World Applied Sciences Journal, 24(5), 609-616 (2013)

APPLICABILITY OF THE ISLAMIC MICRO-INVESTMENT MODEL (IMIM) IN ISLAMIC BANK IN MALAYSIA

Rashidah Abdul Rahman, Aliyu Dahiru Muhammad and Ismail Mahayudin

Abstract  

The contemporary Islamic banking system started in the late 1970s as an attempt by some Muslims to avoid riba, which is prohibited by the religion of Islam. Conventional banks came into existence with the emergence of colonialism in Muslim countries. However, after independence, countries like Malaysia, Indonesia, Pakistan and some Middle Eastern countries established formal Islamic banks to serve as an alternative to the conventional banking system. Unlike the conventional system, one of the objectives of the Islamic banking system is to ensure a fairer wealth distribution in society. This could be achieved through providing capital to Micro, Small and Medium Enterprises (MSMEs). Inexplicably, Islamic banks seem to be sinking in the ocean of the conventional banking system by providing more or less similar products that are debt-based instead of partnership based that could develop enterprising cultures in society. In line with this development, this paper develops and proposes an Islamic Micro-Investment Model (IMIM) that could ensure the achievement of Islamic economic and financial objectives in society. The model is applicable in Islamic Banks in Malaysia and elsewhere.