Abstract
Agricultural financing is crucial in improving farm productivity and has various
forms including institutional and noninstitutional financing. The Wasil
Foundation has recently introduced Bai Salam, an Islamic agricultural financing
method involving deferred delivery with upfront payment supporting small
farmers and serving as a feasible alternative to conventional financing in
Muslim-majority regions. This study examines the impact of Bai Salam,
extended by the Wasil Foundation, on the wheat production business in the
Faisalabad district. Data were collected from 90 Salam borrowers (intervention
group) and 100 non-Salam farmers (control group) from the same area with
similar/closely related attributes. A closed-ended questionnaire was used to
gather information on sociodemographic indicators (age, education, family size,
farm size) and farming attributes (cost of land preparation, labor, irrigation,
chemicals, wheat output/acre). Descriptive analysis, t-tests, and multiple
regression analysis were conducted to analyze the data. The study found
significant differences between the intervention and control groups in input
purchasing behaviors, output, revenue, and profits per unit area. Regression
analysis revealed that Salam borrowers achieved significantly higher wheat
output per acre (2.6 mounds) than the control group. Moreover, most control
variables (age, education, family size) exhibited the expected relationships with
farm productivity. These findings highlight the positive impact of Bai Salam
financing and emphasize the importance of promoting it among policymakers
and practitioners in the agricultural sector to achieve sustainable development
goals in countries such as Pakistan.
forms including institutional and noninstitutional financing. The Wasil
Foundation has recently introduced Bai Salam, an Islamic agricultural financing
method involving deferred delivery with upfront payment supporting small
farmers and serving as a feasible alternative to conventional financing in
Muslim-majority regions. This study examines the impact of Bai Salam,
extended by the Wasil Foundation, on the wheat production business in the
Faisalabad district. Data were collected from 90 Salam borrowers (intervention
group) and 100 non-Salam farmers (control group) from the same area with
similar/closely related attributes. A closed-ended questionnaire was used to
gather information on sociodemographic indicators (age, education, family size,
farm size) and farming attributes (cost of land preparation, labor, irrigation,
chemicals, wheat output/acre). Descriptive analysis, t-tests, and multiple
regression analysis were conducted to analyze the data. The study found
significant differences between the intervention and control groups in input
purchasing behaviors, output, revenue, and profits per unit area. Regression
analysis revealed that Salam borrowers achieved significantly higher wheat
output per acre (2.6 mounds) than the control group. Moreover, most control
variables (age, education, family size) exhibited the expected relationships with
farm productivity. These findings highlight the positive impact of Bai Salam
financing and emphasize the importance of promoting it among policymakers
and practitioners in the agricultural sector to achieve sustainable development
goals in countries such as Pakistan.
| Original language | English |
|---|---|
| Journal | COMSATS Journal of Islamic Finance (CJIF) |
| Publication status | Published - 2023 |