Islamic Microfinance for Poverty Alleviation: A Systematic Literature Review

Abstract

This paper reviews and discusses the impact of IslAmic microfinance and its conventional counterpart on their borrowers. Another primary focus of this study is to identify determinants that could influence the microfinance borrowers. The study also promotes IslAmic microfinance and suggests it as one of the best poverty alleviation tools, especially among the Muslim society by reviewing some measurements taken and suggestions by other researchers through systematic literature review. This paper is a literature survey of more than 50 articles related to microfinance which tries to analyze the areas that researchers investigated in microfinance. This survey comprises not only an empirical analysis and comparative analysis but also the recommendation and suggestion with some theoretical works. Microfinance is lauded asan effective tool for eradicating poverty. It has improved the livelihood, well-being and economic development of the poor people. However, studies show that most conventional microfinance programs neglected the extremely poor population. Therefore, various modes and structures of IslAmic microfinance can deal with different activities and levels of poverty, including the extremely poor. The findings of this study suggest that IslAmic microfinance is one of the best tools to reduce poverty, especially in Muslim society.