Sectorial evaluation of Islamic banking contracts: a fuzzy multi-criteria-decision-making approach

  • 140 Views
  • 20 Downloads

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License

Improving the efficiency and performance of microfinance investments is essential to achieve its objectives in terms of economic and social development. One parameter that influences such a performance is the kind of the activity exercised by the micro-entrepreneurs. The aim of this paper is to provide a decision-making guide to help both microfinance institutions and investors to choose the appropriate Islamic banking contract with respect to each sector of activity. To attain this goal, an Intuitionistic Fuzzy TOPSIS evaluation is conducted in collaboration with Moroccan Islamic finance experts and practitioners. The proposed approach has the advantage to deal with the lack of quantitative historical data, as well as the uncertainty of the decision makers’ judgments. The suggested work will be helpful for the Moroccan participative banks and for the future Islamic microfinance institutions as well.

view full abstract hide full abstract
    • Figure 1. Sectorial distribution of activities financed by microcredit
    • Figure 2. Closeness coefficient of all contracts in different sectors
    • Table 1. Sectors’ activities financed by microfinance in Morocco
    • Table 2. The aggregated IFT weights
    • Table 3. The IF-PIS and the IF-NIS
    • Table 4. The separation measures and the closeness coefficient
    • Table A1. Linguistic scale for importance of criteria, rentability, honoring of commitments, job creation, wealth creation and economic development
    • Table A2. Linguistic scale for the risk’s occurrence
    • Table A3. The aggregated IF decision matrix of trade sector
    • Table A4. The aggregated IF decision matrix of handicrafts and crafts sector
    • Table A5. The aggregated IF decision matrix of services sector
    • Table A6. The aggregated IF decision matrix of agriculture sector
    • Table A7. The aggregated weighted intuitionistic fuzzy decision matrix of trade sector
    • Table A8. The aggregated weighted intuitionistic fuzzy decision matrix for handicraft sector
    • Table A9. The aggregated weighted intuitionistic fuzzy decision matrix of services sector
    • Table A10. The aggregated weighted intuitionistic fuzzy decision matrix of agriculture sector