Stages of the Islamic Social and Commercial Financing for Microfirms

Anisa Fitria Wulaningtyas, Zuliani Dalimunthe, Yusuf Wibisono

2017

Abstract

Zakah, shadaqah, and waqf are among the Islamic social funds work as instruments for poverty alleviation. Islamic social funds in Indonesia collect through authorized zakah institutions. This study analyzes how zakah institutions provide micro financing in several stages to develop micro-business. We interviewed three zakat institutions in Indonesia. We found that micro-business financing through zakat institutions provided in three stages. Each stage has different schemes and provisions. At the first stage, the fund granted to individuals without an obligation to pay the fund back. It is a zakah fund distributed according to a transfer payment scheme. In the second stage, financing provided to individuals or business groups with interest-free repayment. It is a non-zakat social fund used to finance a micro business with 0% interest, lower than the market rate for micro-financing. Moreover, the repayment at this stage is not to the zakat institution, but rather to the group, either become revolving fund among group members or become group-owned resources. The third stage is commercial financing using murabaha or profit sharing scheme.

Paper Citation

in Harvard Style

Wulaningtyas A., Dalimunthe Z. and Wibisono Y. (2017). Stages of the Islamic Social and Commercial Financing for Microfirms.In 1st International Conference on Islamic Economics, Business, and Philanthropy - Volume 1: ICIEBP, ISBN 978-989-758-315-5, pages 746-750. DOI: 10.5220/0007089107460750

in Bibtex Style

@conference{iciebp17,
author={Anisa Fitria Wulaningtyas and Zuliani Dalimunthe and Yusuf Wibisono},
title={Stages of the Islamic Social and Commercial Financing for Microfirms},
booktitle={1st International Conference on Islamic Economics, Business, and Philanthropy - Volume 1: ICIEBP,},
year={2017},
pages={746-750},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0007089107460750},
isbn={978-989-758-315-5},
}

in EndNote Style

TY - CONF

JO - 1st International Conference on Islamic Economics, Business, and Philanthropy - Volume 1: ICIEBP,
TI - Stages of the Islamic Social and Commercial Financing for Microfirms
SN - 978-989-758-315-5
AU - Wulaningtyas A.
AU - Dalimunthe Z.
AU - Wibisono Y.
PY - 2017
SP - 746
EP - 750
DO - 10.5220/0007089107460750