Leveraging Qard Hasan as a Financing Mechanism for Entrepreneurship at the Bottom of the Pyramid: A Systematic Review

Abstract

The purpose of study is to examine  the Islamic finance literature on how best to leverage Qard Hasan (benevolent loan) as a financing mechanism for entrepreneurship at the Bottom of the Pyramid (BoP), by  addressing existing gaps and optimising its potential for financial inclusion and economic empowerment. The present research  adopts a systematic literature review (SLR) methodology involving desk research as a data collection method. The desk research encompasses reviewing relevant books, articles, and working papers. In terms of data extraction for analysis, the study adopts the PRISMA protocol for conducting a systematic review of 41 articles published from 2010 to 2024 to provide answers to four research questions. The selected publications were taken from the Web of Science, Scopus, and Google Scholar databases, using the purposive sampling technique, and considering the selection criteria of quality, relevance and timeliness of the publications. The discussion highlights Qard Hasan’s potential for financial empowerment and inclusive development. Leveraging it enhances business capital access, while FinTech innovations improve scalability and sustainability. Strengthening these aspects can uplift BoP communities, enabling them to transition from beneficiaries to active contributors to economic growth. Further, the study  broadens the discourse of the prospects of Qard Hasan as a financing mechanism for entrepreneurship based on Islamic moral economy, Maqasid al-Shari’ah (objectivity of Islamic ethical laws), stakeholder theory, institutional economy and financial mediation. It lays a foundation for future research on the Qard Hasan-Entrepreneurship nexus.