Applicability of Mudarabah and Musharakah as Islamic Micro-equity Finance to Underprivileged Women in Malaysia

Reazul Islam () and Rubi Ahmad ()
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Reazul Islam: University of Malaya
Rubi Ahmad: University of Malaya

The European Journal of Development Research, 2020, vol. 32, issue 1, No 7, 176-197

Abstract: Abstract No microfinance institutions (MFIs) in Malaysia offer mudarabah and musharakah (M&M) as micro-equity instruments. This study looks into the possibility of introducing M&M for underprivileged women entrepreneurs in Selangor State. Hence, it assesses clients’ willingness to accept Shariah rules, religiosity, product knowledge and entrepreneurial skills. Data from 330 respondents were collected from female Muslim members of an MFI, namely Amanah Ikhtiar Malaysia (AIM). The data were analysed by using exploratory factor analysis (EFA), confirmatory factor analysis (CFA) and structural equation modelling (SEM). The findings show that women entrepreneurs prefer those Shariah principles that seem easy to comprehend and preserve their interests. They possess primary knowledge of M&M and fairly practise intrinsic and extrinsic religiosity, but lack proper entrepreneurial skills. Therefore, application of M&M would be viable if clients’ knowledge of Shariah and M&M were improved along with their religiosity and entrepreneurial skills. These findings would help include M&M within the context of microfinancing.

Keywords: Mudarabah and Musharakah; Profit and loss sharing; Islamic microfinance; Poverty alleviation (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1057/s41287-019-00225-3

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