Ibn Khaldun’s Concept of Social Solidarity and its Implication to Group-Based Lending Scheme

Dr. Asyraf W. Dusuki
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‘Asabiyah or social solidarity is the core of Ibn Kaldun’s thought concerning the rise and decline of the civilisation. It is also a source for economic development and political stability. In the Muqaddimah, Ibn Khaldun emphasises the importance of having a sense of solidarity or ‘espirit de corp’ – the state of mind that makes individuals identify with a group and subordinate their own personal interests to that of group interest. Without such willingness to subordinate self to the group, peace and social development may not be possible. The implication of Ibn Khaldun’s social solidarity concept to the present world is imperative. The concept of social solidarity can be enforced through formation of group-based lending among rural poor communities who are normally denied access to credit mainstream financial institution and market. The poor are usually perceived by the ‘profit-orientated’ conventional banks as high-risk borrowers due to inherent difficulties in assessing their creditworthiness compounded by their general inability to provide collateral to pledge against any potential risk. This paper, therefore argues that social solidarity concept is similar to social capital which can be utilised by the poor both as a creation of human capital as well as a substitute for physical capital. Hence it serves as effective mechanism to overcome the many barriers that have prevented large potentially productive segments of the population from access to formal financial institutions.

Keywords: Social Solidarity, Social Capital, Group-Based Lending, Financial Intermediation
Stream: Economics and Management
Presentation Type: Paper Presentation in English
Paper: A paper has not yet been submitted.

Dr. Asyraf W. Dusuki

Lecturer, Department of Economics
Kulliyyah of Economics and Management Sciences, International Islamic University Malaysia

Kuala Lumpur, Malaysia

Dr. Asyraf is a young scholar graduated from IIUM in the year 2000. Upon completing his degree in Accounting and having been awarded as the Best Accounting Graduate of IIUM, Malaysian Association of Certified Public Accountant (MACPA) and Harvard Business School Alumni Club, he joined IIUM as an Assistant Lecturer. He then pursued his Master degree in Islamic Economics, Banking and Finance at Loughborough University United Kingdom in 2001. Immediately after completing his Master with Distinction, he started his PhD in the same area. Within 3 years, he successfully obtained his PhD in Islamic Banking from Loughborough University. He has presented papers at both local and several international conferences including London and Jakarta. He produced several articles, such as, “The Ideal of Islamic Banking: Chasing a Mirage”, “Why Do People Patronise Islamic Banks?", “Application of the Principles of Maqasid al-Shari`ah on Corporate Social Responsibility (CSR) Framework” and “The Objectives of Islamic Banking: A Survey of Stakeholders’ Perspectives”.

Ref: I07P0190