The Role of Islamic Finance in Enhancing Financial Inclusion in Organization of Islamic Cooperation (OIC) Countries

Mohieldin, Mahmoud ; Iqbal, Zamir ; Rostom, Ahmed ; Fu, Xiaochen

关键词: ACCEPTABLE COLLATERAL;    ACCESS TO CREDIT;    ACCESS TO FINANCE;    ACCESS TO FINANCIAL SERVICES;    ACCESS TO FINANCING;   

DOI  :  10.1596/1813-9450-5920
RP-ID  :  WPS5920

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The core principles of Islam lay greatemphasis on social justice, inclusion, and sharing ofresources between the haves and the have nots. Islamicfinance addresses the issue of "financialinclusion" or "access to finance" from twodirections -- one through promoting risk-sharing contractsthat provide a viable alternative to conventional debt-basedfinancing, and the other through specific instruments ofredistribution of the wealth among the society. Use ofrisk-sharing financing instruments can offerShariah-compliant microfinance, financing for small andmedium enterprises, and micro-insurance to enhance access tofinance. And redistributive instruments such as Zakah,Sadaqat, Waqf, and Qard-al-hassan complement risk-sharinginstruments to target the poor sector of society to offer acomprehensive approach to eradicating poverty and to build ahealthy and vibrant economy. Instruments offered by Islamhave strong historical roots and have been appliedthroughout history in various Muslim communities. The paperidentifies gaps currently existing in Organisation ofIslamic Cooperation (OIC) countries on each front, that is,Shariah-compliant micro-finance and financing for small andmedium enterprises and the state of traditionalredistributive instruments. The paper concludes that Islamoffers a rich set of instruments and unconventionalapproaches, which, if implemented in true spirit, can leadto reduced poverty and inequality in Muslim countriesplagued by massive poverty. Therefore, policy makers inMuslim countries who are serious about enhancing access tofinance or "financial inclusion" should exploitthe potential of Islamic instruments to achieve this goaland focus on improving the regulatory and financialinfrastructure to promote an enabling environment.