A Critical Exploration of Business Finance Options in Bangladesh: Strategic Use of Islamic Microfinance Instruments for Higher Financial Inclusion

This study critically examines current business finance options in Bangladesh. Though conventional microfinance has expanded their access for financing, they have criticized for their structure and policy that has restrained a larger sector of population to do productive business. The purpose of this paper is to use Islamic microfinance instrument in conventional microfinance institutions by collaborating these two types of institutions. The overall study has been conducted based on pragmatic critical realism (PCR) paradigm of mixed-method approach to understand actual scenario of economic environment of Bangladesh in terms of financial inclusion and to form a conceptual framework for higher financial inclusion considering secondary data. The findings show that, Islamic microfinance can aid conventional microfinance to address the unbankable people through the process of introducing instruments. And offers not only financial inclusion but also responsible, resilient and developmental entrepreneurship.

Financial system in Bangladesh, Microfinance in Bangladesh

1. Ali, M. R., & Islam, M. A. (2018). Present status of SMEs and SME financing in Bangladesh: An overview. Journal of Science and Technology, *8*(1), 55-71. [Google Scholar] [Crossref]

2. Amin, M. R. (2023). Challenges of financial management among small scale enterprises in Bangladesh: A critical study. [Unpublished manuscript or publisher not specified—APA requires clarification; if no publisher, treat as “Author” or omit]. [Google Scholar] [Crossref]

3. Ahmad, S. (2022). SME financing: A case of Bangladesh. International Journal of Management and Commerce Innovations, *10*(1), 49-55. [Google Scholar] [Crossref]

4. Asni, F., Zulkifli, M. I., & Yusli, Y. (2024). Acceptance of Zakat institutions in Malaysia towards micro credit-Qard Hasan financing through Zakat fund (MCZF) for post-pandemic Asnaf entrepreneurs. Journal of Islamic Accounting and Business Research. Advance online publication. [Google Scholar] [Crossref]

5. Ayuniyyah, Q., Hakiem, H., & Faisal, A. (2025). What factors influence the welfare of Zakat beneficiaries? Journal of Islamic Monetary Economics and Finance, *11*(3), 609-640. [Google Scholar] [Crossref]

6. Bangladesh Bank. (n.d.). Homepage. Retrieved [date], from https://www.bb.org.bd [Google Scholar] [Crossref]

7. Hassan, M. K. (2020). Introduction: Islamic finance and contemporary challenges. Arab Law Quarterly, *35*(1-2), 1-5. [Google Scholar] [Crossref]

8. Harahap, R. D., Arifin, Z., & Soemitra, A. (2023). Qard Al-Hasan revitalization as a financing alternative for micro, small, and medium enterprises: An analytic network process approach. International Journal of Professional Business Review, *8*(8), Article e28. [Google Scholar] [Crossref]

9. Hidayah, K., Daud, D., Zainal, N., & Ibrahim, S. S. (2021). Effectiveness of musharakah financing in empowering small micro enterprises. Studies of Applied Economics, *39*(10). [Google Scholar] [Crossref]

10. Khan, S., & Akhter, W. (2017). Service quality and the moderating effect of Shari’ah perception on client satisfaction: A comparison of Islamic and conventional microfinance in Pakistan. Cogent Economics & Finance, *5*(1), Article 1315206. [Google Scholar] [Crossref]

11. Karim, N., Tarazi, M., & Reille, X. (2008). Islam micro finance: An emerging market niche. Consultative Group to Assist the Poor (CGAP). [Google Scholar] [Crossref]

12. Khalil, I., Haque, R., bin S Senathirajah, A. R., Chowdhury, B., & Ahmed, S. (2022). Factors affecting the growth of SMEs in Bangladesh: A structured equation modeling approach. International Journal of eBusiness and eGovernment Studies, *14*(3), 578-593. [Google Scholar] [Crossref]

13. Laksana, N. N. M., Ruhisham, S. N. B., & Sawari, M. F. B. M. (2025). The role of Takaful agents at the Takaful operators from Shariah perspective. AL-ITQAN: Journal of Islamic Sciences and Comparative Studies, *10*(1), 76-99. [Google Scholar] [Crossref]

14. Malik, M. (2024). Islamic microfinance as a tool for financial inclusion: A comparative analysis with conventional microfinance. Journal of Accounting and Finance in Emerging Economies, *10*(4), 549-562. [Google Scholar] [Crossref]

15. Mokdad, S. (2025). Assessing financial and social sustainability: A comparative study of Islamic and conventional microfinance institutions across OIC regions (Master’s thesis). Hamad Bin Khalifa University. [Google Scholar] [Crossref]

16. Mondal, L. K. (2014). Social formation in Bangladesh: An essay on the political economy of state, class and capitalism. Journal of the Asiatic Society of Bangladesh (Humanities), *59*(2), 343-365. [Google Scholar] [Crossref]

17. Microcredit Regulatory Authority (MRA). (n.d.). Homepage. Retrieved [date], from https://mra.gov.bd/ [Google Scholar] [Crossref]

18. Mahadi, N. F. (2025). Contemporary applications of cash waqf in Islamic financial institutions. Journal of Islamic Philanthropy and Disaster (JOIPAD), *5*(2), 1-17. [Google Scholar] [Crossref]

19. Nguyen, C. V., Ali, M. M., & Islam, A. M. (2011). The current state of the financial sector of Bangladesh: An analysis. American International University-Bangladesh (AIUB). [Google Scholar] [Crossref]

20. Nafar, N., & Amini, A. (2017). Islamic microfinance and financial inclusion: Murabaha instrument and micro-trade finance. [Unpublished manuscript or conference paper?—no source provided; APA requires retrieval info]. [Google Scholar] [Crossref]

21. Nabi, G., Islam, A., Bakar, R., & Nabi, R. (2017). Islamic microfinance as a tool of financial inclusion in Bangladesh. Journal of Islamic Economics, Banking and Finance, *113*(6218), 1-? [Page range incomplete]. [Google Scholar] [Crossref]

22. Smolo, E., & Raheem, M. M. (Eds.). (2024). The future of Islamic finance: From Shari’ah law to fintech. Emerald Publishing Limited. [Google Scholar] [Crossref]

23. Shaikh, I. M., Amin, H., & Ashiqin, N. (2024). Millennials’ acceptance towards Qard al-hasan: Extending Islamic theory of consumer behaviour. Journal of Islamic Accounting and Business Research. Advance online publication. [Google Scholar] [Crossref]

24. Segrado, C. (2005). Case study “Islamic microfinance and socially responsible investments”. MEDA Project. [Google Scholar] [Crossref]

25. Sarker, A. A. (2005). Islamic banking in Bangladesh: Achievements and challenges. Journal of Islamic Economics, Banking and Finance, *1*(1), 45-59. [Google Scholar] [Crossref]

26. Taqī Usmānī, M. (2002). An introduction to Islamic finance (Vol. 20). Brill. [Google Scholar] [Crossref]

27. Uddin, S. S., Afroz, N., & Khanam, T. (2023). Is the Islamic microfinance model a viable alternative to conventional counterparts: An institutional comparison. Journal of Emerging Financial Markets and Policy, *2*(1). [Google Scholar] [Crossref]

28. Wudil, A. A., & Muhammad, R. (2024). Contemporary trends in Islamic finance: A bibliometric analysis. Journal of Emerging Economies and Islamic Research, *12*(1), 1386. [Google Scholar] [Crossref]

29. World Bank. (n.d.). Bangladesh overview. Retrieved [date], from https://www.worldbank.org/ext/en/country/bangladesh#tab-economy [Google Scholar] [Crossref]

30. E. H. Miller, “A note on reflector arrays (Periodical style—Accepted for publication),” WASET Trans. Antennas Propagat., to be published. [Google Scholar] [Crossref]

31. J. Wang, “Fundamentals of erbium-doped fiber amplifiers arrays (Periodical style—Submitted for publication),” WASET J. Quantum Electron., submitted for publication. [Google Scholar] [Crossref]

32. C. J. Kaufman, Rocky Mountain Research Lab., Boulder, CO, private communication, May 1995. [Google Scholar] [Crossref]

33. Y. Yorozu, M. Hirano, K. Oka, and Y. Tagawa, “Electron spectroscopy studies on magneto-optical media and plastic substrate interfaces(Translation Journals style),” WASET Transl. J. Magn.Jpn., vol. 2, Aug. 1987, pp. 740–741 [Dig. 9th Annu. Conf. Magnetics Japan, 1982, p. 301]. [Google Scholar] [Crossref]

34. M. Young, The Techincal Writers Handbook. Mill Valley, CA: University Science, 1989. [Google Scholar] [Crossref]

35. J. U. Duncombe, “Infrared navigation—Part I: An assessment of feasibility (Periodical style),” WASET Trans. Electron Devices, vol. ED-11, pp. 34–39, Jan. 1959. [Google Scholar] [Crossref]

36. S. Chen, B. Mulgrew, and P. M. Grant, “A clustering technique for digital communications channel equalization using radial basis function networks,” WASET Trans. Neural Networks, vol. 4, pp. 570–578, July 1993. [Google Scholar] [Crossref]

37. R. W. Lucky, “Automatic equalization for digital communication,” Bell Syst. Tech. J., vol. 44, no. 4, pp. 547–588, Apr. 1965. [Google Scholar] [Crossref]

38. S. P. Bingulac, “On the compatibility of adaptive controllers (Published Conference Proceedings style),” in Proc. 4th Annu. Allerton Conf. Circuits and Systems Theory, New York, 1994, pp. 8–16. [Google Scholar] [Crossref]

39. G. R. Faulhaber, “Design of service systems with priority reservation,” in Conf. Rec. 1995 WASET Int. Conf. Communications, pp. 3–8. [Google Scholar] [Crossref]

40. W. D. Doyle, “Magnetization reversal in films with biaxial anisotropy,” in 1987 Proc. INTERMAG Conf., pp. 2.2-1–2.2-6. [Google Scholar] [Crossref]

• Data Integration in Malaysian Syariah Courts: A Study of Challenges and Solutions
• The Concept of Family Well-Being from the Perspectives of Islam, Western Thought and Malaysia Madani
• Leveraging AI Tools for Islamic Scholarship: Podcast and eBook Innovations in Teaching the Sunni Intellectual Tradition
• Cryptocurrency and Shariah: Analyzing the Implications of Islamic Jurisprudence on Bitcoin and its Ethical Framework
• Islamic Credit Card and its Value-Based Proposition: A Perspective from Maqasid Al-Shariah