تجربیات انجام شده در تأمین منابع مالی کوچک اسلامی

Microfinance has been identified as an important tool in increasing the productivity of the poor and in aiding economic development. However, a large proportion of the poor are practicing Muslims, and are thus unable to take advantage of traditional microfinance contracts which involve the payment of interest. This paper describes and experimentally tests Islamic-compliant microfinance products in the context of information asymmetry and costly state verification. We find significantly higher compliance rates for the Islamic-compliant contracts (profit-sharing and joint venture) than for the traditional contract (interest-based). We believe that there is great promise for these types of loans in the microfinance context, for both Muslims and non-Muslims.

This paper describes and experimentally tests Islamic-compliant microfinance products. While both microfinance and Islamic (macro)finance are well-developed fields of study, very little previous research has examined their intersection. This endeavor is important for understanding the financial attitudes and behaviors of low-income consumers, both within the U.S. and abroad. Microfinance has been identified by many as a useful tool in aiding economic development (Comim, 2007, Dowla and Barua, 2006, Wright, 2000 and Islam, 2007), even though the actual impact on poverty is still a matter of debate. However, the reach of microfinance (and especially microcredit) may be more limited than was previously realized. It is estimated that over 1/3 of the world's poor are Muslims (CIA World Factbook, 2010 and Economist, 2008), and thus are unable to take advantage of the existing, interest based, microcredit products (CGAP, 2008). The Consultative Group to Assist the Poor (CGAP) conducted a global survey in 19 Muslim countries in 2007, in which 20–40 percent of the respondents cited religious reasons for not using conventional microloans. Constructing and making available Islamic-compliant microfinance products would extend the reach of microfinance and aid in the economic progress of the Muslim poor in all countries, and the economic development of nations with large Muslim populations. Karlan and Morduch (2009) stress the importance of the way microfinance choices are offered, and argue that they may matter more than the pure economics of the choices with regards to take-up rates. The products tested in this paper rely on profit and loss sharing (PLS) contracts, and show how these options can contribute to the variety of microfinance choices, which should result in higher take-up rates of microfinance products. Our results indicate that these products can be more efficient (and more profitable for lenders) than traditional interest based contracts which are primarily offered, even among non-Muslim populations. The use of PLS contracts has traditionally been minimized in Islamic banking due to risks resulting from information asymmetry (such as enterprise failure, adverse selection, moral hazard and costly state verification) (El-Gamal, 1997). While the problems of enterprise failure and adverse selection are common for both PLS and interest based finance, moral hazard and costly state verification are more acute risks of PLS finance (e.g. Gale and Hellwig, 1985). Our paper focuses on comparing these PLS and interest based contracts when the lender needs to verify the project's state when the loan has not been repaid.1 PLS contracts are surprisingly sparse in the field. El-Gamal (1997) notes that Islamic banks over-rely on non-PLS contracts (such as: leasing, cost-plus and deferred payment sales), while using an accounting interest rate for their bookkeeping. Chong and Liu (2009) show that less than 1 percent of Islamic banking operations in Malaysia use PLS-based products and thus, most of the operations are interest based or -pegged. Dar and Presley (2000) cite agency problem as one of the main reasons behind the lack of PLS in Islamic banking. However, they confirm that there is no theoretical reason to make us believe that PLS is inherently less efficient than interest based contracts. That said, sometimes interest contracts incorporate PLS features. For example, Udry (1990) cites an example from Northern Nigeria (where Muslims are predominant) in which risk is shared by varying the interest rates that based on the realization of random production shocks. Our goal in this paper is to investigate the feasibility of PLS contracts in the presence of information asymmetry. We argue that PLS contracts pool risk between the lender and the borrower, much as a sharecropper agreement or a profit sharing franchise agreement. This risk pooling generates in a different power structure between the borrower and the lender than the interest contract. As a result, PLS contracts are seen as more equitable than interest contracts, and borrowers will feel a stronger obligation to comply with their terms and, in particular, to repay the loan when their project succeeds.2 In this paper, we develop and test Islamic-compliant microfinance contracts that are based on PLS. We use laboratory experiments as a “testbed” or “wind-tunnel” for these contracts (Plott, 1987). The laboratory can test, at very low cost, the behavioral response to different types of contracts. These contracts can then be adjusted or amended before being used in the field. The laboratory thus serves as an intermediate step between theoretical development and field-testing. We develop two microfinance contracts which are Islamic-compliant (profit sharing and joint venture) and compare them with an interest based loan. Borrowers invest these loans in risky projects, whose outcome is known to them but not to the lender. We examine compliance rates, the rate at which individuals comply with the terms of the loan, in the three contracts under three conditions. A no-enforcement condition involves a simple repayment or reporting decision by the borrower. An enforcement condition allows the lender to follow up on the decision, and to force collection or audit the project's outcome if appropriate. An enforcement with penalty condition also allows the lender to charge a penalty to the borrower if he has defaulted on the loan or misreported the success of his project. Our results indicate that the Islamic-compliant loans induce at least as much compliance as the interest based loans in all three conditions (no-enforcement, enforcement and enforcement with penalty), although the differences between the three contracts decrease as the possibility of penalty is introduced. We believe that there is great promise for these types of loans in the microfinance context, and discuss strategies for field implementation in the conclusion of the paper. The paper is organized as follows. Section 2 discusses the practice of Islamic finance, microfinance, and their combination. Section 3 describes our theoretical model and Section 4 our experimental design. Section 5 presents our experimental results and Section 6 concludes.

This paper provides an experimental test of Islamic-compliant microfinance contracts, which involve profit and loss sharing (PLS). While there have been scattered endeavors to establish Islamic microfinance projects in the field, no previous research has experimentally compared the performance of Islamic-compliant loans with traditional interest based loans. In our setting, the lender gives money to an individual borrower under different contractual agreements (interest, profit sharing and joint venture). The borrower invests it in a risky project, which doubles the investment with a 90 percent chance. The outcome of the investment is known only to the borrower, who decides whether to comply with the terms of the loan, or not. In the no-enforcement condition, this is the end of the game. In the enforcement condition, the lender can expend resources to force collection (of the interest loan) or audit the outcome (of the other loans). Collection/auditing is successful only probabilistically, in which case the borrower is forced to comply with the loan terms. In the enforcement with penalty treatment, the borrower pays the cost of the state verification when she does not comply with the loan terms. Our setting thus controls for adverse selection and instead focuses on costly state verification. We choose parameters for these models so that borrowers have an incentive to default, regardless of contract or condition. Our measure of interest, then, is the proportion of individuals who voluntarily comply with the terms of the contract. We find that compliance is significantly higher in the PLS contracts than in the interest based contract. Under the no-enforcement condition, compliance in the joint venture contract is significantly higher than in the interest based contract. Under the enforcement condition, both profit sharing and joint venture contracts have significantly higher compliance rates than the interest based contract. Under the enforcement with penalty condition there are no significant differences between the contracts. We also find that women comply more than men; this agrees with common wisdom and practice in microfinance. Further, religiosity increases compliance rates in general. We believe that the improved performance of profit sharing and joint venture contracts over interest contracts has to do with their perceived fairness and the resulting obligation which borrowers feel in response. In particular, these contracts do not require individuals to repay their loans when their projects fail. As a result, participants feel more obligated to comply with the terms of the contract when their projects succeed. This condition of risk-sharing characterizes many PLS contracts (including those seen in sharecropping or franchising arrangements, or in labor markets with gift-exchange), not simply the ones we tested here. Notions of altruism, inequality or inequity aversion or other social preferences do not capture the sense of obligation that we believe is being generated here. After all, in our experiment the lender is a computer program (although behind that program are the experimenters themselves). In the field, lenders are likely to be significantly more wealthy than borrowers, making these other-regarding social preferences less likely to influence behavior. We think of this effect as being more ethical than social. Interestingly, we find that individuals who experience PLS contracts first exhibit significantly more compliance throughout our entire experiment. Although our experiment was not designed to investigate this result, it suggests that spillover effects from PLS contracts might make interest based contracts even more effective (by increasing compliance rates). Future work should explicitly explore this possibility. All research has limitations, and this paper is no exception. Our experimental economics methodology can provide a useful testbed for contracts like these, but a true test will need to follow in the field. Our participants are students, not farmers or microentrepreneurs, and while we believe that individual reactions to different contracts are likely to be universal, this is an empirical question that can be answered only with data. Udry (1990)’s findings, that interest contracts in Northern Nigeria were edited to incorporate PLS, suggests that in some credit markets risk-sharing may be normative and may indicate that effects for a Muslim population would be larger than effects found in the U.S. with university students. While the experiment involved small-stake loans for real money, the project's outcome was randomly determined (within five seconds) with no input from the borrowers. In contrast, in the field, the likelihood of success of a project depends (at least in part) on the effort individuals expend. Now that these contracts have performed well in the lab, future work in the field will provide a stronger test of their suitability. Additionally, our experiment abstracted away from issues of moral hazard (choosing a more risky project) and adverse selection (the type of lender) to focus on the problem of costly state verification. Clearly, however, these problems are also present in the field, and future research should investigate the impact of contract type and enforcement condition in these settings. The results of this research can be useful in many domains. Within Islamic banking, practitioners have minimized their use of profit sharing and joint venture contracts due to concerns about the increased costs for verifying the state of nature. This research suggests that costly state verification may not be as serious a problem as was feared; we find that even with no enforcement, 45 percent of borrowers complied with the terms of their joint venture contract. Furthermore, the level of the incentive to cheat in profit sharing and joint venture contracts is comparable to (and perhaps somewhat less than) the level in interest contracts. This research thus opens the door for Islamic banking to reconsider the use of these contracts. In microfinance and microcredit, our results suggest that profit sharing and joint venture contracts might be useful tools for both the Muslim and the non-Muslim populations. Among Muslims, it can increase the pool of potential borrowers. Among non-Muslims, our results suggest that these contracts may yield greater compliance rates than the contracts currently in use. We anticipate a similar effect in the Muslim population as well. More generally, Hoff and Stiglitz (1990) suggest problems caused by asymmetric information in the U.S. are resolved using indirect mechanisms. Our results suggest that risk-sharing properties of a financial contract may be one indirect mechanism to consider. We hope that this research will encourage microfinance scholars and practitioners to consider new and innovative contractual designs, which will help de-constraining access to credit before the limited-income consumer. Microfinance has the potential to significantly alleviate poverty, but to accomplish this goal the field needs to cater for different tastes and different levels of poverty. Therefore, varying the choices offered and compatibility with different social norms will lead to higher take-up rates in microfinance. Exploring and testing alternative contractual types, in the lab and in the field, can help in this move.