THE ECONOMIC NECESSITY OF ORGANIZING ISLAMIC MICROFINANCE ORGANIZATIONS

Abstract

Poverty is one of the problems of the global world. One of the main reasons for this is the limited access to financial services. Indeed, it is natural that the poor need not only credit, but also various banking services such as credit, savings, remittances and insurance. Since commercial banks mainly specialize in big cities, microfinance organizations come to the rescue. Microcredit organizations are also divided into two groups according to their formation and operation.

These are traditional and Islamic microcredit organizations. The microcredit offered by traditional microfinance organizations contains an element of riba, which is prohibited by Islamic Sharia, because it prevents the Muslim population and entrepreneurs from using it. Therefore, the establishment of Islamic microfinance organizations plays an important role in eradicating poverty, especially in countries with large Muslim populations.