Financial inclusion: Islamic finance perspective
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Enhancing financial inclusion or access to finance can make critical contributions to the economic development. Conventional mechanisms such as micro-finance, small-medium-enterprises (SME), and micro-insurance to enhance financial inclusion have been partially successful in enhancing the access and are not without challenges. Islamic finance, based on the concept of risk-sharing offers set of financial instruments promoting risk-sharing rather than risk-transfer in the financial system. In addition, Islam advocates redistributive risk-sharing instruments such as Zakah, Sadaqat, Qard-al-hassan, etc, through which the economically more able segment of the society shares the risks facing the less able segment of the population. These are not instruments of charity, altruism or beneficence but are instruments of redemption of rights and repayment of obligations. In addition, the inheritance rules specify how the wealth of a person is distributed among present and future generations of inheritors.
Financial inclusion , Redistributive risk-sharing , Risk transfer , Zakah , Inheritance rules , Sadaqat , Qard al Hassan
Iqbal, Zamir and Mirakhor, Abbas. (2012). Financial inclusion: Islamic finance perspective. Journal of Islamic Business and Management, 2 (1), pp. 35-64.
Riphah Centre of Islamic Business (RCIB)