Islamic micro-finance programme and its impact on rural poverty alleviation

Abstract

Bangladesh launched in 1995 a shari'ah based micro-finance programme named Rural Development Scheme to uplift the overall socioeconomic standards of rural poor. It covered 0.52 million group members, 94 per cent of whom are females. This paper presents findings on this experiment using 1,020 responses in a sample survey. Result shows that a significant of clients have improved their religious observations such as prayers and fasting. Results of the econometric models showed that household income, productivity of crops and livestock, expenditure and employment increased significantly due to the influence of changed behaviour and availability of micro-finance. Clients stated that the micro-investment had provided better organisation of their economic activities. Finally, the Islamic micro-investment programme appears spur more ethical and economically desirable behaviour leading to poverty alleviation.