The Challenge in Poverty Alleviation: Role of Islamic Microfinance and Social Capital

Islamic microfinance is an intervention-based social intermediation in which poor people can mobilize their savings, which are linked with Islamic investment, and ideally become self-employed. It results in building social capital. The present study attempts to understand the growth of Islamic microfinance and how the Islamic microfinance sector and social capital can contribute to the challenge of poverty alleviation. Collective action actually provides the means to adopt and benefit from agricultural innovations, generate economic and human capital, and make the development process sustainable. A non-random survey including Islamic microfinance group members suggests increased environmental awareness, economic uplift of members and the potential for local common resource management through Islamic microfinance.