(pp.247-256) M. N. Alam ‘Cost minimisation through interest-free micro credit to micro entreprenurs: A Case of Bangladesh’, WJEMSD, Vol. 6, No. 3, 2010
Mohammed Nurul Alam, Sultan Qaboos University, Sultanate of Oman
Abstract: The purpose of the paper is to present the result of an empirical review as to how and to what extent the interest-free microfinance to micro entrepreneurs contributes in minimising different cots of both the lender and the borrowers. An institutional-network theoretical approach is used to study the phenomenon. A qualitative nature of research methodology is used while studying this particular phenomenon. A multiple explanatory case study was adopted as a research strategy in order to focus on the contemporary phenomenon within the real-life context of different rural-based micro-entrepreneurs and their relationships with the lending organisations. Interest-free microfinance by Islamic banks is characterised by a close supervision and an in-kind type of financing, which contributes greatly in promoting lender-borrower network relationships between the bank and the rural-based micro entrepreneurs. Such network relationships result in minimising exchange costs and other business related costs of both the borrowers and the lending organi-sations. The study was mainly concerned with rural-based micro entrepreneurs who are engaged in grass-root type entrepreneurs like poultry and diary firm, handloom industry, etc. Particular reference is made here to the facts of rural-based micro entrepreneurs and their relationships with Islamic banks in Bangladesh.
Keywords: Operating and other costs; Interest-free micro creditmicro entrepreneurs; Institutions; Networks; Islamic banks; Bangladesh; Interest-free financing modes; Qualitative method; In kind loans