An analysis of the religious, social factors and income’s influence on the decision making in Islamic microfinance schemes

Purpose - Islamic microfinance schemes are designed and developed with the primary intention of poverty alleviation and fulfillment of the Islamic law requirements. The purpose of this study is to investigate the effects of religiosity, religious leader’s endorsement, social influence and income on the intention to apply for Islamic microfinance among Muslims in Malaysia. Design/methodology/approach - This study is based on a public survey to collect primary data from various states in Malaysia. Then, structural equation modelling (SEM) was used to analyse the data set. Findings - The results of SEM indicate significant roles for religiosity and religious leader’s endorsement as religion-based factors on intention to apply for microfinance products. Moreover, social influence (peer-pressure) is influential on the financial decision-making process. The authors also examined the moderation effect of gender on these relations and found that females, in comparison to males, tend to be more influenced by religious leader’s endorsement and social influence. On the other hand, male with higher religiosity tend to favour Islamic microfinance products more than females. Originality/value - Findings of this study are new in many aspects, most importantly as it sheds light into the role of religiosity and religious leader’s endorsement on the decision-making process in microfinancing services.