Experiment on interest-free microfinance products
International Journal of Islamic and Middle Eastern Finance and Management
ISSN: 1753-8394
Article publication date: 2 May 2023
Issue publication date: 1 August 2023
Abstract
Purpose
The main purpose of this study is to experiment with interest-free microfinance (IFMF) products and investigate the factors affecting IFMF institutions.
Design/methodology/approach
This study uses both quantitative and qualitative data types that will be collected through questionnaires, secondary data, interviews and experimental tests to answer key questions. The collected data were analyzed using repeated-measures analysis ANOVA. This study determines the factors affecting the default rate of Islamic microfinance (MF) products, and evaluates the repayment performance of IFMF products using field experiments.
Findings
The participants found that the repayment performance level is higher than that of Qard Al-Hassan, which shows that it is one of the best mechanisms to reduce the default rate among borrowers. It has been observed that women have higher repayment performance than men, and those with different income sources have higher repayment performance levels than those who do not. This study showed that the effects of age, marital status and educational status on the repayment performance level of the participants were not statistically significant. In addition, it was shown that the participants’ status of having or not having children did not have a significant effect on the level of repayment performance.
Originality/value
This study differs from other studies in two ways. First, in terms of field experimentation, this study focuses on the practical impact of IFMF products on customer reimbursement performance. Second, this study tested different demographic variables that could affect the reimbursement performance.
Keywords
Acknowledgements
The authors are grateful to the journal’s anonymous reviewers for their extremely helpful suggestions to improve the quality of the article.
Declaration of conflict interest: The authors declare no potential conflict of interest regarding the research and publication of this article.
Funding statement: This study was supported by a grant from The Harar Abadir Development Association and Harari Regional State in Ethiopia.
Citation
Wazir, A.A. and Durmuşkaya, S. (2023), "Experiment on interest-free microfinance products", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 16 No. 5, pp. 1055-1070. https://doi.org/10.1108/IMEFM-05-2022-0200
Publisher
:Emerald Publishing Limited
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