Empirical Study of the Proximity of Rotating Savings and Credit Associations to Islamic Principles of Financing in Ilorin Metropolis

By Mufutau Ayinla Abdul-Yakeen, Nasir Mukhtar Gatawa (Ph.D), Prof. Chika Umar Aliyu (Ph.D), and Prof. Mohammed Olanrewaju Ibrahim (Ph.D)

Abstract

The study empirically investigates the Level of Compliance of Members of Rotating Savings and Credit Associations (ROSCAS) in Ilorin Metropolis with Islamic Principles of Financing (IPF). Muslims are mandated to enter Islam completely (Q2:208). A day would come when all men would be asked of their worldly pleasures (Q102:1-8). Previous studies have not given the level of application of Islamic Principles to the operation of ROSCAS in Ilorin Metropolis. In this study, four hundred structured-questionnaires are administered on the purposefully selected respondents. Three hundred and twenty-eight of the returned ones were good for descriptive and inferential analysis via SPSS software. Three hypotheses were formulated on the biography of respondents to establish the relationship between operational strategies of ROSCAS members and IPF. Result of the tests conducted at 5% significance level on the gender of respondents does not conform to the a priori assumption while those of occupation and education do. The study reveals that male, highly-educated, and self-employed respondents have better compliance to IPF than their counterparts. Respondents with higher proximity to IPF must carry along their counterparts in Islamizing ROSCAS and add them to the Models of Islamic Finance. The study recommends that Muslim dominated nations should also start ROSCAS among themselves.