Performance of Credit Cooperative in Malaysia: A Financial Analysis

Performance of Credit cooperative in Malaysia: A Financial Analysis

By

Abdi Qani Jama Abdullahi

Research Paper Submitted to

The Othman Yeop Abdullah Graduate School of Business

University Utara Malaysia

 In Partial of the Requirement for the

Master in Islamic Finance and Banking

CHAPTER ONE

INTRODUCTION

1. Background of study

Since 19 century, cooperative industry locally, internationally and globally increase day by day and have been an important feature of global industry. According Von Rolf Greve (2002) for his study stated that the Cooperative industry have a long experience and less risks. Currently the world changing economically such system of industry, DR, Rolf Grave (2002), mentioned for his article the cooperative banking group in Germany adapted its governance structure to changing general economic, legal, technical, and social conditions. According, International Cooperative Association - ICA (2000)has defined the cooperative as an autonomous association of persons united voluntarily to meet the needs and aspirations of economic, social and cultural jointly by the company jointly owned and democratically controlled.

In general the Islamic law even encourage the Community or (Ummah) to cooperate each other, also our the prophet Mohammad (S.A.W) many times repeated in Cooperation because cooperation is public interest or (Maslaha Amah).Islamic law advice the people to cooperate as stated ,Surah Ma’idah *5* (verse 2)  Allah (SWT) said

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O you who have believed, do not violate the rights of Allah or the sanctity of the sacred month or [neglect the marking of] the sacrificial animals and garlanding them or violate the safety of those coming to the Sacred House seeking bounty from their Lord and His approval. But when you come out of ihram, then you may hunt. And do not let the hatred of a people for having obstructed you from al-Masjid al-Haram lead you to transgress. And cooperate in righteousness and piety, but do not cooperate in sin and aggression. And fear Allah; indeed, Allah is severe in penalty.

In humanity is better to cooperative each other or acting together to meet common needs and aspirations of its members, sharing ownership and decision making in a democracy. It is a voluntary business owned and controlled by members and operated by a non-profit goals based (non-profit) or cost-based (UWCC, 2002). It is a business that aims to equip the identity of the components of the ownership, control and use of services. These are the three characteristics that distinguish cooperatives from other businesses (Laidlaw, 1974).