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A microfinance scheme was introduced in Malaysia in the year 1987 as one of the alternatives to poverty eradication strategies in the country by the government. Since that time there are several institutions were created to carry out the agenda in providing small loan to the low income group to start up their small scale business trading to generate more sources of income to support their household consumption. However, for certain reason the people still do not find the microfinance as an important tool to uplift their economy positions and most of the low-income group still unaware of this golden opportunity tailored for them. In addition, the sustainability of this microfinance subsidized system implemented by Malaysia is not properly studied. This study explores on the attractiveness of the products offered by the institutions and emphasizes the options that the participant or to start utilizing the product. Through this research as well it able to promote microfinance facilities as compared to microcredit that contain conventional element which is prohibited by Muslim trades to be involve in. The study also discusses the measurement and action taken by the Islamic microfinance institutions in serving the low-income group. This paper is a qualitative method in nature with the interview method using content analysis. Report, journals publications and other related documents are analyzed in achieving the objectives. The impact of the study from the result founds that it may pave the way to a clearer implication towards how the Islamic microfinance institutions sustain their operations.

Financial inclusion (FI) appears to be one of the main global agendas as it is an essential way of reducing poverty and increasing the economic growth of a country. FI is the provision of financial services to all segments of society in a more convenient, quality, and affordable way. In this study, the authors analyzed the issues and challenges faced from the two perspectives of the Financial Institutions (FIs) and the rural B40 group concerning the way of pursuing the exclusive of FI. Primary data was collected by conducting semi-structured interviews with four expert bankers from the Financial Institutions (FIs) in Kuala Rompin, Pahang, and two representatives from the B40 customers in the rural areas of Pekan, Pahang, Malaysia. Based on the findings, barriers faced by the supply sides of the FIs include 1) high risk of cost and security, 2) barriers in communication and lack of financial education, and 3) lack of proof documents. The other challenges are 1) competition with the conventional institutions, 2) default risk due to non-payment, and 3) internet connection problem. On the demand side, the issues and challenges found include 1) lack of confidence, 2) lack of proof documents, 3) misuse of capital, and 4) lack of financial literacy. Henceforth, the findings have significant implications for the Islamic banking and finance industry in exploring the current barriers faced in delivering financial inclusion to the lower segment of the society in Malaysia.

Indonesia is currently experiencing a demographic dividend, where the total population of productive age is higher than the total of un-productive age. The most numerous groups in this productive age group are the millennials aged 20 to 40 years. This generation is known to have significant differences compared to previous generations, which are the ability to use advanced technology and have more consumptive behavior. So, it is required for them to have a sufficient knowledge of financial literacy in order to manage their financial wisely, especially in Islamic finance education. Aceh is one of the regions in Indonesia that will implement special regulations for financial institutions, to convert its conventional finance into fully Islamic finance products and operations. Therefore, this study aims to measure the level of Islamic financial literacy of millennials in Aceh, Indonesia and to investigate its effects on managing cash and debt. The influence of demographic factors is also examined in this study as independent variables; namely gender, age, educational background and income level. By using multiple linear regression analysis, the result shows that the level of Islamic financial literacy, educational background, and income level significantly affect cash and debt management. In addition, the results of the study shown that millennials in Aceh have a good level of Islamic financial literacy by reaching 71%. The results of this study can be references for the Islamic financial industry in Aceh and for its government. The millennial seems to be ready for the new provisions that will be implemented in relation to the Islamic financial industry in Aceh.

The current practise of the Islamic banks to rely on market interest rate as pricing benchmark for their home financing products has been a subject of intense debate among many parties. Muslim scholars have warned that it is highly discouraged as it could lead to a possible convergence between the practices of the Islamic and conventional banks. This paper intends to address the financing issues in the discussion of human settlement or housing policy by presenting the determinants for house price index as well as looking into the possibility of adopting the House Price Index (HPI) to replace the market interest rate as a pricing benchmark for the Islamic home financing. The study applies Auto-Regressive Distributed Lag (ARDL) method on a model comprising HPI as the dependent variable and a set of independent variables consisting of economic, housing demand and housing supply factors. The findings lead to the formulation of recommendations as a way forward for the Islamic banking industry in particular, and the economy in general. This will require a paradigm shift from basic financing products to a more holistic approach which integrates supply of housing factors, as well as urban planning and urban finance, with human rights and recognizes the need to place and shelter people.

Currently, major interest rates, such as the Base Lending Rate (BLR) and Kuala Lumpur Interbank Offered Rate (KLIBOR), are widely used as reference rates by the Islamic financial institutions to benchmark a broad range of financial products and contracts. This study aims to compare the viability of alternative pricing mechanisms for the Islamic home financing products. By comparing the interest-based benchmark with the non-interest benchmark, this study attempts to highlight the sensitivity and fragility of the Islamic home financing product to financial market volatility. The study focuses on Malaysia as the case study and uses quarterly data frequency covering the period from 2001 to 2015. Specifically, the study compares the lending rate and Housing Price Index (HPI) with the economic growth as the indicator of economic activities. Through the correlation analysis, the study found that the non-interest benchmark shows better relationships with macroeconomic variable compared to the interest-based benchmark. It shows that these alternative benchmarks have the connection to the economic movements that lead to the stability of the non-interest financing instruments. The findings of this study would provide important insights on the viability of House Price Index as the alternative to the benchmark of the equity financing home financing product. This study contributes to the empirical evidence for the feasibility of adopting interest-free benchmark to price Islamic home financing product.