Islamic Finance

Sharī‘ah covers all aspects of human dealings, including Islamic financial law and its Fiqh nominated contracts, essentially the basis for all Islamic banking and finance transactions.

An attempt has been made to quantify the targeting of the microfinance and its economic impact on the borrowers. The study has employed the Difference of the Difference Approach to find the net effect of microfinance by employing data collected by Pakistan Poverty Alleviation Fund. The study found that about 30 percent of the borrowers were poor, while 70 percent of the borrowers were non-poor. The impact on the poverty status was found to be marginal. The income of the poor borrowers hardly could grow by 2 percent during the study period.

Pakistan is a lower middle-income country, which is home to a large number of poor, constituting about one-third of its population. The incidence of poverty has remained at around 30 percent of the population during last four decades. The country has been struggling for poverty reduction and has been introducing poverty alleviation programs from time to time. Despite these efforts, poverty persists. The country is facing many challenges including low growth, high inflation and unemployment, sectarian strife, and poor governance.

Pakistan has been facing a high incidence of poverty. Despite its persistent efforts to make a dent on poverty, the country never witnessed a systematic reduction in the same. The country has been spending a significant amount on safety nets and social protection programs. Some programs provide direct cash grants and other forms of indirect support to the poor, while microfinance programs provide microcredit, micro savings and micro insurance to the beneficiaries.

It is commonly observed that the current methodology of product development in Islamic finance has failed to reflect the productive nature of Islamic economics. This is evidenced by a number of current products being substantially indistinguishable from their conventional counterparts according to the commonly-held views.

An attempt has been made to quantify the targeting of the microfinance and its economic impact on the borrowers. The study has employed the Difference of the Difference Approach to find the net effect of microfinance by employing data collected by Pakistan Poverty Alleviation Fund. The study found that about 30 percent of the borrowers were poor, while 70 percent of the borrowers were non-poor. The impact on the poverty status was found to be marginal. The income of the poor borrowers hardly could grow by 2 percent during the study period.

Developing countries have been facing a number of challenges including poverty. Pakistan is one of the developing countries that is home to a large number of poor, constituting about one-third of its population. The state has been introducing different poverty reduction programs from time to time during the last six decades. These include integrated rural development to transfer payments such as