Personal Cooperative Societies as an Islamic Microfinance Vehicle Conceptual Framework and Evidence from Egypt

ISRA International Journal of Islamic Finance, Vol. 7, Issue 2, 2015

22 Pages Posted: 24 Jan 2016 Last revised: 27 Feb 2019

Date Written: January 23, 2016

Abstract

This paper study a unique model for financial cooperation has been found in many countries around the world known as Rotating Saving and Credit Associations ROSCAs, which known in Egypt many decades ago. This arrangement between homogenous group of people based on the principle of Mutual Qard Hasan (counter no interest loan), it is well known as Jamey'ah (literally, Society).

The purpose of this paper is to study the perception of the Society participants in order to identify their motives, and evaluation of this model, in addition to investigate the conceptual framework of Societies.

This is an exploratory study utilizing the survey research approach. A random sample of participants from Helwan area in Cairo; who joined Society in managing their financial needs was selected. A questionnaire used to collect data about economic and demographic traits of the participants, motives behind participation in the Society, their experience, how they judge the current Society model, and if they find it better to institutionalize this model or maintain the status quo.

The study showed that Societies have a long history mode that has been followed in many countries regardless of the nomination. The results uncovered that participants devote the majority of the Society's sum for expenditure on current essential short term needs, which negatively affect their propensity to invest.

Commitment to the rules of Islamic Sharī’ah proved as the Society members showed high sensitivity in this regard. This affected directly their motives and attitudes apparently. As a comprehensive conclusion, the general trend toward Societies was very positive.

Keywords: Islamic finance, Personal Finance, Crowd Funding, Microfinance, ROSCAs, Egypt

JEL Classification: G23, P460, P480

Suggested Citation

Al-Ajlouni, Ahmed, Personal Cooperative Societies as an Islamic Microfinance Vehicle Conceptual Framework and Evidence from Egypt (January 23, 2016). ISRA International Journal of Islamic Finance, Vol. 7, Issue 2, 2015, Available at SSRN: https://ssrn.com/abstract=2721007 or http://dx.doi.org/10.2139/ssrn.2721007

Ahmed Al-Ajlouni (Contact Author)

Qassim University ( email )

Qassim University, Saudi Arabia
College of Sciences and Arts
Buraydah, 52571
Saudi Arabia

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