The Potential of Islamic Microfinance in Uplifting B20 Communities in Malaysia: A Review of Literature

Abstract

The purpose of this study is to review the Islamic microfinance model that best suit the bottom of the wealth pyramid (B20) communities. Islamic microfinance products and services that are friendly to the B20 communities are crucial to ensure they are not lacking behind from the current development where everybody has access to financial services. Most current Islamic microfinance products use debt-based financing that similar to banking products. These products not suitable to the B20 communities because it creates debt and burdens them to pay back the financing. This paper reviews past literature to determine the Islamic microfinance model through Scopus, Google Scholar, and ResearchGate platform. The search criteria are confined to English documents that are within the period of 2000-2020. Articles that did not score or did not convince that the subject of Islamic microfinance has been applied in the Islamic economy, Islamic finance, Islamic financing products, and economic development are excluded. Appropriate search keys are used to get better results. The findings inform that contemporary scholars show a robust commitment to the themes of the result during the stated period. Equity-based financing via musharakah mutanaqisah is seen as the innovative Islamic microfinance model that suits the B20 communities compare to debtbased financing.