2017 Fiscal Year Research-status Report
Islamic Microfinance as a Tool for Poverty Alleviation: The Case of Bangladesh and Indonesia
| Project/Area Number |
16K03765
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| Research Institution | Ritsumeikan Asia Pacific University |
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Principal Investigator |
BARAI Munim 立命館アジア太平洋大学, 国際経営学部, 教授 (50584017)
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| Project Period (FY) |
2016-04-01 – 2019-03-31
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| Keywords | Islamic Microfinance / Conventional Microcredit / Grameen Bank / Bangladesh / RDS / Microcredit Borrowers / Loan Loss / Poverty Alleviation |
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| Outline of Annual Research Achievements |
My research in FY2017 focused on finding the operational and performance issues of microcredit and Islamic Microfinance in Bangladesh. Financial inclusiveness of Indonesia and role of Islamic Microcredit have also been explored. Along with the collection of data, an in-depth experience survey has been done with individuals, small businesses, and micro enterprises to get a better perspective on the performance of Islamic Microfinance and conventional microcredit. At the field level, I interacted with ground level borrowers and users of the product. These activities were vital as they also involved a lot of discussions and brainstorming with experts and practitioners of Islamic microfinance and its beneficiaries. The efforts have given a clear-cut idea on the social, political and institutional apparatus in the operational mechanism of Islamic microfinance of the institutions, particularly in Bangladesh. Based on the findings of the field visits, experience survey and information from the secondary sources, I wrote three seminar papers-two to present at the APU, Japan and another at North South University, Bangladesh. These papers have evaluated the performance of Islamic Microfinance vis-a-vis the conventional microfinance in Bangladesh. The presentations have also generated feedback, which should help me to address the questions or shortcomings. This should ultimately assist to attain the objectives of the research successfully. Importantly, one of the papers has also been published. Efforts are there to get the other paper published in some reputed journal.
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| Current Status of Research Progress |
Current Status of Research Progress
2: Research has progressed on the whole more than it was originally planned.
Reason
The research has raised and proposed to get answers to a number of questions. They are related to the emergence of Islamic microfinance in Bangladesh and Indonesia, current level of penetration of Islamic microfinance as a poverty alleviation tool, challenges to Islamic microfinance as a potential tool to finance the poor and future policies to make Islamic micro financing an effective tool to alleviate poverty in a cross-country context.
Based on the progress made with activities in AY2016, the research has made a further inroad by evaluating the performance of Islamic Microfinance in a comparative setting with conventional microcredit in Bangladesh. My field and experience surveys, literature review and interactions with the actual borrowers have helped me to understand the reasons behind the better performance of Islamic microcredit in Bangladesh. An interesting finding of the research in AY2017 was that though Islamic Microfinance had a better performance at the ground and helped poverty reduction process in Bangladesh, the outreach of the product may not be termed to be satisfactory. Considering the level of analysis done and outputs and findings achieved in AY2017, the research has indeed progressed well in the expected line.
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| Strategy for Future Research Activity |
For the research, I have a number of planned activities in FY2018. They are as follows:
1.A field visit in Indonesia will be done to get ideas on capitalization of the lending bodies, ownership structure, mode and areas of financing, mode of repayments, regulatory body, role and relationship of the government with the financial institutions (FIs) that deals with Islamic microcredit. The visit will also be utilized to understand why the outreach growth of Islamic microfinance id faster than that of Bangladesh.
2.A fact-finding visit to London will be done understand the reason and attractiveness for the city’s emergence as the most important overseas trading center of Islamic Finance.
3.Attending few seminars /conferences in Japan and overseas to present the findings of the study and enhance my knowledge base in this area.
4.Writing research papers on inclusive finance for poverty alleviation and social empowerment of the poor.
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| Causes of Carryover |
I have to visit Indonesia and London, UK for the reinforcement of some findings I made by secondary sources of information on Islamic Microcredit. The visit should also give further insights into the operations and impact of IM as a financial product.Usage Plan:1.Visiting Indonesia and London, UK. 2.An experience survey of individuals, small enterprises, experts, and borrowers of Islamic microcredit.
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