ISLAMINOMICS: JOURNAL OF ISLAMIC ECONOMICS, BUSINESS AND FINANCE

THE ART OF BAITUL MAALWATAMWIL (BMT) AS ISLAMIC MICROFINANCE INSTITUTION IN ERADICATING POVERTY AND THE FRAMEWORK TO ANALYSE ITS PERFORMANCE

Atiqi Chollisni

Keywords: Microfinance, Islamic Microfinance, BMT, efficiency

Abstract

The nature of microfinance is to provide financial services and
assist the poor people to become economically independent.
Different with conventional microfinance that offers the
financing scheme based on interest (read;riba), Islamic
microfinance offers the financing scheme based on shariah
principles to enhance the development of microentrepreneurs.
The paper aims to present the art of baitulmaalwatamwil (BMT)
as Islamic microfinance institution in eradicating poverty and
propose a conceptual model on the performance of BMT by
analyzing its efficiency. In the last twenty years, the growth of
BMTs increase significantly and have contributed positively to
the development of socio economic in Indonesia. Recently, it is
estimated 4,000 BMTs operated and have enhanced thousand
poor people life. The paper believes that Islamic ethics offers by
BMTs have attracted and accepted by society. The paper also
identifies the appropriate methods to evaluate efficiency of
BMTs, such evaluation of Islamic microfinance institution to
function effectively to achieve socio economic objective in
order to increase its performance. The findings are not only
relevant and applicable to Indonesia but also to other muslim
countries and would be useful for further empirical research in
this area.