Islamic microfinance: the evidence from Australia

Abstract

Purpose

The purpose of this paper is to contribute to the existing body of work in the area of Islamic microfinance by examining the co‐operative nature of Islamic financial services providers (IFSPs) in Australia.

Design/methodology/approach

The method employed in this study is a mixture of one of the authors' post‐graduate research and their personal experience, curiosity and association with this industry.

Findings

Islamic financial cooperatives, relevant government authorities and Islamic micro‐lenders in Australia should cautiously examine the following opportunities for the development of Islamic microfinance in Australia: merging of Islamic cooperatives with each other for their future growth and development through attracting more capital; integration of microfinancing Islamic investment and retail banking facilities to provide the twin engines of fulfilling communities' religious needs and Australia's economic development; and introducing more creative Islamic microfinance techniques to suit the financial needs of individuals and groups to facilitate their contribution in the country's economic development.

Practical implications

The paper offers: an introduction to the emergence and development of Islamic microfinance in Australia; studies the current realities of the Islamic financial system of Australia from the perspective of Islamic microfinance contracting perspectives; explains the key role of IFSPs in Australia in fulfilling the microfinance needs of Muslim community; and examines the Islamic microfinance techniques they use.

Originality/value

Examination of the issues of the study is undertaken aiming at introducing Islamic microfinance with relevant parties including government authorities and Islamic micro‐lenders in Australia to find it as a viable alternative system of financing for Muslims in Australia.

Citation

Umar Faruq Ahmad, A. and Rafique Ahmad, A.B. (2009), "Islamic microfinance: the evidence from Australia", Humanomics, Vol. 25 No. 3, pp. 217-235. https://doi.org/10.1108/08288660910986946