-5, 2022. Crossref, https://doi.org/10.14445/23939125/IJEMS-V9I11P101

Abstract:

The success of microfinance is measured based on the impact on its beneficiaries at the micro level and the community at large. The present study has examined the performance of Interest-free microfinance institutions (IFMFIs) in Kerala in impacting Household Expenditure, Household Assets and Employment Generation on its beneficiaries. The study used a stratified random sampling method to collect data from 454 respondents from 32 sample institutions. The study found that the IFMFIs in Kerala have a positive economic impact on its beneficiaries. The study has also tried to examine whether there is any significant difference between the Society Model, Trust Model and Nidhi Model. Interest-free Microfinance in economic impact and the Society Model of interest-free microfinance institutions perform better in all economic impact parameters than the Trust Model and Nidhi Model of Interest-free Microfinance. So, it recommends following the principles of the Society model to serve the poor better.

Keywords:

Analysis of Variance, Economic Impact, Employment Generation, Household Expenditure, Household Assets, Interest-free Microfinance

References:

[1] A.M. Inun Jariya, “True Economy Prosperity through Poverty Alleviation-Islamic Microfinance as Commercial Venture,” Proceeding Kuala Lumpur International Business, Economics and Law Conference, 2013.
[2] M. A. Adnan and S. R. Ajija, “The effectiveness of Baitul Maal wat Tamwil in reducing poverty: the case of Indonesian Islamic Microfinance Institution,” Humanomics, vol. 31, no. 2, 2015.
[3] H. Ahmed, “Incentive-Compatible Profit-Sharing Contracts: a Theoretical Treatment,” Islamic Banking and Finance, pp. 40-54, 2002.
[4] A. Ameer, “Outreach Performance and Financial Sustainability of Interest-Free Microfinance Institutions in Alappuzha, Kerala,” Sai Om Journal of Commerce & Management, vol. 2, no. 8, pp. 10-16, 2015.
[5] M. A. Ashraf, “The Effectiveness of Microcredit Programs and Prospects of Islamic Microfinance Institutes (IMFIs) in Muslim Countries: A Case Study of Bangladesh,” Journal of Islamic Economics, Banking and Finance, vol. 6, no. 4, pp. 32-45, 2010.
[6] A. B. Bhuiyan and A. Hassan, “Microcredit and Sustainable Livelihood: an Empirical Study of Islamic and Conventional Credit on the Development of Human Capital of the Borrowers in Bangladesh,” Journal of Economic Cooperation and Development, vol. 34, no. 3, pp. 101-128, 2013.
[7] W. B. M. C. Hadisumarto and A. G. B. Ismail, “Improving the Effectiveness of Islamic Micro‐Financing: Learning from BMT Experience,” Humanomics, 2010.
[8] The IMF and ISLAMIC FINANCE, [online]. https://www.imf.org/external/themes/islamicfinance/
[9] R. Islam, R. Ahmad, K. Ghailan and K. E. Hoque, “An Islamic Microfinance Approach to Scaling up the Economic Life of Vulnerable People with HIV/AIDS in the Muslim Society,” Journal of religion and health, vol. 59, no. 3, pp. 1327-1343, 2020.
[10] A. G. Ismail and A. Elzahi, Eds., Regulation and Supervision of Islamic Microfinance, International Islamic University Malaysia, 2015.
[11] M. Khaleequzzaman, “Islamic Microfinance: Outreach and Sustainability,” In a Paper Presented at IIUM, International Conference on Islamic Banking and Finance, pp. 23-25, 2007.
[12] S. R. Khandker, “Microfinance and Poverty: Evidence Using Panel Data from Bangladesh,” The World Bank Economic Review, vol. 19, no. 2, pp. 263-286, 2005.
[13] M. Kabir Hassan, Muneer M. Alshater, Rashedul Hasan and Abul Bashar Bhuiyan, “Islamic Microfinance: a Bibliometric Review,” Global Finance Journal, vol. 40, 2021.
[14] A. Modi, K. J. Patel and K. M. Patel, “Impact of Microfinance Services on Rural Women Empowerment: an Empirical Study,” IOSR Journal of Business and Management, vol. 16, no. 11, pp. 1-8, 2014.
[15] M. Obaidullah, “Introduction to Islamic Microfinance,” IBF Net Limited, 2008.
[16] M. Obaidullah and T. Khan, “Islamic Microfinance Development: Challenges and Initiatives,” Islamic Research & Training Institute Policy Dialogue, Paper 2, 2008.
[17] M. Obaidullah and H. S. H. A. Latiff, “Islamic Finance for Micro and Medium Enterprises,” Islamic Research & Training Institute Islamic Development Bank, Centre for Islamic Banking, Finance and Management Universiti Brunei Darussalam, 2008.
[18] A. R. A. Rahman, “Islamic Microfinance: an Ethical Alternative to Poverty Alleviation” Humanomics,2010.
[19] A. G. Rashid and L. Ejaz, “Interest Free Micro-Credit Loans: Pakistani Female Entrepreneurs,” Journal of Islamic Marketing, 2019. 
[20] N. I. Riwajanti, “Special Feature “Socio-Economic Role of Islamic Finance and Transportation,” vol. 1, no. 6, 2014.
[21] W. Rokhman, “The Effect of Islamic Microfinance on Poverty Alleviation: Study in Indonesia,” Economic Review: Journal of Economics and Business, vol. 11, no. 2, pp. 21-30, 2013.
[22] M. M. Uddin, “Credit for the Poor: The Experience of Rural Development Scheme of Islami Bank Bangladesh Ltd,” Journal of Nepalese Business Studies, vol. 5, no. 1, pp. 62-75, 2008.
[23] A. Ullah, Z. Khan and H. M. Yasin, “Cooperative Microfinance Myth or Reality: An Economic Analysis of the Welfare of Marginalised Segments,” 8th International Conference on Islamic Economics and Finance, 2011.
[24] Valdivia, M., & Karlan, D. (2006). Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions (No. 941). Center for Global Development, Working Paper no 107.
[25] P. Wulandari and S. Kassim, “Issues and Challenges in Financing the Poor: Case of Baitul Maal Wa Tamwil in Indonesia,” International Journal of Bank Marketing, 2016.
[26] N. Zaidah and C. M. Nor, “The Effectiveness of Amanah Ikhtiar Malaysia (Aim) in Reducing Rural Poverty: a Case Study of Pokok Sena,Kedha,” Universiti Utara Malaysian, 2011.