Eco-Microcredit and Rural Transformation: The Mediating Role of Sustainable Farming Practices and the Moderating Effect of Financial Literacy on Household Sustainability

Zuraidah Mohamed Isa, Zaiful Affendi Ahmad Zabib, Chaleeda Som Sak, Rini Lestari and Mohamad Hanif Abu Hassan
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Zuraidah Mohamed Isa: Faculty of Business and Management, Digital Innovations & Social Entrepreneurship, University Teknologi MARA, Cawangan Kedah, Kampus Sungai Petani, Kedah
Zaiful Affendi Ahmad Zabib: Sekolah Kebangsaan Semeling, Semeling, 08100 Bedong, Kedah
Chaleeda Som Sak: Faculty of Business and Management, Digital Innovations & Social Entrepreneurship, University Teknologi MARA, Cawangan Kedah, Kampus Sungai Petani, Kedah
Rini Lestari: Faculty of Economics and Business, Department of Accounting, Universitas Islam Bandung
Mohamad Hanif Abu Hassan: School of Business Managament, College of Business, University Utara Malaysia, 06010 Sintok, Kedah

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 10, 2223-2231

Abstract: Rural communities often struggle to achieve sustainable livelihoods due to limited financial access, low adoption of sustainable farming practices, and insufficient financial literacy. This study addresses these challenges by examining how eco-microcredit, as a form of green financing, serves as a catalyst for rural transformation through its impact on sustainable farming practices and household sustainability. The study aims to develop and validate a conceptual framework that positions sustainable farming practices as a mediating variable and financial literacy as a moderating variable in the relationship between green financing and household sustainability. Using a conceptual and theoretical approach grounded in the Sustainable Livelihoods Framework, ecological modernization theory, and innovation-adoption theory, the study integrates financial access, behavioral adoption, and human capability perspectives. The findings suggest that eco-microcredit enhances household sustainability indirectly by promoting the adoption of sustainable farming practices, while financial literacy strengthens this relationship by enabling effective utilization of financial resources. The study contributes theoretically by linking financial inclusion, behavioral change, and sustainability outcomes in a unified model. Practically, it provides insights for policymakers and financial institutions to design integrated eco-microcredit programs that combine financial support, capacity building, and market access to achieve long-term rural resilience and sustainability.

Date: 2025
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