A Market-Based Financing Model for Islamic Housing Microfinance Market

For many years, microfinance was considered an appropriate tool to accomplish social and financial goals simultaneously. Over time, microfinance has become more commercialized, transforming into a financially efficient industry, allowing customers to have access to more sophisticated banking products (e.g. small housing loans). Despite interest from the commercial sector, the industry has yet to find a workable market-based solution to fund micro-finance. Microfinance in the member states of the Organization of Islamic Cooperation (OIC) faces two challenges: (i) constraints in the area of risk and management capabilities as well as funding; (ii) limited access by consumers to financial services. Growing populations and rising urbanization have impeded the access of low income groups to housing finance. Housing cost in relation to incomes and the lack of formal titles have forced people to live in informal settlements. The objective of this paper is therefore to describe and assess the