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The purpose of this paper is to establish what constitutes best practice models of microfinance for poverty alleviation. It argues that the new microfinance phenomenon characterized by two camps; commercial and developmental players should be recognized as legitimate separate microfinance approaches with different aims and motives. This paper aims to establish strong foundational argument for developing parallel thinking and separate best practice models for effective engagement with each approach.

Rapid evidence assessment methodology was used to systematically identify and analyze a comprehensive list of relevant literature on best practice models of microfinance for poverty alleviation from both online and offline publications. Over 40 publications on microfinance best practice were critically reviewed with a specific attention to how the two approaches to microfinance (commercial and developmental) were dealt with in relation to impact on poverty and best practice approaches.

The paper argues that, business priorities of commercial microfinance providers differ significantly to those of development microfinance providers and this impacts on the program design which means clients of each regardless of coming from the same target group may have different experiences. The microfinance concept evolved far beyond any single philosophical or ideological confinement that there is now need for formal recognition and acknowledgment that commercial and developmental microfinance paradigms are parallel models of approaches whose continuous evolution is less likely to converge in the near future, so should be treated separately.

Because the purpose, challenges and requirements of commercial and developmental microfinance approaches are different, continued lack of purposeful distinction between the two will continue to cause confusion and lack of precision in policy response on specific sector challenges. Further work and discourse on the impact of both commercial and developmental approach to microfinance on service delivery to the poor is required to test the implications on best practice.

The paper highlights the fundamental flaw in the current perspective of microfinance sector which fails to recognize irreconcilable parallel approaches underpinned by different motives.

Woller, Dunford, and Woodworth (1999) and Morduch (2000) were among the first to discuss the existence of a “schism” in the study of microfinance. Although the exact dimensions of this divide are stated differently by various authors, the existence of alternative schools of thought is widely accepted (Brett, 2006; Bhatt & Tang, 2001; Mitlin, 2002; Robinson, 2001; Rhyne, 1998).

The purpose of this paper is to show the link between Islamic banking and microfinancing.

The approach used in this paper is first to describe the basic principles of Islamic banking and microfinancing and then to show the link between the two financial practices. In general, it is believed that the two practices are not compatible since microfinance allows interest payments on loans and Islamic banking prohibits interest payment based on Islamic law, sharia. Both practices, however, promote equality and fairness for all members of the society and encourage entrepreneurship by giving collateral‐free loans to the poor. The two practices, therefore, are ideologically linked. This paper shows that they are also practically linked.

Islamic religious leaders usually dismiss microfinancing because microfinancing requires high‐interest rate which is against Islamic law. This paper finds that it is possible to combine the two practices and to convince Islamic religious leaders that Islamic banking could be applied to microfinancing.

Since microfinancing has been proven to help many poor people in different countries, the findings of this paper could be beneficial to the poor in some Islamic countries that do not practice microfinancing based on religious beliefs.

This study aims to know the present structure and move of the Islamic banks of Pakistan as well as current issues and challenges for Islamic microfinance. However, this is based on perceptions of the Islamic bankers, regulators and micro-entrepreneurs and petty traders, as they are the key players in the credit market.

The study gathered relevant information through conducting field survey. Two questionnaires were designed for the survey. One questionnaire was administered to survey 270 micro-entrepreneurs and petty traders in three major cities of Pakistan. Another survey deals with the perceptions of Islamic bankers. In total, 100 people from middle and top management were surveyed from five full-fledged Islamic banks of Pakistan. The SPSS software, version 16, was used for questionnaire reliability and descriptive analysis to analyse the data.

In general, the study found the strong opinions of the respondents speak in favour of Islamic microfinance under a system of profit and loss sharing. Conversely, the majority of the clients also feel that Islamic banks do not encourage lower-income micro-entrepreneurs. In addition, the study found that Islamic microfinance is constrained by lack of knowledge, experience and professionalism of the supporting staff; however, Islamic bankers have shown great consensus that Islamic banks should offer Islamic microfinance products and instruments to respond to the needs of the poor for poverty alleviation.

The first limitation of the study is the meagre interest of micro-entrepreneurs and petty traders to participate in the survey. The second limitation of this work concerns the extremely busy schedule of top management and administrative impediment to approach and fix an appointment. Despite these limitations, the findings of this study provide insights to Islamic banks in diversifying their products by offering Islamic microfinance to the low-income entrepreneurs but with proper guidelines and policies.

There is a need to educate the community towards the merits of Islamic banking system by developing a good information system using good visuals and professionally presented seminars, banners and arranging regular sessions with the business community. The growth and development of Islamic banking in the country largely depend on its customers’ enhanced knowledge and awareness about its products and services.

It is the responsibility of the community as well as of government to change the mindset of the poor that banks are meant to serve the interest of everybody, regardless of social, economic and political status.

Theoretically, this study contributes to the existing body of knowledge in the area of Islamic microfinance by examining the perceptions of Islamic bankers and micro-entrepreneurs. This can help Islamic banks of Pakistan to design and formulate new administrative as well as operational procedures to serve the interest of the poor with commitment towards Islamic values.

The Government of Iraq (GoI) and the U.S.-led coalition in Iraq have used microfinance institutions (MFIs) as part of their counterinsurgency campaign. This raises several questions. What role can MFIs play in counterinsurgency? Are the economic or civilian and military motivations for supporting microfinance convergent or divergent? What constraints does conflict impose on microfinance borrowers, lenders, and institutions and how can an MFI ameliorate these constraints? Analyzing these issues is the core of this chapter.

The purpose of this article is to systematically review extant research on the corporate governance (CG) of microfinance institutions (MFIs) from a global perspective. In the process, it discusses scholarly contributions and highlights key issues from the findings of past studies on several governance attributes, in particular, their interconnections and influence on different institutional outcomes of the sector.

Although academic work on microfinance governance is substantial, prior studies lack a comprehensive approach to reviewing the literature on this topic. We adopted a systematic method to review past studies on microfinance CG by applying particular inclusion and exclusion criteria. In this regard, the study developed specific questions and sought to find their answers from the existing literature.

The findings from our research indicate that microfinance governance-performance relationship is the central focus of the majority of our reviewed papers, although a few attempts have been made to explain the interconnection between CG mechanisms at the firm and institutional level. Our findings also show that existing studies have used a variety of techniques to measure MFI performance vis-à-vis their hybrid mission, such as profitability and outreach. Moreover, the study found that common topics discussed in the mainstream literature include board structure, CEO characteristics, audit quality, external governance, disclosure and MFI ownership type.

This review has some limitations that warrant further research. First, we considered only peer-reviewed scientific publications for our systematic review. Second, we omitted non-English journal papers from our sample. In light of these limitations, we provide some future research directions that may shed further light on our current inquiry.

This paper evaluates past relevant studies using a systematic approach (in preference to the commonly used narrative approach) for a span of over eighteen years; thereby contributing significantly to the sectoral governance literature. This study is novel in that it offers new incentives and opportunities for further research in order to meet the shortcomings of reviewed papers from various theoretical, empirical, methodological and geographical standpoints.

The purpose of this paper is to explore two main aspects of waqf: the characteristics of waqf property and the management of waqf. This paper also discusses the governance of waqf management as a source of funds for Islamic microfinance institutions (MFIs).

This research uses content analysis method to examine various literatures that discuss the concept and management of waqf.

The characteristics of cash waqf such as permanence, irrevocability and perpetuity differentiate waqf from other type of donations. Therefore, cash waqf-based Islamic microfinance needs to be sustainable. Good corporate governance is vital to ensure the sustainability. As the donors of cash waqf do not aim to make financial profit, waqf-based Islamic MFIs will be able to provide low-cost capital to the poor entrepreneurs. Furthermore, to ensure the perpetuity of the waqf, it is suggested that only revenue from the waqf property should be used for microfinance fund.

The cash waqf-based Islamic microfinance will help the micro entrepreneurs to get low-cost capital without collateral. At the same time, public can donate any amount they afford to contribute to cash waqf.

The creation of a cash waqf-based Islamic MFI must observe the issues of agency conflicts and the right of stakeholders to a transparent management. This paper emphasizes the importance of good governance in managing the waqf property as a source of fund for Islamic MFIs.

This study aims to design appropriate micro-fintech models for Islamic microfinance institutions (IMFIs), especially Baitul Maal wat Tamwil (BMT) in Indonesia, thus enabling BMT to combine Islamic social and commercial microfinance optimally.

This study uses the analytic network process and Delphi methods, with three groups of experts as the respondents, namely, academician-regulators, BMT practitioners and Fintech practitioners.

The first results show that the micro-fintech tools needed by IMFI/BMT are digital banking, payment, peer-to-peer (P2P) financing, P2P social and e-commerce. These could be developed by a BMT alone or with an APEX or Association, which could also collaborate with an existing fintech company that specialises in micro-fintech, applying the offline to online approach. This means that commercial funding, as well as social fundraising of zakat and waqf, would be conducted online, whereas commercial financing for micro and small enterprise customers and the disbursement of zakat and waqf would be conducted offline. The second results show that the limited open ecosystem and hybrid ecosystem are the most appropriate micro-fintech ecosystems for IMFIs/BMT, with various alternative models. In addition, the private closed ecosystem preferred by BMT would be feasible if all criteria show improvement in the future.

This study is qualitative in nature. The methods used have limitations, meaning the models could be improved by incorporating other methods. Moreover, the case and respondents are all Indonesian, which means that the results may only be applicable to BMTs in Indonesia.

A BMT and/or BMT association could immediately apply micro-fintech with a limited open ecosystem, while in the future, they could apply micro-fintech with a private closed ecosystem.

The micro-fintech model could be used to optimise the collections of zakat, infaq and waqf, meaning BMT could provide more social programmes for those in need.

The growth of fintech in Islamic microfinance has occurred only recently, while only a limited number of studies have been conducted; therefore, no study exists on the development of a micro-fintech model appropriate for IMFIs, especially BMT.

The purpose of this paper is to show that the microfinance industry practices can benefit from the culture and spiritual traditions of a country.

The authors use the Bhagavad Gita and the codes of Manu and Kautilya to describe the background of Hindu teaching and practical wisdom. The authors use a case study of a Hindu microfinance institution (MFI).

The authors find that Indian spirituality is a case-based application of learning through experience.

The case used in this study is one of a religious organization led MFI. It would be interesting to have follow up case studies of for-profit organizations and study their philosophy and links to spiritual traditions.

The authors find that business in general, and MFIs in particular, should adopt risk-based pricing. The specificities of each product, its delivery and price should be based on continuous learning from experience of helping customers. Thus a case-based approach to product development and pricing is required.

This paper is a response to the current criticism of microfinance and argues for more tolerance on the part of society and more sensitivity on the part of MFIs. The case study shows that with the right attitude, it is possible to balance societal interests, customer needs and the institution's growth.

This is the first paper on microfinance which looks at outsourcing from a spiritual viewpoint and launches a debate on whether “playing God” is useful.

The purpose of this paper is to show some of the innovative ways loans are being disbursed to help microfinance institutions (MFIs) diversify their portfolios and reach a young and viable market. The paper attempt to highlight how MEDA/PTE's project in Egypt can contribute to the industry learning on microfinance (MF) and occupational hazards and young people.

The paper presents an Egyptian case study to present how financial products can impact social issues such as working children and at – risk youth.

The study finds that the young people market has been rarely researched in the MF sector. Children and youth like many other groups face a host of issues especially unemployed and poor ones. Program design has often focused on social interventions and keeping young people away from work and in the school system. Through a rights‐based approach, this project is learning that the young people are key actors in many micro enterprises as workers and in some cases as business owners themselves. The market is diverse and so are the needs of the children and youth who are involved. It is time to consider innovation in designing programs for young people. There are alternative learning techniques and skill development for young people in poor countries where school and social services do not meet their needs. Learning within actual workplaces can provide alternate educational opportunities for children provided the work is safe and age appropriate. Programs focused on young people and economic empowerment and job creation will assist many developing nations in stabilizing systems and supporting the productive human assets. The authors have found that despite the rhetoric for youth and employment, the youth arena has been neglected of practical and relevant research. MF industry can advance thinking for young people market. We are finding that MF may impact business owners to improve workplace conditions. Loans also contribute to increase learning, higher wages and lower work hours for young people who work.

Lack of current studies focused on young people and MF. Studies carried out are based on very small samples and vignettes. A recently completed study carried out by MEDA/PTE with financial support from CIDA shows MF impacts on children as workers and business owners but there is plenty of opportunity for increasing levels of research in this area.

This paper shares original case material from Egypt's project, to share lessons on the ground and design and implementation learnings. This paper will be of interest to youth serving organizations, MFIs, banks, child rights community, donors and governments with an interest in children and youth.