Chapter 8: An Impact Assessment of Islamic Microfinance on Achieving Sustainable Development Goals (SDGs): A Comparative Study in Bangladesh, Malaysia, and Turkey

This study conducts a comparative analysis of Islamic Microfinance Institutions (IsMFIs) in Bangladesh, Malaysia, and Turkey and examines their influence on SDGs. Islamic Microfinance Institutions (IsMFIs) in Bangladesh, Malaysia, and Turkey examines their influence on SDGs. Islamic microfinance emphasizes socio-economic inclusion and poverty reduction, adhering to Islamic Shariah principles. This study examines how IsMFIs promote financial inclusion, reduce inequality, and improve social, ethical, and economic sustainability. Islamic financial instruments such as profit and loss sharing (PLS), non-profit and loss-sharing (NPLS), and charity-based finance (CF) (Qard Hasana, Zakat, and Sadaqah) are examined in the IsMFI models. Structured surveys of 367 program participants in three countries are analyzed using descriptive statistics and exploratory and confirmatory factor analysis. The results show that IsMFIs affect household financial stability, company growth, and ethical financial conduct. PLS and NPLS processes promote equality and economic stability, whereas CF helps underprivileged people. PLS models’ fairness perceptions need improvement to establish stakeholder confidence. Bangladesh has the most outreach and inclusion, while Malaysia has the best recovery efficiency and financial discipline, and Turkey, albeit new to Islamic microfinance, has great promise. Islamic microfinance supports the achievement of the SDGs in all three nations, encompassing poverty reduction, zero hunger, gender equality, and sustainable economic development. According to this research, Islamic microfinance can alter ethical, inclusive, and sustainable development. Enhance risk management, outreach, and resource allocation to address challenges effectively. This study contributes to global discussions on financial inclusion and sustainable development, helping policymakers, practitioners, and researchers understand how Islamic finance may achieve the SDGs.