An investigation of waqf-based Islamic micro financial institution models to identify the most effective model for Indonesia

Purpose This study aims to determine the best waqf-based Islamic microfinancial institution (IMFI) model by first determining various viable waqf-based IMFI models and then evaluating them based on certain criteria to obtain the best model. Design/methodology/approach A combination of Delphi and analytic network process (ANP) methods was used. The Delphi method was used to determine various waqf-based IMFI models and validate them, whereas the ANP method was used to evaluate those models to prioritize and find the best model. Findings The Delphi results show nine proposed waqf-based IMFI models that have commercial, social or integrated commercial-social orientation, where each could be in the form of a micro bank, micro venture capital (MV) or micro cooperative (MC). Delphi and ANP then determined the strategic, commercial and social criteria to evaluate the models. Finally, the ANP results show that the best waqf-based IMFI models are the integrated waqf-based micro bank, integrated waqf-based MV and integrated waqf-based MC. Integrated waqf-based IMFI provides Islamic microfinance services as well as Islamic social finance services, including waqf, zakat and infaq. Research limitations/implications The adoption of waqf-based IMFI could solve the structural problems of IMFIs, such as funding, low capital, mismatch, liquidity, outreach and sustainability. Practical implications The conceptual framework and method used in this study can be applied to determine and evaluate waqf-based IMFI models in other countries. Originality/value This study begins by determining various viable waqf-based IMFI models and then evaluating them to determine the priority and best waqf-based IMFI model.