Performance of Islamic microcredit in perspective of Maqasid Al-Shariah

Abstract

Purpose – This study aims to examine the role of Islamic microcredit programs based on the achievement of Maqasid Al-Shariah. Past studies have evaluated the role of microcredit programs using the conventional assessment approach. However, the conventional system of socioeconomic role assessment cannot evaluate the performance of Islamic microcredit in terms of achieving the objectives of Shariah for the Islamic microcredit model. Design/methodology/approach – This paper uses primary data that were collected through a questionnaire survey distributed among 393 microcredit borrowers from Amanah Ikhtiar Malaysia (AIM). The survey was conducted from July 2013 to December 2013 in the State of Sabah and in Peninsular Malaysia. This research also analyzes the socioeconomic roles and the achievement of microcredit and microenterprise from the perspective of the five principles of Al-daruriyyat from Maqasid Al-Shariah. Findings – Results indicate that the microcredit program of AIM has a positive and enhancing effect on the livelihood of clients. This effect is reflected in the assessment of their well-being, especially in the context of Maqasid Al-Shariah. Originality/value – This study examines the role of Islamic microcredit based on the achievement of Maqasid Al-Shariah.