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Intellectual Capital and Government Intervention on Islamic Microfinance Performance

This study explores the impact of intellectual capital and government intervention on the performance of Islamic microfinance institutions (IMFIs), with a focus on factors such as human capital, customer capital, structural capital, and social capital. The findings aim to provide insights for improving the performance of IMFIs and expanding their outreach to serve the poor.

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Intellectual Capital and Government Intervention on Islamic Microfinance Performance

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  1. Intellectual Capital and Government Intervention on the Islamic Microfinance Institutions PerformanceAuthors : Maryam Jameelah Hashim, Assoc. Prof. Dr Syed Musa AlhabshiUniversity: IIiBF International Islamic University Malaysia

  2. Introduction • Microfinance Institutions goal is to serve the poor. • Improve MFIs performance • to expand outreach • to achieve financial sustainability

  3. Challenges Challenges in maintaining IMFIs operations and remain sustainable: • Intellectual capital • Human capital • Customer capital • Structural capital • Social capital • Government intervention

  4. Issues

  5. Low Performance • Low Performance due to the high default rates, inability to reach sufficient number of borrowers, dependence on subsidies and only few still live with the original objective which is “including the excluded” (Bhatt & Tang, 2001).

  6. Lack IC Management • Top management is uncertain the valuable resources possessed by the firm will caused to success of new strategies (Amrizah & Rashidah, 2013).

  7. Less Government Intervention • Lack of regulation imposed by government and community institutional infrastructure for delivery of microfinance are not equally distributed (Sharma, 2010).

  8. Irrelevant current banking system • Abdul Rahman and Dean (2013) claims that the current banking system is not appropriate for the poor in Muslim society.

  9. Objectives • To investigate the association between intellectual capital (human capital, customer capital, structural capital and social capital) with IMFIs performance. • To examine the influence between government intervention and IMFIs performance. • To identify types of IMFIs as moderator has a positive impact on IMFIs performance.

  10. Previous Study

  11. Conceptual Framework Intellectual Capital Human Capital Islamic Microfinance Institutions Performance Customer Capital Structural Capital Social Capital Government Intervention Types of IMFIs

  12. Hypotheses • H1: Intellectual capital (human capital, customer capital, structural and social capital) has a positive influence on IMFIs performance. • H2: Government intervention has a positive influence on IMFIs performance. • H3: Types of IMFIs as moderator has a positive impact on IMFIs performance.

  13. Methodology • data being gathered via structured questionnaires. • Methods use Structural Equation Modeling (SEM). • Respondents comprises of managerial levels at selected bank based IMFIs (commercial-driven) and non-bank based IMFIs (government/non- government funded).

  14. Expected Result • It is expected that intellectual capital and government intervention should have positive influence towards performance of Islamic microfinance institutions. • IMFIs which possess all the IC components are endowed with more strength to compete in the business as compared to those which possess only a single IC resource (Amrizah & Rashidah, 2013). • Therefore, governments of developing countries should balance resources in investing in IC and physical investments (Chen, Cheng, & Hwang, 2005).

  15. AlHuda CIBE FZ LLE - U.A.E P: + 971 56 9286664, + 971 55 938 99 00 AlHuda Center of Islamic Banking & Economics - Pakistan Ph: (92-42) 35913096 - 98, Fax: (92-42) 35913056 Email: info@alhudacibe.comWebsite:www.alhudacibe.com

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