Publication:
Can micro-enterprises use tawarruq fardi financing (TFF) for fund raising?
Abstracts views
25
Views & Download
0
Date
2022
SDG:
../../../../assets/images/goals/E_WEB_01.png
Abstract
Micro-enterprises, like any other business entity, face financing challenges. However, micro-enterprises often cannot access financial institutions as they cannot fulfill the conditions to obtain financing facilities from a formal financial institution. As such, they have to rely on family or friends for financing needs. The most critical challenge faced in this regard to Muslim micro-enterprises is finding out a way in which family and friends could give a financial helping hand without the involvement of riba (interest). At the same time, the person giving the financing can enjoy a profit. This paper aims to propose the tawarruq fardi financing (TFF) model that Islamic micro-enterprises could use to fulfill their financial needs. It becomes a solution when obtaining financing from friends and family or any other third party who could be a private investor who does not want to engage in an equity relationship. This study adopts a qualitative research methodology, combining descriptive and content analysis using the inductive reasoning approach. The paper's outcome shows that the proposed TFF could assist Islamic micro-enterprises in obtaining Shariah-compliant financing without engaging in an equity partnership. It allows them to fulfill their financing needs bearing in mind the interest of both parties involved in the transaction.
Keywords
Islamic finance , Islamic microfinance , New model , Tawarruq
Citation
Siddiky, S., Swandaru, R., & Muneeza, A. (2022). Can micro-enterprises use tawarruq fardi financing (TFF) for fund raising? PSU Research Review. https://doi.org/10.1108/PRR-08-2021-0047
Publisher
Emerald Publishing Limited