Books and Research

The establishment of the so-called Baitul Maal wat Tamwil (BMTs) in the form of an Islamic
microfinance (IMFI) is intended initially to effectively help the poor. At present time there are
around 3,874 BMTs operating around the country. Although the BMTs have been existing since
more than ten years ago, yet no research has been conducted to examine their effectiveness in
alleviating the poverty. This study in aimed at fulfilling this important gap. The case study approach
on BMT MMU Sidogiri (located at East Java Province) is taken. Two important and dominating
products of BMT MMU Sidogiri (i.e. ba’i bithaman ‘ajil (BBA) and mudarabah) are examined
carefully on how much they have helped the customers in reducing their poverty. The paper goes
beyond data measurement using descriptive statistics, paired t-test and some poverty measurement
indexes such as headcount index, poverty gap, Sen index and and Foster, Greer, and Thorbecke
Index to investigate the effectiveness of the BMT in reducing poverty. The study reveals that BMT
financing is effective in reducing poverty. Most of respondents can increase their income after
receiving BMT financing. Products of the BMT especially BBA and mudarabah to empower the
poor in various productive business have been able to reduce extent and severity of poverty. This
study also discloses some interesting and important findings related with how BMTs work, so that it
can contribute more to the knowledge enrichment, as well as the development of BMTs in general
in realising their mission.