Islamic microfinance in Indonesia: the challenge of institutional diversity, regulation, and supervision
Forays into Islamic microfinance have been few and scattered and of limited outreach. Some have been mandated by the state, but lack popular demand, as in Iran; others have emerged in response to popular demand, but lack regulatory support by the state, as in Syria. This has provided the background...
| Published in: | Sojourn |
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| Main Author: | |
| Format: | Print Article |
| Language: | English |
| Check availability: | HBZ Gateway |
| Journals Online & Print: | Drawer...
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| Fernleihe: | Fernleihe für die Fachinformationsdienste |
| Published: |
Institution
2008
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| In: |
Sojourn
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| Further subjects: | B
Bench
B Cooperative society B Religious identity B Credit B Islam B Microfinance B Banking B Credit system B Indonesia Microfinance Islam Bench Credit Bankensystem Cooperative society Bankdienstleistungen Religiöse Bevölkerungsgruppe Muslime B Population group B Muslim B Indonesia |
| Summary: | Forays into Islamic microfinance have been few and scattered and of limited outreach. Some have been mandated by the state, but lack popular demand, as in Iran; others have emerged in response to popular demand, but lack regulatory support by the state, as in Syria. This has provided the background for a more systematic study of Islamic microfinance in Indonesia, the largest Muslim country, where several strands of Islamic microfinance, formal and semi-formal, have evolved since 1990 in parallel. Islamic banking is now officially recognized as part of a dual banking system in Indonesia. Lacking broad popular demand, experience differs by sub-sector. Only commercial banks have successfully acquired the art of Islamic banking by training young and dynamic people, yet lack experience in microfinance. Islamic rural banks, mostly under absentee ownership, have failed to prove themselves as efficient and dynamic providers of microfinance services. Unsupervised Islamic, like conventional, cooperatives are an outright menace to their members, who risk loosing their savings. There are two options of promoting Islamic microfinance: (1) assisting Islamic commercial banks to establish units with Islamic microfinance products; (2) reassessing in a participatory process the challenges and realistic opportunities of Islamic rural banks and cooperatives, with a focus on effective internal control, external supervision, and the establishment of associations with apex services to their member institutions. (Sojourn/GIGA) |
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| ISSN: | 0217-9520 |
| Contains: | In: Sojourn
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