Impact of Islamic and Conventional Microfinance on Poverty Alleviation: A Comparative Study

Abstract

Purpose – This study explores how microfinance influences the poverty reduction and examines the effects of both Islamic and conventional microfinance in alleviating poverty.

Design/Methodology/Approach – This cross-sectional research has adopted a quantitative research design and a survey research strategy has been used for collecting data from microfinance clients. 

Findings – This study has found that both Islamic and conventional microfinance lead towards poverty alleviation, but Islamic microfinance is more suitable for poverty alleviation than conventional microfinance.

Research Implications/Limitations – This study provides useful implications to policymakers and practitioners for improving microfinance strategies aiming to fulfill the objective of poverty alleviation. Further, it provides policy recommendations for microfinance institutions, donors in the microfinance sector, and the government.

Originality/Value – This study represents the initial attempt to comprehensively compare the efficacy of Islamic and conventional microfinance in alleviating poverty, based on the available knowledge. Additionally, it emphasizes the significant impact of Islamic microfinance on poverty alleviation.