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An Estimation of Market Size for Microfinance: Study on the Urban Microentrepreneurs in Selangor, Malaysia

Salwana Hassan, Md. Mahmudul Alam () and Rashidah Abdul Rahman3

No bkmc6, SocArXiv from Center for Open Science

Abstract: Malaysia is a fast growing developing country where majority of the people are Muslim. Due to the religious bindings, Muslim prefers Shariahcompliant Islamic credits instead of conventional interest based credits. At the same time, non-Muslims can also consider Shariahcompliant Islamic credit because it is considered as the ethical credit. However, still many microentrepreneurs are not receiving the Shariahcompliant Islamic microfinance products because they have negative perceptions about the credit andinterest (riba). Therefore, this study aims to assess the demand for microfinance among the microentrepreneurs in the State of Selangor, Malaysia and thus, determine the potential market size. Data of the study were collected based on a questionnaire survey from 550 microentrepreneurs from the urban areas of Selangor. It was found that only 12.2 per cent of them received microfinance from various microfinance institutions and banks. However, the study found that still there is potential for microfinance borrowing with around 55,000-128,000 microenterprises in Selangor, Malaysia. Therefore, Islamic microfinance institutions should try to expand their market size by promoting these potential microfinance borrowers among the existing microentrepreneurs.

Date: 2019-02-28
New Economics Papers: this item is included in nep-isf, nep-mfd and nep-sea
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DOI: 10.31219/

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