Evaluation of Qard al Hassan as a Microfinance Approach in Poverty Alleviation Programs

Different countries have implemented various methods in their poverty elimination programs such as redistribution policies, financing low income groups, subsidizing, and enhancing the capabilities of the poor. The study of poverty alleviation is one of the most important considerations in Islamic thoughts. ihsan, zakat, waqf and qard hasan are part of the principles and economic behaviors of Muslims which have considerable positive effects on poverty elimination in these societies. By emphasizing qard hasan as a means of microfinance in the banking system and Islamic shari’a in order to finance the poor in accordance with modern financing tools, this paper will evaluate the effects and results of the application of interest-free loans in poverty elimination programs in Iran. Accordingly, by compiling data of 28 provinces of the country during 1996-2003, the effects of providing interest-free loans on per-capita income as a proxy variable for poverty elimination indicator will be analyz