Advancing Sharia-Compliant Loan Models for Micro, Small, and Medium Enterprises (Msmes) to Promote Financial Inclusion and Alleviate Poverty

Eva Nadya, Maryam Maryam, Nelly Nelly, Rahmah Yulianti, Pritye Lala Sary

Abstract


This article examines advancements in Islamic financing models that seek to enhance financial inclusivity and alleviate poverty. These innovations are crucial for addressing current deficiencies in implementation and harnessing the untapped potential of Islamic lending. The Islamic lending model, grounded on the principles of equity and risk distribution, presents a compelling alternative to conventional lending methods that frequently fail to cater to the requirements of low-income communities and micro, small, and medium enterprises (MSMEs). The sharia lending model has significant potential in promoting poverty  reduction  and  sustainable  economic  development  by  abstaining  from  interest  (riba)  and speculation (gharar) and emphasizing genuine contributions in transactions. This article examines the necessity for greater financial inclusivity and the potential of sharia lending models to address this need. It also discusses how advancements in the sharia financial sector can create new prospects for communities that have been historically underserved by traditional banking systems. 

 


Keywords


Sharia Loans, Financial Innovation, Financial Access, Poverty Reduction, Sharia Finance, Profit and Loss Sharing (PLS)

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DOI: https://doi.org/10.30596/miceb.v2i0.741

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