Ar-Rahnu (Islamic Pawning Broking) Opportunities and Challenges in Malaysia
This paper aims to identify the key factors that have contributed to the existence and the growth of Ar-Rahnu (Islamic pawn broking scheme) in Malaysia. Based on the previous studies and cost of borrowing analysis, this paper found that the need for interest (riba) free, transparent transaction and low cost short-term cash borrowing scheme is much preferred by the pawning customers. Besides that the cost of borrowing in this scheme is the lowest compared to the conventional pawn broking scheme. However, the Ar-Rahnu scheme needs to address central issues such as the marketing, public awareness and the locations of this scheme.
Development of Islamic Pawn-Broking services : differentiating profile of their respectice patrons
This paper seek to develop a comparative demographic and lifestyle profiles of the small independent islamicised conventional pawnshops vis-a-vis their larger institutionalised counterparts.
Pawnbroking as an Instrument of Rural Banking in the Third World
Most countries of the Third World have experimented with designing financial systems to service the weaker sections of the rural economy. Cooperatives, commercial banks, and specialized farm credit institutions have been encouraged to dispense low-priced credit among rural borrowers and to compete with informal financial intermediaries for the clientele of the poor. Despite huge subsidies and easy access to public funds, most systems proved not viable as costs were higher than revenues. Moreover, these systems seldom reached more than a tiny fraction of the target group. Institutional lenders attributed these shortcomings to the high cost of making small loans, the low interest ceilings permitted on these loans, and borrowers' lack of suitable collateral and mismanagement of productive loans. Today, the rural masses in less developed countries still rely predominantly on the financial services of informal lenders. These lenders face the same problems as the institutional lenders, yet they manage to survive and maintain viability without the support of subsidies. Why is this so? Informal lending has a number of favorable features. The most important one is that it belongs to and has been part of the rural economy for centuries. Through long experience, informal lenders have adapted their systems to rural conditions and culture and are still doing so. In keeping with the environment, they operate without costly buildings, staff, and paperwork. Because of proximity, they have knowledge of the creditworthiness of borrowers, which minimizes the cost of assembling information. They are accessible at all times and keep pro-