A two-stage approach in Islamic micro-finance: Lessons for Islamic banking system in Iran

摘要

This study presents a two-stage (phasic) approach in the application of Islamic participation (Musharakah) contracts in Islamic micro-finance. According to the model, at the first phase, trade-based contracts, such as Murabaha are applied, and at the second phase, participation contracts are applied. The usage of trade contracts at the first phase, provides the Islamic micro-finance institution with the chance to recognize and select qualified groups for Musharakah loans. The results of this theoretical analysis show that phasic approach is applicable and has various advantages for the Islamic micro-finance institutions. The model presented in this study, piloted primarily and in a limited form in Sri-Lanka, provides the necessary bases for the establishment of Islamic micro-finance institutes in Iran. In addition, the phasic model can bring about good lessons for banks and interest-free institutions working under the Usury-free banking law in Iran.