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Islamic blended finance for circular economy impactful SMEs to achieve SDGs

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dc.contributor.authorFatou Badjie
dc.contributor.authorTariqullah Khan
dc.date.accessioned2022-10-28T02:17:29Z
dc.date.available2022-10-28T02:17:29Z
dc.date.issued2022
dc.description.abstractIn this research, we present a framework for blended Islamic finance for impactful small and medium enterprises (SMEs) to achieve sustainable development goals (SDGs). The blend results from discussing the pertinent perspectives that underlie the motives of philanthropy, private sector activities and public sector facilitation. The consensus of these three stakeholders on the impact criteria is an essential precondition for the blend to happen. Therefore, we first developed the consensus-based impact criteria for SMEs, namely, 4Zeros & SS (zero-waste, zero-emissions, zero-interest, zero-foreclosures and service to society). After that, we adopted a financial engineering approach to design products by blending the three motives. Financial contracts could be incentive compatible and effective if these three motivations are recognized and brought together. The purpose of our research is to offer such incentive-compatible structures that can mobilize funding for impactful SMEs, save cost as well as generate revenue for self-sustainability. In the contract design, the private sector provides finance, the philanthropist pays the costs of funds, the public sector facilitates, and the impactful SME gets subsidized financing. Since the blended nature of the contract provides a social subsidy to fund the cost element of the financing, the proposed structure creates a win-win result for the blending parties. While financial institutions expand into the SMEs sector for profitability, blended Islamic finance will attract additional resources toward enhancing development impact. Through the philanthropic component, SMEs, on the other hand, will access the source of social subsidy that will relieve the burden of the exorbitant commercial rates. The funding structure will reduce risk perception and spur growth. Consequently, this collaborative and innovative contract design will contribute to achieving multidimensional human development, as enshrined in the Maqasid al-Shariah, and the SDGs. Impactful businesses must integrate environmental, social and governance best practices as well as national development goals. Hence, the proposal offers several benefits and prospects of extended use for other consensus-based purposes such as low-cost housing, solar panelling, health, education, etc.en_US
dc.identifier.citationKhan, T., & Badjie, F. (2022). Islamic blended finance for circular economy impactful SMEs to achieve SDGs. The Singapore Economic Review, 67(1), 219-244. https://doi.org/10.1142/S0217590820420060en_US
dc.identifier.doihttps://doi.org/10.1142/S0217590820420060
dc.identifier.issn1793-6837 (Online)
dc.identifier.urihttps://ikr.inceif.org/handle/INCEIF/3665
dc.languageEnglish
dc.language.isoengen_US
dc.publisherWorld Scientific Publishing Companyen_US
dc.rights2022. World Scientific Publishing Company
dc.sourceSEDONA
dc.subjectIslamic social financeen_US
dc.subjectBlended Islamic financeen_US
dc.subjectSustainable human developmenten_US
dc.subjectZakahen_US
dc.subjectWaqfen_US
dc.subjectSadaqaen_US
dc.subjectSustainable development goalsen_US
dc.subjectCircular economyen_US
dc.titleIslamic blended finance for circular economy impactful SMEs to achieve SDGsen_US
dc.typeJournal Articleen_US
dlc.maintopicIslamic social financeen_US
dspace.entity.typePublication
ikr.doctypeScholarly Works
ikr.topic.maintopicIslamic social financeen_US
relation.isAuthorOfPublication36145047-2606-47d8-be88-b34e648f2e9b
relation.isAuthorOfPublication36145047-2606-47d8-be88-b34e648f2e9b
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relation.isAuthorOfPublication.latestForDiscovery36145047-2606-47d8-be88-b34e648f2e9b
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