COST MINIMISATION THROUGH INTEREST-FREE MICRO CREDIT TO MICRO ENTREPRENEURS:A CASE OF BANGLADESH

摘要

The purpose of the paper is to present the result of an empirical reviewas to how and to what extent the interest-free microfinance to micro entrepreneurscontributes in minimising different cots of both the lender and the borrowers.An institutional-network theoretical approach is used to study the phenomenon.A qualitative nature of research methodology is used while studying this particularphenomenon. A multiple explanatory case study was adopted as a research strategyin order to focus on contemporary phenomenon within the real life context ofdifferent rural-based micro entrepreneurs and their relationships with the lendingorganisations. Interest-free microfinance by Islamic banks is characterised by a closesupervision and an in-kind type of financing, which contributes greatly in promotinglender-borrower network relationships between the bank and the rural basedmicro entrepreneurs. Such network relationships result in minimising exchangecosts and other business related costs of both the borrowers and the lending organisations.The study was mainly concerned with rural-based micro entrepreneurs whoare engaged in grass-root type entrepreneurs like poultry and diary firm, handloomindustry, etc. Particular reference is made here to the facts of rural-based micro entrepreneursand their relationships with Islamic banks in Bangladesh.