Case Study Analysis
Case Study Analysis
Case Study Analysis
In this case study analysis, the significance of Islamic microfinance will be discussed and in
addition to that, will look into whether Islamic microfinance has actually served the Maqasid Al-
Shariah. Furthermore, will shed a light on what more steps can be taken by Islamic microfinance
institutions in order to implement Maqasid Al-Shariah.
In the literature review of the research paper, the authors have explained how different writers
have defined microfinance and summarized that microfinance are referred to the small loans that
are granted for the poor so that it can be used for activities that can generate an income. Therefore,
the objective of microfinance being tackling the issue of poverty, hence, reducing poverty. The
authors have further discussed on what Islamic microfinance is, the Maqasid Al-Shariah of an
Islamic economy and Mal (wealth) and the Shariah ruling for microfinance. According to the
research paper, Islamic microfinance can be defined as the process of providing small-scale
financial services, based on Shari'ah concepts, to the poor who may be excluded from formal
financial services, without putting any burden on the parties either in the form of interest or undue
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benefits. They also have gone in depth regarding Maqasid Al-Shariah and how the objectives of
microfinance nad Maqasid-Al Shariah aligns. In addition, they have discussed how conventional
microfinance contradicts with the Maqasid Al-Shariah by being counterproductive, even though
conventional microfinance helps to achieve some of the objectives of Maqasid Al-Shariah.
For the research, the authors have used qualitative research methodology based on an Islamic
window of Kyrgyzstan. And a qualitative content analysis was carried out. In order to respect the
privacy of the Islamic window, they have refrained from publishing the name of the window and
referred to the institution as Islamic Microfinance Company A (IMCA). While they discussed
about Kyrgyzstan, they have mentioned that if Kyrgyzstan has an average population of six million
people, they can conclude that in the recent years, 1.5 and 2 million people are living below the
national poverty line, which is significantly high. Moreover, it was noted that Islamic financial
market at Kyrgyzstan can be considered very new compared to the international Islamic financial
market. For this research, face-to-face interviews were conducted with key personnel working
within the Islamic microfinance operational setting. For the case study, analysis questions were
used to analyze whether the practice of Islamic microfinance serves Maqasid Al-Shariah. The
questions were; Does Islamic microfinance helps reduce or alleviate poverty, enhance the
economy, enhance the social condition of society, contribute to wealth circulation & distribution
and contribute to the intellectual/educational enhancement of individuals in a society.
According to the empirical section of the research paper, evidence shows that Islamic microfinance
practice in Kyrgyzstan has contributed in serving some of the key aspects of Maqasid Al-Shariah
such as reduction in poverty and enhancement in the economy. And also, the practice of
microfinance has contributed for the enhancement of educational/intellectual level of the
Kyrgyzstan’ society. And they have concluded that their research has empirical evidence that, if
adopted efficiently, Islamic microfinance may contribute serving to many key aspects of Maqasid
Al-Shariah.
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ANALYSIS OF THE CASE STUDY
As seen from the above summary of the case study, a very clear background information was
provided by the authors in regards to what microfinancing is and Maqasid Al-Shariah. Different
definitions of microfinance and Islamic microfinance was explained in a way that a reader who
has no prior extensive knowledge of Islamic finance can understand the research. The writers have
grasped concept of Maqasid Al-Shariah very well. And I believe that shedding some light on the
conventional microfinance was a very idea. The authors have discussed extensively why
conventional microfinance is not acceptable by highlighting the prohibition of interest, even
though it helps attain some objectives of Maqasid Al-Shariah.
In the discussion of Analysis Question 1: ‘Does Islamic microfinance help reduce or alleviate
poverty?’, from the data and literature provided, I do not believe that there was enough information
provided to answer the question. The authors mentioned that 10% of the Islamic microfinance
transactions were returning clients and that 265 thousand citizens benefited from Islamic
microfinancing projects. However, this data does not really address to the question whether Islamic
microfinance helps in the reduction or alleviation of poverty. It was also mentioned that many of
the clients previously did not have a recorded credit history, therefore, can be assumed that they
did not access to financing. However, it is important to provide data for such statements. For such
case studies, the authors can request IMCA to reach out their customers for a survey, asking the
customers when they had access to financing and why. In addition, the authors states that
‘Therefore, these clients may have not necessarily improved their financial conditions as a result
of these financings, but rather benefited from a service that seemed to have not been available to
them previously’, however, it is difficult to say why the clients were engaged in these financing.
It might be because the clients or the public wasn’t aware of the financial services provided due to
the lack of marketing. This is the reason why it is important to present the data to prove the claims
in a case study.
The second analysis questions discussed was ‘Does Islamic Microfinance helps enhance the
economy?’. In addition to the discussion of data collected from IMCA, it was discussed about the
significant tax amount paid to the tax authorities, which helps to prove that Islamic microfinance
enhances the economy. And ensuring that the all clients are registered with tax authorities before
any financial disbursement will further ensure that the clients are contributing to the economy,
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hence, enhancement in the economy. I would like to highlight that the research would have been
far more fruitful if data was collected from tax authorities as well, so that the researchers can
compare the data from tax authorities and financial institutions and come up with a conclusion.
The discussion on third analysis question ‘Does Islamic microfinance help enhance the social
condition society’ has very valid statements that proves the improvement of the social condition
of the society. I would like to highlight the point regarding, empirical enquiry revealing that
number of imperative benevolent loans (Qard Hasan) were disbursed to institutions that are service
providers such as schools and medical facilities, hence, increasing the social condition of the
society.
For the fourth analysis question ‘Does Islamic microfinance contribute to wealth circulation and
distribution’ and fifth analysis question ‘Does Islamic microfinance contribute to
intellectual/educational enhancement of individuals in a society’ good data and literature was
provided that ensures that Islamic microfinance has contributed to wealth circulation &
distribution and to the intellectual/education enhancement of individuals in a society mainly due
to the domino effect.
In the conclusion part, the authors have talked about why there is a pessimistic view regarding
Islamic finance and its relationships with Maqasid Al-Shariah. I believe that the authors could have
researched more literature review on this topic and included views and opinions of different
authors.
While looking at the case study overall, the majority of the article discusses about the significance
of Islamic microfinancing. And how much over the few years that it has been since the introduction
of Islamic microfinance to Kyrgyzstan, Islamic microfinance has expanded over the country. And
how Islamic microfinance has helped the people below the poverty line, to have financial
instrument options and how they have been engaged in the economy. The research has talked about
how conventional microfinancing helps to achieve some objectives of Maqasid Al-Shariah, while
explaining that the inclusion of Riba in the conventional instruments further increases poverty in
the long run. The authors further discussed that the introduction of Islamic microfinancing
instruments helped in the reduction of poverty while enhancing the economy and enhancing
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educational/intellectual level of the Kyrgyzstan’ society, therefore, showing the significance of
Islamic microfinancing.
According to the authors of the research paper, Islamic microfinance has actually served the
Maqasid Al-Shariah. There are three classifications of Maqasid Al-Shariah; Essential
(Dharuriyyat), necessities (Hajiyat) and Embellishment (Tahsinyyat). And under essentials there
is protection of religion, life, progeny, intellect and wealth (Alhammadi, 27th November 2020)
The goal of Maqasid Al-Shariah is Maslaha, which implies the utmost righteousness and high
standards of morality. And it is the result of an action which benefits or leads to the universal
goodness. (Maqasid al-Shari'ah, n.d.) By implementing Shariah in our financial transactions, we
are protecting our religion, And Islamic microfinancing is Shariah compliant by eliminating the
prohibited elements such as Riba. Protection of intellect is practiced with Islamic microfinancing
as proved in the case study. Qard Hasan was given to students and schooling institutions which
promotes the protection of intellect. Protection of wealth is practiced to a very large extent in
Islamic micro finance. As the research has mentioned, the circulation of wealth increased and the
economy expanded when business registered in tax authorities and etc. And unlike conventional
microfinance, Islamic microfinance allows for the redistribution of wealth equally while reducing
poverty.
In order to materialize the Maqasid Al-Shairah, I believe that it is important to educate the society
first, because, many are still under the impression that financial instruments provided by the
Islamic and conventional microfinance is the same. Or they do not believe that the Islamic
institutions are Shariah compliant. So, I believe that it is important for the financial institutions to
become more transparent and educate the customers, clients and the society regarding the
difference of Islamic and conventional microfinance. It has been mentioned in different articles
that to practically apply the element of Maslaha of Maqasid Al-Shariah in everyday life, the
element of morality in Islamic finance should be encouraged educational and awareness for all
included parties in the industry. (Ahmad, 2020) And I believe that it is important to understand the
customers perspective regarding Islamic and conventional microfinance and understand why they
still choose conventional instruments even when Islamic financial instruments are available.
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CONCLUSION
In conclusion, I would like to say that a good introduction of background & context was included
the case study. And the problem statement, research objective and the importance of the research
was very well outlined in the research paper. I would also like to mention that the interviews could
have been carried out with the clients as well, and not the institution personnel only. And if the
questions are more specific, it would be easy to collect more data which can help to achieve the
research aim of the case study. Moreover, I believe that for such research asking customers
why they choose conventional financing while Islamic finance instruments are available, will be
an additional step for this research. It will help to understand the choices of the customers and
clients and whether the Islamic microfinance serves the Maqasid Al-Shariah.
Also, I further believe quantitative research would have been more appropriate for this case study
because the findings of the quantitative research are relatively easy to analyze since the data can
be very consistent, precise and reliable even though there are some limitations to this method of
research.
REFERENCE