Security design, incentives, and Islamic microfinance: Cross country evidence

Yaoyao  Fan; Kose John; Frank Hong Liu; Luqyan  Tamannid

doi:10.1016/j.intfin.2019.08.002

Security design, incentives, and Islamic microfinance: Cross country evidence

Yaoyao Fan, Kose John, Frank Hong Liu^* (Corresponding Author), Luqyan Tamannid

^*Corresponding author for this work

Accountancy & Finance, Finance

Research output: Contribution to journal › Article › peer-review

6 Citations (Scopus)

2 Downloads (Pure)

Abstract

We provide cross country evidence from microfinance institutions (MFIs) that are Sharia-compliant and their comparisons with non-Sharia-compliant MFIs. We find that, compared with non-Sharia-compliant conventional MFIs, Sharia-compliant Islamic MFIs have less credit risk but are less profitable and financially sustainable, have better poverty outreach, and are less likely to ‘mission drift’. Our results highlight the differences in religiosity and security design between these two institutions. Our study also helps practitioners and policy makers improve the understanding of the difference between conventional and Islamic MFIs.

Original language	English
Pages (from-to)	264-280
Number of pages	17
Journal	Journal of International Financial Markets, Institutions and Money
Volume	62
Early online date	17 Aug 2019
DOIs	https://doi.org/10.1016/j.intfin.2019.08.002
Publication status	Published - Sep 2019

Keywords

microfinance institutions
Sharia-compliant product
Islamic
security design
religiosity
cross country
Microfinance institutions
Security design
Religiosity
Cross country
MATTER
GOVERNANCE
CORPORATE SOCIAL-RESPONSIBILITY
PERFORMANCE
RISK
INSTITUTIONS
CAPITAL STRUCTURE
RELIGION
BANKS
EFFICIENCY

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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© 2019. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
Accepted author manuscript, 571 KBLicence: CC BY-NC-ND

Cite this

@article{5ba7358adac842679b7cdc5f4db5033b,

title = "Security design, incentives, and Islamic microfinance: Cross country evidence",

abstract = "We provide cross country evidence from microfinance institutions (MFIs) that are Sharia-compliant and their comparisons with non-Sharia-compliant MFIs. We find that, compared with non-Sharia-compliant conventional MFIs, Sharia-compliant Islamic MFIs have less credit risk but are less profitable and financially sustainable, have better poverty outreach, and are less likely to {\textquoteleft}mission drift{\textquoteright}. Our results highlight the differences in religiosity and security design between these two institutions. Our study also helps practitioners and policy makers improve the understanding of the difference between conventional and Islamic MFIs.",

keywords = "microfinance institutions, Sharia-compliant product, Islamic, security design, religiosity, cross country, Microfinance institutions, Security design, Religiosity, Cross country, MATTER, GOVERNANCE, CORPORATE SOCIAL-RESPONSIBILITY, PERFORMANCE, RISK, INSTITUTIONS, CAPITAL STRUCTURE, RELIGION, BANKS, EFFICIENCY",

author = "Yaoyao Fan and Kose John and Liu, {Frank Hong} and Luqyan Tamannid",

note = "Acknowledgement We thank for the support from Institute of Belt and Road Studies, Sun Yat-sen University. All errors are ours.",

year = "2019",

month = sep,

doi = "10.1016/j.intfin.2019.08.002",

language = "English",

volume = "62",

pages = "264--280",

journal = "Journal of International Financial Markets, Institutions and Money",

issn = "1042-4431",

publisher = "Elsevier BV",

}

TY - JOUR

T1 - Security design, incentives, and Islamic microfinance

T2 - Cross country evidence

AU - Fan, Yaoyao

AU - John, Kose

AU - Liu, Frank Hong

AU - Tamannid, Luqyan

N1 - Acknowledgement We thank for the support from Institute of Belt and Road Studies, Sun Yat-sen University. All errors are ours.

PY - 2019/9

Y1 - 2019/9

N2 - We provide cross country evidence from microfinance institutions (MFIs) that are Sharia-compliant and their comparisons with non-Sharia-compliant MFIs. We find that, compared with non-Sharia-compliant conventional MFIs, Sharia-compliant Islamic MFIs have less credit risk but are less profitable and financially sustainable, have better poverty outreach, and are less likely to ‘mission drift’. Our results highlight the differences in religiosity and security design between these two institutions. Our study also helps practitioners and policy makers improve the understanding of the difference between conventional and Islamic MFIs.

AB - We provide cross country evidence from microfinance institutions (MFIs) that are Sharia-compliant and their comparisons with non-Sharia-compliant MFIs. We find that, compared with non-Sharia-compliant conventional MFIs, Sharia-compliant Islamic MFIs have less credit risk but are less profitable and financially sustainable, have better poverty outreach, and are less likely to ‘mission drift’. Our results highlight the differences in religiosity and security design between these two institutions. Our study also helps practitioners and policy makers improve the understanding of the difference between conventional and Islamic MFIs.

KW - microfinance institutions

KW - Sharia-compliant product

KW - Islamic

KW - security design

KW - religiosity

KW - cross country

KW - Microfinance institutions

KW - Security design

KW - Religiosity

KW - Cross country

KW - MATTER

KW - GOVERNANCE

KW - CORPORATE SOCIAL-RESPONSIBILITY

KW - PERFORMANCE

KW - RISK

KW - INSTITUTIONS

KW - CAPITAL STRUCTURE

KW - RELIGION

KW - BANKS

KW - EFFICIENCY

UR - https://linkinghub.elsevier.com/retrieve/pii/S1042443118304244

UR - http://www.mendeley.com/research/security-design-incentives-islamic-microfinance-cross-country-evidence-1

UR - http://www.scopus.com/inward/record.url?scp=85070869074&partnerID=8YFLogxK

UR - http://www.mendeley.com/research/security-design-incentives-islamic-microfinance-cross-country-evidence

U2 - 10.1016/j.intfin.2019.08.002

DO - 10.1016/j.intfin.2019.08.002

M3 - Article

VL - 62

SP - 264

EP - 280

JO - Journal of International Financial Markets, Institutions and Money

JF - Journal of International Financial Markets, Institutions and Money

SN - 1042-4431

ER -

Security design, incentives, and Islamic microfinance: Cross country evidence

Abstract

Keywords

UN SDGs

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