Different Uses of Microfinance Among Conventional and Islamic Borrowers: Evidence from Jordan

The paper focuses on investment decisions made by microfinance borrowers in Jordan. While there has been a lot of literature concentrating on the level of investment after credit access was made available, there has been very limited research on the impact of Islamic microfinance. The amount of literature comparing Islamic financing and its conventional counterpart is even more uncommon. This study will look at how conventional and Islamic borrowers differ in their decisions pertaining to business investments, home improvement projects and consumer durable goods. Results show that microfinance loan take-ups do lead to a higher probability of business investments. In addition, it is found that the two groups of borrowers do not differ in investments regarding their microenterprises, but Islamic borrowers are less likely to invest in home improvement projects and purchase consumer durables. The findings suggest that there exists a substantial difference among investment decisions made by the two types of borrowers