Everand Logo

Welcome to Everand!

  • Discover millions of ebooks, audiobooks, and so much more with a free trial

    Only $11.99/month after trial. Cancel anytime.

    Applying blockchain on Islamic Financing for SMEs
    Applying blockchain on Islamic Financing for SMEs
    Applying blockchain on Islamic Financing for SMEs
    Ebook179 pages1 hour

    Applying blockchain on Islamic Financing for SMEs

    By Hussein Elasrag

    ()

    Read preview

    About this ebook

    The purpose of this book is to investigate the opportunities of development and growth as well as the main challenges for Islamic Financing for SMEs. The book  focuses on analyzing the innovative technology Blockchain and the potential of blockchain-based applications to Islamic Financing for SMEs. The main objectives were to define how blockchain can change the Islamic Finance industry. The book discussed the various interesting applications of blockchain in Islamic finance that can bring different benefits. The book also shed light on the challenges facing Applying Blockchains for Islamic finance. This book will help to deepen understanding of the concepts of blockchain as well as SMEs. In addition to evaluate how blockchain can support  Islamic Financing for SMEs .
    LanguageEnglish
    PublisherHussein Elasrag
    Release dateFeb 20, 2022
    ISBN9785471958609
    Applying blockchain on Islamic Financing for SMEs

    Read more from Hussein Elasrag

    Related to Applying blockchain on Islamic Financing for SMEs

    Related ebooks

    Finance & Money Management For You

    View More
    View More

    Related podcast episodes

    Related articles

    • Article

      Digital Banks And The New Normal

      Apr 30, 2020

      Retailers, telecoms operators, fintech start-ups and fully digital banks are all vying to take a slice of the banking pie, whether through mobile payments, lending, deposits or asset management. Traditional banks are coming under additional pressure

      1 min read

    • Article

      Smarter Money

      May 7, 2020

      China has started testing its government-backed digital legal tender, digital currency and electronic payment (DC/EP), in some regions before it is widely applied to replace paper notes and coins in circulation, the digital currency research institut

      5 min read

    • Article

      What Is ‘Blockchain’ And What Does It Mean For Me?

      Jan 4, 2018

      You may have heard of blockchain, but still be confused about exactly what it is, what the hype around it really means, and how it could affect you. “…there is a bit too much hype surrounding the term ‘blockchain.'” Roger Wattenhofer, a professor of

      1 min read

    • Article

      Payment Cards Are Changing

      May 8, 2019

      Payment Cards Are Changing
      6 min read

    • Article

      NFTs for Dummies

      Mar 3, 2022

      NFTs for Dummies
      3 min read

    • Article

      A Budget for ‘Shubhkruta’

      Jan 21, 2022

      A Budget for ‘Shubhkruta’
      4 min read

    • Article

      Technology Reshapes The World

      Feb 29, 2024

      The fintech ecosystem encompasses a diverse range of start-ups and established companies, and collaborations between the financial and technological sectors. Regulatory support, coupled with a tech-savvy population, has created an environment conduci

      2 min read

    • Article

      How Blockchain May Be Revolutionary

      Aug 6, 2021

      even if you have never heard of it, DeFi (for decentralised finance) is very much part of the world we live in. In short, decentralised finance uses new technologies like blockchain that avoids traditional financial intermediaries like brokerages, ex

      3 min read

    • Article

      The Fintech Innovation Engine

      Feb 2, 2024

      IN THE LAST decade, India has witnessed an unprecedented surge in the use of technology to access financial services and products. It has revolutionised the way we bank, invest, and manage money. Looking ahead into the new year, 2024 holds immense pr

      3 min read

    • Article

      Joining the Blockchain

      Aug 20, 2020

      Joining the Blockchain
      6 min read

    • Article

      Krungthai Bank Driving Thailand’s financial inclusion

      Jan 14, 2022

      Thailand’s economic vitality is reflected in and underpinned by the strength of its banking system. In June 2021, the Thai office of ratings agency Fitch Ratings, said that that banks’ buffers, such as loan-loss reserves and common equity Tier 1 capi

      5 min read

    • Article

      NEWS & VIEWS

      Jun 30, 2021

      NEWS & VIEWS
      5 min read

    • Article

      Breaking Through Asia

      Dec 10, 2021

      Breaking Through Asia
      4 min read

    • Article

      A Strong Foundation

      May 13, 2019

      A Strong Foundation
      2 min read

    • Article

      Investing in Organised Chaos

      Nov 4, 2019

      Investing in Organised Chaos
      1 min read

    • Article

      Value Added Universe

      May 28, 2018

      Value Added Universe
      4 min read

    • Article

      Nigeria’s Fintech Frenzy: Onwards And Upwards

      Aug 2, 2021

      FINANCIAL TECHNOLOGY, OR WHAT IS popularly called ‘fintech’ , is the broad brush used to describe new technology that creates innovative solutions and automates the delivery of financial services. With banks and traditional financial providers going

      18 min read

    • Article

      Finding Scaling Solutions For The Masses

      May 15, 2020

      the mindset of ‘making your money work for you and not just working for your money’ is difficult to embrace for most people in South Africa living from one paycheck to the next. According to the Allianz Global Wealth Report 2019, approximately 10% of

      4 min read

    • Article

      Banking can Spur India’s Great Leap Forward

      Feb 6, 2023

      INDIA HAS HAD a relentless journey since it became an independent republic 75 years ago. Despite myriad challenges on the economic and social fronts, the country has managed to carve a path that has brought it to the threshold of a new economic golde

      4 min read

    • Article

      Bank On, Powered by Tech

      Aug 6, 2020

      The IMF recently projected a deep (-4.9 per cent) contraction of the global economy in 2020, with advanced economies likely to be particularly vulnerable. The agency expects the Indian economy to contract by 4.5 per cent, a historic low. The downturn

      5 min read

    • Article

      MAKING Defi and NFT Platforms MORE SECURE

      Nov 1, 2021

      QuillHash is a blockchain studio based in India and leads the adoption of blockchain technology worldwide. It offers private and public blockchain platform solutions, blockchain security audits, smart contracts development, and tokenization solutions

      4 min read

    Related categories

    Reviews for Applying blockchain on Islamic Financing for SMEs

    0 ratings

    0 ratings0 reviews

    What did you think?

    Tap to rate

    Review must be at least 10 words

      Book preview

      Applying blockchain on Islamic Financing for SMEs - Hussein Elasrag

      Abstract

      Small and Medium Enterprises (SMEs)  make up the bulk of the economic tissue of the economy. In developing countries, they represent the majority of employment, including female employment. Investing in SMEs is a long-term and smart strategy, with sustainable returns that multiply across regions, countries and societies. SMEs constitute the overwhelming majority of firms. Globally, SMEs make up over 95% of all firms, account for approximately 50% of GDP and 60%–70% of total employment, when both formal and informal SMEs are taken into account. This amounts to between 420 million and 510 million SMEs, 310 million of which are in emerging markets. Promoting access to finance for SMEs has been on the global reform agenda since the global financial crisis.

      Despite the fact that SMEs account for a significant part of a country's economy and provide employment opportunities for the majority of people, they are less likely to be able to secure bank loans than large organizations; instead, they rely on internal or personal funds to launch and initially run their enterprises.

      According to The World Bank, One of the biggest constraints to SME development is a lack of financial resources to start, sustain and grow their businesses. It is calculated that between 55 to 68 percent of formal SMEs in emerging markets are either unserved or underserved by financial institutions.

      In developing economies, the picture is even worst: the World Bank Report 2017 estimates that 70% of small and medium as well as micro-enterprises are unable to access the credit they need. While the gap varies considerably between regions, it is particularly wide in Africa and Asia. The current credit gap for formal SMEs is estimated to be US$1.2 trillion; the total credit gap for both formal and informal SMEs is as high as US$2.6 trillion.

      Islamic finance, as an alternative and ethical financing method, directs funding to impact-oriented real economic activities; it thus utilizes economic and financial resources to satisfy the material and social needs of all members of the community — including SMEs and innovative start-ups. The main foundations of Islamic financial products are its asset-based transaction nature, together with its equity-based nature of sharing risk and profits. Each of these financing categories has a fundamental role to play in increasing the financial inclusion of SMEs and innovative start-ups, as well attracting potential capital from Islamic capital providers and sources.

      The blockchain technology is rapidly gaining the attention of the Organizations of Islamic Cooperation. There are various Islamic financial institutions that are planning to use the blockchain system to bring the benefits that come with it. Dubai authorities have revealed their plans to use blockchain in public and private sectors in 2020 proving that even the government is showing interest in the digital currency which connects blockchain in Islamic finance with the banking system.

      Islamic finance can use cryptocurrencies to provide financing for SMEs, underpinned by blockchain technology, to structure payments in an efficient and cost-effective manner. The installation of blockchain in Islamic banking will primarily affect the way payments, remittances and trading activities are conducted. This modern technology is moving forward towards the mainstream and promises to provide benefits such as the following:

      •      Modernize legal documentation through the application of smart contracts

      •      Significantly reduce transaction processing time

      •      Reduce costs for providers and transaction fees for consumers

      •      Eliminate the need for documentation and manual reconciliation of transactions

      •      Reduce the need for centralized regulation

      •      Eliminate the risk of errors and duplication

      •      Reduce or eradicate fraud

      •      Manage counterparty risk

      Blockchain’s core attributes has significant potential for use in Islamic SME financing due to its:

      •      Transparency — blockchain provides provenance, traceability and transparency of transactions

      •      Control — access to permissioned networks is restricted to identified users

      •      Security — the digital ledger cannot be altered or tampered with once the data is entered whereby fraud is less likely and easier to spot

      •      Real-time information — information is updated for everyone in the network at the same time

      Blockchain has the potential to completely reinvent the wheel when it comes to SME funding. The technology shows real promise in solving things once and for all: the inefficient and antiquated system of bank business loans is one that’s ripe for disruption.

      The real challenge, going forward, will be the legality of smart contracts, and the global regulatory framework needed to establish true peer-to-peer lending across borders; just because it is legal in one country, does not make it so in the other. However, the power and potential of blockchain and smart contracts is being recognized across the business and political spectrum.

      While it may take regulators some time to catch up, broader adoption will surely lead to sensible regulations.

      The purpose of this book is to investigate the opportunities of development and growth as well as the main challenges for Islamic SME`s Financing. The book focuses on analyzing the innovative technology Blockchain and the potential of blockchain-based applications to Islamic SME`s Financing. The main objectives were to define how blockchain can change the Islamic SME`s Financing industry. The book discussed the various interesting applications of blockchain in Islamic finance that can bring different benefits. The book also shed light on the challenges facing Applying Blockchains for Islamic finance. This book will help to deepen understanding of the concepts of blockchain as well as SMEs. In addition to evaluate how blockchain can support Islamic SME`s Financing industry.

      Table of Contents

      Abstract

      Introduction

      Chapter 1

      The blockchain basis

      Types of Blockchain

      Investments in Blockchain

      Why it's hard to trust a blockchain

      Proof of Existence

      Proof of Nonexistence

      Proof of Time

      Proof of Order

      Proof of Identity

      Proof of Authorship

      Proof of Ownership

      Specific Use Cases

      Chapter 2

      Understanding SMEs

      SMEs Definitions

      SMEs distribution in various parts of the world

      Chapter 3

      Islamic Financing techniques for SMEs

      Islamic Financing techniques for SMEs

      Obstacles Faced by Banks in SME Financing

      Islamic Financing Options for SMEs

      key elements required to unlock the full potential of Islamic finance for SMEs

      1- Creating an Enabling Environment

      2- Developing the industry and markets

      3- Ensuring financial stability

      Chapter 4

      Applications of Blockchain in Islamic Finance

      1. Smart Contracts

      2. Cloud Storage

      3. Digital Currencies

      4. The collection of zakat

      5. Improving the utility of  waqf

      6- Effective, and efficient halal supply chains

      7- Remittance Transaction Flow using Cryptocurrency and Blockchain

      8- Takaful (Islamic Insurance)

      9- Smart Sukuk

      Chapter 5

      Applying Blockchains to Islamic SME`s Financing

      Blockchain to Islamic SME`s Financing: Obstacles & Challenges

      Government Interferences

      Underdeveloped Ecosystem Infrastructure

      Unclear Regulations

      Security , Privacy and Lack of Standards

      Immature Middleware and Tools

      Scalability

      Strategic operational adjustments to target SMEs

      1- Strategy and Segmentation

      2- Products and Services

      3- Sales and Delivery

      4- Advisory Services

      5- Organization and Systems

      6- Risk Management

      References:

      Introduction

      Distributed ledger technology (DLT), the technology that started the various cryptocurrencies in circulation today, has created quite a buzz in many areas in the last few years. Putting it simply, a DLT is a decentralized system for recording transactions with mechanisms for processing, validating and authorizing transactions that are then recorded on an immutable ledger. Blockchain is one implementation of DLT. It is also referred to as an Internet of value, meaning a secure way to store and transact value – anything from currency, stocks, contracts and even votes – from one entity to another. It is also the underlying technology powering cryptocurrencies such as Bitcoin and Ether.(Sylvester, 2019)

      The blockchain technology is rapidly gaining the attention of Organizations of Islamic Cooperation. There are various Islamic financial institutes which are planning to use the blockchain system to bring the benefits that come with it.

      The authorities in Dubai have revealed their plan that in 2020 they will be using blockchain in public and private sectors. It is no surprise that even government is showing interesting in the digital currency. Here we have the information related to the relationship of blockchain in Islamic finance and banking system.

      Blockchain is an exciting new technology that may prove to be a radical innovation—similar to technologies such as the steam

      Enjoying the preview?
      Page 1 of 1