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The role of Islamic Microfinance in Poverty Alleviation: Lessons from Bangladesh Experience

Dhaoui, Iyad (2015): The role of Islamic Microfinance in Poverty Alleviation: Lessons from Bangladesh Experience.

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Abstract

In the People’s Republic of Bangladesh, the poverty has been a main challenge since the last decades and its alleviation is one of the country’s strategic goals to achieve MDGs by 2015 to fight poverty and improve the standards of living of underprivileged population. Micro and SME financing have been playing important role in poverty reduction by creation a gainful employment opportunities. The Islamic banks and the Islamic windows of conventional banks in Bangladesh should pursue vigorous promotion of Islamic micro and medium scale enterprise (SME) finance, in step with the country's concerted efforts for faster poverty eradication with deeper, wider financial inclusion. This paper determined the role of the Islamic microfinance in poverty alleviation efforts in Bangladesh and how this role can be enhanced. It was intended to establish and recommend Islamic microfinance and its principles that could raise poverty reduction and economic development in the country. Especially, this paper tries to answer the following questions: Can Islamic microfinance help alleviate poverty? Should Islamic finance “innovation” include innovative ways to alleviate poverty? Because an institution is “Islamic” does this mean it has a particular obligation to invest in economic or community development? How does the concept of Islamic microfinance operate to serve the goal of poverty alleviation in Bangladesh? For this purpose, this paper tries to give some possible reflections that help us to develop the analytical tool that may help us to improving the way towards the amplification of the analysis paradigm.

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