Does Ar-Rahnu Contract Alligned with Social Finance Goal?

Abstract

This paper examines the application of Islamic micro-financing through the Ar-Rahnu contract using a content analysis approach. It explores whether Ar-Rahnu aligns with social finance goals. The findings suggest that Ar-Rahnu offers significant advantages over other Islamic micro-financing options due to its lower pricing, higher margins, and simplified procedures. Additionally, Ar-Rahnu operations are characterized by skilled employees, high customer satisfaction, and the integration of current technology. This study contributes to the literature by comparing Islamic financial products and employing a qualitative methodology that combines content analysis with in-depth interviews.