Islamic Banking: Is It A Means for Poverty Alleviation in Nigeria?

Abstract

The principle goals and functions of the Islamic banking system include economic well-being with full employment and maximum rate of economic growth, equal distributions of income and wealth and as a result socio-economic justice, and the generation of sufficient savings and their productive mobilization and stability in the value of money. (Chapra, 2000). Moreover, poverty in the other hand refers to the lack of income and the necessary means of production to attain a “decent” standard of living. This study therefore was carried out to ascertain if Islamic banking can be another means for poverty alleviation in Nigeria. The study is exploratory in nature and study revealed that Islamic Banking will be an inevitable means of poverty alleviation. The study therefore concluded that that Islamic Banking is another means for poverty alleviation because the bank (Islamic banking) will not only provide the capital but will provide the financing by coming in as traders or partners proving the technical-no-how and all other techniques the borrower might lack thereby improving the investment. Based on this conclusion, the study now recommended that Islamic Banking should be highly encourage by the appropriate body(ies) in order to assist in the war against poverty in Nigeria.

Keywords: Islamic Banking, Poverty, Conventional Banks, Interest, Loan