Analysis of Capacity of Profit-making Contracts in Islamic Microfinance System using Fuzzy TOPSIS Method

In the last two decades, the microfinance industry has grown exponentially both in terms of the number and types of customers and service providers and in terms of methods and processes, with the goal of empowering the poorest people. Today, conventional microfinance is mainly based on a loan agreement with interest. Considering the prohibition of Riba in Islamic economics, it is necessary to use the Islamic contracts for microfinancing. Profit-making contracts, including Mubadala (exchange) and Musharakah (participation) because of their specific characteristics, can be used in this regard. However, the question to be asked here is which of the various types of these contracts are more appropriate for the development of Islamic microfinance activities? To answer this question first needs identifying the criteria for desirable contracts in microcredit system. In this paper, first we study the most important criteria and then we use them to ranking profit-making contracts according to applicability in Islamic microfinance system using fuzzy TOPSIS as one of the MCDM techniques. According to results there are 9 important criteria for this issue in microcredit system. Also the results show that, Murabaha, Jua'ala and Ijara are the most sutibale contracts for microcredit, respectively.