Financial Inclusion and Poverty Alleviation in Muslim-majority Countries: The Role of Islamic Finance and Qard Hassan

Global Findex database reports that 75% or about one billion adults among self-identified Muslims do not have an account in a formal financial institutions. The first part of this chapter suggests that overall access to Islamic financial products is positively correlated with levels of financial inclusion in Muslim majority countries. One such product is Qard Hassan and the second part of this chapter highlights its theoretical potentials in reducing poverty and increasing shared prosperity. This theoretical treatment is then complemented with the third part of the chapter where a case study of Akhuwat Foundation, a Pakistani Islamic microfinance organization operating on a Qard Hassan model is presented in some detail and its relative success in breaking the cycle of poverty through Qard Hassan is highlighted. © Author