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Islamic Fintech Industry Development Trajectory

Islamic Fintech Industry Development Trajectory

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This research aimed at examining the Islamic banking and finance responses to the emerging financial needs of MSMEs in country cases studies (Indonesia, Jordan, Kuwait, Senegal and Russia). Considering that emergence of the Islamic economics movement focused on constituting Islamic development process (Chapra, 1993, 2000; Ahmad, 1979, 1994; Naqvi,...

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Context 1
... a result, there are expectations for a transformation in the Islamic finance sector during and after the pandemic, particularly in these two areas, namely technology adaptation and social responsibility. Figure 7 clearly demonstrates the potential of Islamic fintech suggesting a 21 percent growth rate from 2020 to 2025 by growing from USD49 billion to USD128 billion, respectively. Copnsidering that one of the main consequence of COVID-19 is the increased use of digital platforms for business, Islamic fintec platforms will continue to develop. ...
Context 2
... experienced a steady growth of Gross Domestic Product (GDP) between 4-6% in 2019, but had a decline in the beginning of 2020. Due to pandemic, Indonesia experienced a negative growth in the second quarter of 2020, which then rebound slowly for the following quarters although there is a low decline in the second quarter of 2021 (see: Figure 17). ...
Context 3
... Figures 27-29 present the performance of Islamic banks, including profitability, nonperforming financing, efficiency, and capital requirement. Figure 27 shows the profitability trend and the non-performing financing from Bank Umum Syariah (BUS) [Islamic banks] and Unit Usaha Syariah (UUS) [Islamic windows]. There was an increase in profitability, demonstrated by the trend for Return on Assets (ROA) and Net Operating Margin (NOM), but it declined in March 2020 onwards due to the pandemic although it then increases from the end of 2020 going towards 2021. ...
Context 4
... to the European Investment Bank (2019), only 20% of MSMEs in Jordan report no difficulty in obtaining finance, and approximately 43% of Jordanian firms report major or very severe constraints in relation to access to finance. As can be seen in Figure 37, MSMEs in Jordan depend heavily on their own saving or retained earnings to finance their fixed assets purchases or to pay for the working capital: almost 60% of the fixed assets and 80% of the working capital is financed by owners' personal sources. Credit from commercial banks is easier to attain in the case of fixed assets, with almost 26% of the total investment finance sourced from the commercial banks, compared to only 9% for the working capital. ...
Context 5
... legal provision is made through the 2003 Law No 30, while sukuk related regulation was issued in 2015 by the CMA (IFN Kuwait Report, 2020). Figure 47 present the leading indicators and trends in those indicators for the Islamic banking sector in Kuwait, which covers 2020 also to detect the impact of COVID-19. Data Source: IFSB Database ...
Context 6
... Islamic banks in Kuwait demonstrated resilience towards the COVID-19 impact, as it was the case with the 2008 Global Financial Crisis. However, this raises a critical issue as to how Islamic banks are not affected even though GDP and its growth was affected, as indicated in Figure 47, which may imply that Islamic banks are no longer fully relate to real economy and hence they are operating within disembedded reality. Their limited exposure to SMEs, as indicated by one of the interviewees, can lead us to such a conclusion. ...

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