Determinants of Islamic Financial Institutions on Poverty Reduction: A Systematic Review
DOI:
https://doi.org/10.18196/ijief.v8i2.27476Keywords:
Islamic Finance, Poverty Alleviation, Meta-synthesis, Institutional Factors, Social FinanceAbstract
This study explores the multifaceted determinants of Islamic Financial Institutions (IFIs) in alleviating poverty by employing a qualitative meta-synthesis approach guided by the ENTREQ protocol. The research synthesizes findings from 23 scholarly articles indexed in Scopus to identify key internal and external factors influencing IFI performance in poverty alleviation. These determinants are systematically categorized into a strategic quadrant model: internal-structural, internal-behavioural, external-structural, and external-behavioural. Internal-structural elements such as institutional capacity, operational models, access to capital, and adherence to Islamic values significantly affect the success of IFIs, while internal-behavioural dimensions highlight the roles of innovation, religiosity, and community-based initiatives. Externally, the legal and policy environment, cultural dynamics, public perception, and economic conditions emerge as critical influences on IFIs’ outreach and effectiveness. The findings reveal that IFIs often face challenges in maintaining their developmental focus due to resource limitations, regulatory gaps, and competitive financial landscapes. Nonetheless, when grounded in Islamic ethical principles and supported by appropriate institutional frameworks, IFIs demonstrate a strong potential to deliver inclusive financial services and uplift marginalized communities. The novelty of this study lies in its integrative approach to consolidating diverse themes into a coherent analytical framework, offering actionable insights for practitioners, regulators, and scholars. It emphasizes that successful poverty alleviation through IFIs requires a synchronized interplay of ethical commitment, institutional readiness, policy support, and grassroots participation. The results contribute to the development of strategic recommendations for enhancing the role of Islamic finance in addressing poverty across different socio-economic and regulatory contexts.
References
Abbas, Kausar, and Nasim Shirazi. 2015. “The Key Players’ Perception on the Role of Islamic Microfinance in Poverty Alleviation: The Case of Pakistan.” Journal of Islamic Accounting and Business Research 6(2):244–67. doi: 10.1108/JIABR-06-2013-0017.
Abdullah, Mahmoud, Muhammad Said, and Arief Mufraini. 2022. “The Systematic Review of Shariah Governance in Islamic Banking System: A Meta-Synthesis Approach.” Tapis: Jurnal Penelitian Ilmiah 6(2):101. doi: 10.32332/tapis.v6i2.5339.
Adinugraha, Hendri Hermawan, Muhammad Shulhoni, and Dliya’udin Achmad. 2023. “Islamic Social Finance in Indonesia: Opportunities, Challenges, and Its Role in Empowering Society.” Review of Islamic Social Finance and Entrepreneurship 2(1):45–62. doi: 10.20885/risfe.vol2.iss1.art4.
Al Afif, Rafiq Azzam, Darlin Rizki, Rohayani Mustikasari, and Rifqi Praditya. 2024. “Ruang Lingkup Baru Studi Ekonomi Pembangunan Islam Di Indonesia: Pendekatan Bibliometrik Dan Systematic Literature Review.” Jurnal Ilmiah Ekonomi Islam 10(02):1216–20.
Asutay, Mehmet. 2007. “A Political Economy Approach to Islamic Economics: Systemic Understanding for an Alternative Economic System.” Kyoto Bulletin of Islamic Area Studies 2(2):3–18.
Barnett-Page, Elaine, and James Thomas. 2009. “Methods for the Synthesis of Qualitative Research: A Critical Review.” BMC Medical Research Methodology 9(1). doi: 10.1186/1471-2288-9-59.
Begum, Halima, A. S. A. Ferdou. Alam, Md Aslam Mia, Faruk Bhuiyan, and Ahmad Bashawir Abdul Ghani. 2019. “Development of Islamic Microfinance: A Sustainable Poverty Reduction Approach.” Journal of Economic and Administrative Sciences 35(3):143–57. doi: 10.1108/JEAS-01-2018-0007.
Bhuiyan, Abul Bashar, Chamhuri Siwar, Abdul Ghafar Ismail, and Normah Omar. 2017. “The Islamic Microfinancing Contributions on Sustainable Livelihood of the Borrowers in Bangladesh.” International Journal of Business and Society 18(S1):79–96.
Cammett, Melani. 2017. Development and Underdevelopment in the Middle East and North Africa.
Chapra, Muhammad Umer. 2014. Morality and Justice in Islamic Economics and Finance.
Choudhury, Masudul Alam, Mohammad Shahadat Hossain, and Mohammad Taqiuddin Mohammad. 2019. “Islamic Finance Instruments for Promoting Long-Run Investment in the Light of the Well-Being Criterion (Maslaha).” Journal of Islamic Accounting and Business Research 10(2):315–39. doi: 10.1108/JIABR-11-2016-0133.
Dalimunthe, Zuliani, Akhmad Syakhroza, Mustafa E. Nasution, and Zaafri A. Husodo. 2019. “How Feasible Is a Convertible Ijarah Contract for Sme Financing? A Simulation Approach.” Journal of Islamic Monetary Economics and Finance 5(2):439–58. doi: 10.21098/jimf.v5i2.1070.
Dixon-Woods, Mary. 2011. “Using Framework-Based Synthesis for Conducting Reviews of Qualitative Studies.” BMC Medicine 9:9–10. doi: 10.1186/1741-7015-9-39.
Ginanjar, Adhitya, and Salina Kassim. 2020. “Can Islamic Microfinance Alleviates Poverty in Indonesia? An Investigation from the Perspective of the Microfinance Institutions.” Journal of Islamic Monetary Economics and Finance 6(1):77–94. doi: 10.21098/jimf.v6i1.1203.
Hanif, Muhammad, and Kiran Zafar. 2020. “Developments in Islamic Finance Literature: Evidence from Specialized Journals.” Journal of King Abdulaziz University, Islamic Economics 33(2):3–23. doi: 10.4197/Islec.33-2.1.
Haque, Muhammad, and Masahiro Yamao. 2011. “Prospects and Challenges of Islamic Microfinance Programmes : A Case Study in Bangladesh Muhammad Sayeedul Haque * Masahiro Yamao.” Int. J. Economic Policy in Emerging Economies 4(1):95–111.
Hassan, Abul. 2014. “The Challenge in Poverty Alleviation: Role of Islamic Microfinance and Social Capital.” Humanomics 30(1):76–90. doi: 10.1108/H-10-2013-0068.
Hayati, Safaah Restuning, and Miftakhul Khasanah. 2019. “The Role of Cooperatives in the Smes Empowerment in Rural Areas.” Humanities and Social Sciences Reviews 7(2):226–32. doi: 10.18510/hssr.2019.7225.
Irfan, Mohammad. 2020. “A Meta-Analysis of Islamic Microfinance: Case Based Evidence from India.” Journal of Islamic Monetary Economics and Finance 6(1):21–50. doi: 10.21098/jimf.v6i1.1202.
Islam, Reazul, and Rubi Ahmad. 2022. “Incorporation of Mudarabah, Musharakah and Musharakah Mutanaqisah with Microfinance: A Sustainable Livelihood Approach to Poverty Alleviation.” Journal of Economic Cooperation and Development 43(1).
Kaleem, Ahmad, and Saima Ahmed. 2010. “The Quran and Poverty Alleviation: A Theoretical Model for Charity-Based Islamic Microfinance Institutions (MFIS).” Nonprofit and Voluntary Sector Quarterly 39(3):409–28. doi: 10.1177/0899764009332466.
Kassim, Salina, and Rusni Hassan. 2018. “Issues Facing Islamic Microfinance and Their Possible Solutions: Empirical Evidence From.” Journal of Islamic Thought and Civilization.
Mahmood, Hafiz Zahid, and Mehreen Fatima. 2015. “Islamic Microfinance and Poverty Alleviation: An Empirical Ascertainment from Pakistan.” Journal of Islamic Economics Banking and Finance 11(2):85–105. doi: 10.12816/0024916.
Mansori, Shaheen, Meysam Safari, and Zarina Mizam Mohd Ismail. 2020. “An Analysis of the Religious, Social Factors and Income’s Influence on the Decision Making in Islamic Microfinance Schemes.” Journal of Islamic Accounting and Business Research 11(2):361–76. doi: 10.1108/JIABR-03-2016-0035.
Martiana, Andri, and Mukhlis Rahmanto. 2021. “Islamic Microfinance and Poverty Alleviation in Indonesia: A Systematic Review of the Evidence.” Journal of Economics and Development Studies 60(4):431–44. doi: 10.15640/jeds.v7n2a6.
Mirjalili, Seyyed Hossein, Amin Mohseni Cheraghlou, and Hossein Sa’adat. 2018. “Avoiding Middle-Income Trap in Muslim Majority Countries: The Effect of Total Factor Productivity, Human Capital, and Age Dependency Ratio.” International Journal of Business and Development Studies 10(1):5–21.
Mohammed, Mohammed A., Rebekah J. Moles, and Timothy F. Chen. 2016. “Meta-Synthesis of Qualitative Research: The Challenges and Opportunities.” International Journal of Clinical Pharmacy 38(3):695–704. doi: 10.1007/s11096-016-0289-2.
Mokhtar Maouloud, Vatimetou, Salina Kassim, and Anwar Hasan Abdullah Othman. 2021. “Islamic Microfinance in Mauritania: An Investigation into Involuntary Factors Affecting Usage.” International Journal of Ethics and Systems 37(3):390–405. doi: 10.1108/IJOES-11-2020-0176.
Mustika, Fiky Nila, Eni Setyowati, and Azhar Alam. 2019. “Analysis of Effect of ZIS (Zakat, Infaq, And Shadaqah), Regional Domestic Products of Bruto, Regional Minimum Wage and Inflation on Levels Poverty in Indonesia 2012 – 2016.” Journal of Islamic Economic Laws 2(2):193–211. doi: 10.23917/jisel.v2i2.8679.
Nabi, Golzare, Aminul Islam, Rosni Bakar, and Rafiun Nabi. 2017. “Islamic Microfinance as a Tool of Financial Inclusion in Bangladesh.” Journal of Islamic Economics, Banking and Finance 13(1):24–51. doi: 10.12816/0051154.
Nawaz, Tasawar. 2018. “Lifting the Lid on Financial Inclusion: Evidence from Emerging Economies.” International Journal of Financial Studies 6(2). doi: 10.3390/ijfs6020059.
North, Douglas C. 1990. Institutions, Institutional Change and Economic Performance. Cambridge University Press.
Nuryitmawan, Tegar Rismanuar. 2023. “The Impact of Islamic Fintech on Poverty Alleviation in Indonesia: A Socio-Economic Implications.” Airlangga Journal of Innovation Management 4(2):136–46. doi: 10.20473/ajim.v4i2.49478.
Platonova, Elena. 2013. “Corporate Social Responsibility from an Islamic Moral Economy Perspective: A Literature Survey.” Afro EUrasian Studies 2(Issues 1&2, Spring and Fall 2013):272–97.
Rahayu, Ninik Sri. 2020. “The Intersection of Islamic Microfinance and Women’s Empowerment: A Case Study of Baitul Maal Wat Tamwil in Indonesia.” International Journal of Financial Studies 8(2):1–13. doi: 10.3390/ijfs8020037.
Rahmat, Ali, and Asya Hasan. 2022. “THE EFFECT OF INTERBANK MUDHARABAH INVESTMENT CERTIFICATE AND SHARIA BANK INDONESIA CERTIFICATE ON LIQUIDITY IN SHARIA COMMERCIAL BANKS.” At-Tijaroh: Jurnal Ilmu Manajemen Dan Bisnis Islam 8(1):126–41.
Sandelowski, M., and J. Barroso. 2006. Handbook for Synthesizing Qualitative Research. Springer Publishing Company.
Sari, Yuli Indah, and Widiyanto bin Mislan Cokrohadisumarto. 2019. “Modelling a Sustainability Model of Islamic Microfinance Institutions.” Journal of Islamic Monetary Economics and Finance 5(4):713–40. doi: 10.21098/jimf.v5i4.1127.
Setyowati, Eni, Maulidiyah Indira Hasmarini, Ali Zaenal Abidin, Muhammad Arif, and Annisa Nur Hidayah. 2022. “Poverty Determinants of Micro Entrepreneurs with Logistic Regression.” Proceedings of the International Conference on Economics and Business Studies (ICOEBS 2022) 655(Icoebs):336–42. doi: 10.2991/aebmr.k.220602.045.
Syahrir, Dimas Kenn, Ickhsanto Wahyudi, Zuhairan Yunmi Yunan, and Rahmawati Rahmawati. 2023. “Leveraging Islamic Economic to Alleviate Poverty in Indonesia: A Promising Pathway.” International Journal of Entrepreneurship and Business Management 2(2):98–112. doi: 10.54099/ijebm.v2i2.797.
Tamanni, Luqyan, and Mohd Hairul Azrin Haji Besar. 2019. “Profitability vs Poverty Alleviation: Has Banking Logic Influences Islamic Microfinance Institutions?” Asian Journal of Accounting Research 4(2):260–79. doi: 10.1108/AJAR-05-2019-0039.
Tong, Allison, Kate Flemming, Elizabeth McInnes, Sandy Oliver, and Jonathan Craig. 2012. “Enhancing Transparency in Reporting the Synthesis of Qualitative Research: ENTREQ.” BMC Medical Research Methodology 12(Figure 1):1–8. doi: 10.1186/1471-2288-12-181.
Uddin, Tanvir Ahmed, and Md Fazla Mohiuddin. 2020. “Islamic Social Finance in Bangladesh: Challenges and Opportunities of the Institutional and Regulatory Landscape.” Law and Development Review 13(1):265–319. doi: 10.1515/ldr-2019-0072.
Umar, Umar Habibu, Abubakar Jamilu Baita, Md Harashid Bin Haron, and Sadanu Hamza Kabiru. 2022. “The Potential of Islamic Social Finance to Alleviate Poverty in the Era of COVID-19: The Moderating Effect of Ethical Orientation.” International Journal of Islamic and Middle Eastern Finance and Management 15(2):255–70. doi: 10.1108/IMEFM-07-2020-0371.
Wulandari, Permata. 2019. “Enhancing the Role of Baitul Maal in Giving Qardhul Hassan Financing to the Poor at the Bottom of the Economic Pyramid: Case Study of Baitul Maal Wa Tamwil in Indonesia.” Journal of Islamic Accounting and Business Research 10(3):382–91. doi: 10.1108/JIABR-01-2017-0005.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 International Journal of Islamic Economics and Finance (IJIEF)

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
License
This journal is based on the work available at http://journal.umy.ac.id/index.php/ijief/ under a license from Creative Commons Attribution-ShareAlike 4.0 International License.
You are free to:
- Share – copy and redistribute the material in any medium or format.
- Adapt – remix, transform, and build upon the material for any purpose, even commercially.
The licensor cannot revoke these freedoms as long as you follow the license terms, which include the following:
- Attribution — You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.
- ShareAlike — If you remix, transform, or build upon the material, you must distribute your contributions under the same license as the original.
- No additional restrictions — You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.
Creative Commons Attribution-ShareAlike (CC BY-SA)
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.