Bank-based investing RoSCA for Islamic finance: a new alternative to drain households savings and reduce financial exclusionReport as inadecuate




Bank-based investing RoSCA for Islamic finance: a new alternative to drain households savings and reduce financial exclusion - Download this document for free, or read online. Document in PDF available to download.

Abstract

On the arrival of the new banking law in Morocco, in august 2015, conventional banks andtheir foreign rivals will finally have the possibility to create their subsidiaries dedicated to microcredit,participative finance and payment, and hence, supply the market with new Islamic financialsolutions for money saving and financing. In order to drain the substantial households savingsescaping to classic banks, and consequently, gain ground among these latter, we think that thosenew Islamic finance operators should target, in almost equal proportions, people with no access toformal financing and those with religious convictions about interest rate prohibition in Islam. Forthis purpose, we conceptualized an innovative bank based model of Rotating Savings and CreditAssociations that allows its members to invest their savings by means of the bank, and raise freeinterestrate loans with no application and management fees. In fact, The conception of this modelrelied on the results of a survey questionnaire we administered among 725 subjects from differentsocial categories in Morocco to comprehend the inherent features of this informal practice RoSCAlocally called -Daret-. The first part of the answers gave us a basic data we used, by means ofthe two-way ANOVA Analysis of the variance, to determine which social characteristics interacttogether to motivate a person to join a RoSCA. As for the second part of the answers, it gave usinsights into the functioning of traditional RoSCAs in Morocco and their members preferences andperceptions on different scales. After all, we based on these findings to conceptualize the modeltaking into account both equity between members and sustainability of the operation. Additionally,unlike the traditional types of RoSCAs that rely on confidence and social links between members,this bank-based investing RoSCA allows people with no prior cognition to be gathered. This byintroducing the bank as a guarantor and withdrawing, temporarily, a deposit for default risk toestimate by means of a risk-rating matrix we proposed. The model is, also, found to be moreattractive regarding its real economy promotion through investment, risk sharing process, andintegration of financially excluded households.



Item Type: MPRA Paper -

Original Title: Bank-based investing RoSCA for Islamic finance: a new alternative to drain households savings and reduce financial exclusion-

English Title: Bank-based investing RoSCA for Islamic finance: a new alternative to drain households savings and reduce financial exclusion-

Language: English-

Keywords: RoSCA; Two-way ANOVA; Islamic finance; Default risk; Morocco.-

Subjects: G - Financial Economics > G2 - Financial Institutions and ServicesG - Financial Economics > G2 - Financial Institutions and Services > G23 - Non-bank Financial Institutions ; Financial Instruments ; Institutional InvestorsO - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and GovernanceO - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements-





Author: BOUSALAM, Issam

Source: https://mpra.ub.uni-muenchen.de/67510/







Related documents