Can Islamic Micro-financing Improve the Lives of the Clients Can Islamic Micro-financing Improve the Lives of the Clients: Evidence from a Non-Muslim Country

Microfinance has become very important for financial inclusion micro-based economic development and the rise of Islamic finance responds to this change in many parts of the world. In Thailand, an Islamic microfinance institution has been established in Pattani Province in 1987. This demand-side impact study is one of the first attempts to evaluate the impact of an Islamic microfinancial product in Thailand. Knowledge on impact helps to assess whether Islamic microfinance can be an alternative solution for the poor and financially excluded Muslims who forms a large part of the world poor. Using a combination of questionnaire and semi-structured interview, this study reveals that murabahah micro-financing has impacts on economic well-being of clients ’ households. The results further indicate that the impacts are either direct or indirect and these are likely to be influenced by clients ’ characteristics, including age, membership length, gender, occupation and the level of productive assets the clients possess. These characteristics can be classified into awareness and exposure about the operations and procedures related to Islamic microfinance institutions, in general, and the product (Islamic micro-financing), in particular; affordability and existin