IDEAS home Printed from https://ideas.repec.org/a/pal/eurjdr/v32y2020i1d10.1057_s41287-019-00225-3.html
   My bibliography  Save this article

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

Author

Listed:
  • Reazul Islam

    (University of Malaya)

  • Rubi Ahmad

    (University of Malaya)

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.

Suggested Citation

  • Reazul Islam & Rubi Ahmad, 2020. "Applicability of Mudarabah and Musharakah as Islamic Micro-equity Finance to Underprivileged Women in Malaysia," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(1), pages 176-197, January.
    • Handle: RePEc:pal:eurjdr:v:32:y:2020:i:1:d:10.1057_s41287-019-00225-3
    DOI: 10.1057/s41287-019-00225-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41287-019-00225-3
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1057/s41287-019-00225-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Chen, Roy & Chen, Yan & Liu, Yang & Mei, Qiaozhu, 2017. "Does team competition increase pro-social lending? Evidence from online microfinance," Games and Economic Behavior, Elsevier, vol. 101(C), pages 311-333.
    2. M. Kabir Hassan & William J. Hippler, III, 2014. "Entrepreneurship and Islam: An Overview," Econ Journal Watch, Econ Journal Watch, vol. 11(2), pages 170-178, May.
    3. Zubair HASAN, 2016. "How Islamic is the Diminishing Musharkah Model used for Home Financing?," Turkish Economic Review, KSP Journals, vol. 3(3), pages 443-452, September.
    4. Chong, Beng Soon & Liu, Ming-Hua, 2009. "Islamic banking: Interest-free or interest-based?," Pacific-Basin Finance Journal, Elsevier, vol. 17(1), pages 125-144, January.
    5. Tamer ElGindi & Mona Said & John William Salevurakis, 2009. "Islamic Alternatives to Purely Capitalist Modes of Finance: A Study of Malaysian Banks from 1999 to 2006," Review of Radical Political Economics, Union for Radical Political Economics, vol. 41(4), pages 516-538, December.
    6. Derigs, Ulrich & Marzban, Shehab, 2009. "New strategies and a new paradigm for Shariah-compliant portfolio optimization," Journal of Banking & Finance, Elsevier, vol. 33(6), pages 1166-1176, June.
    7. Mohieldin , Mahmoud & Rostom , Ahmed & Fu, Xiaochen & Iqbal, Zamir, 2012. "The Role of Islamic Finance in Enhancing Financial Inclusion in Organization of Islamic Cooperation (OIC) Countries," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 20, pages 55-120.
    8. Khan, Tariqullah & Ahmed, Habib, 2001. "Risk Management: An Analysis of Issues in Islamic Financial Industry (Occasional Papers)," Occasional Papers 91, The Islamic Research and Teaching Institute (IRTI).
    9. Wang, Yacan & Hazen, Benjamin T., 2016. "Consumer product knowledge and intention to purchase remanufactured products," International Journal of Production Economics, Elsevier, vol. 181(PB), pages 460-469.
    10. Jonathan Levie & Erkko Autio, 2013. "Growth and growth intentions: a meta-analysis of existing evidence," White Papers 0001, Enterprise Research Centre.
    11. James O. Fiet & Robert D. Nixon & Mahesh Gupta & Pankaj C. Patel, 2006. "Entrepreneurial Discovery By The Working Poor," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 11(03), pages 255-273.
    12. Chen, Hanwen & Huang, Henry He & Lobo, Gerald J. & Wang, Chong, 2016. "Religiosity and the cost of debt," Journal of Banking & Finance, Elsevier, vol. 70(C), pages 70-85.
    13. Alex De Noble & Craig S. Galbraith & Gangaram Singh & Curt H. Stiles, 2007. "Market justice, religious orientation, and entrepreneurial attitudes," Journal of Enterprising Communities: People and Places in the Global Economy, Emerald Group Publishing Limited, vol. 1(2), pages 121-134, June.
    14. Mohammed Obaidullah, 2015. "Enhancing food security with Islamic microfinance: insights from some recent experiments," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 75(2), pages 142-168, July.
    15. Ellahi, Abida & Bokhari, Rahat H., 2013. "Key quality factors affecting users' perception of social networking websites," Journal of Retailing and Consumer Services, Elsevier, vol. 20(1), pages 120-129.
    16. El-Komi, Mohamed & Croson, Rachel, 2013. "Experiments in Islamic microfinance," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 252-269.
    17. Adhikari, Binay Kumar & Agrawal, Anup, 2016. "Does local religiosity matter for bank risk-taking?," Journal of Corporate Finance, Elsevier, vol. 38(C), pages 272-293.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ahmed Idi Kato, 2023. "Unlocking the Potential of Microfinance Solutions on Urban Woman Entrepreneurship Development in East Africa: A Bibliometric Analysis Perspective," Sustainability, MDPI, vol. 15(20), pages 1-22, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Elnahas, Ahmed M. & Kabir Hassan, M. & Ismail, Ghada M., 2017. "Religion and mergers and acquisitions contracting: The case of earnout agreements," Journal of Corporate Finance, Elsevier, vol. 42(C), pages 221-246.
    2. Hassan, M. Kabir & Aliyu, Sirajo, 2018. "A contemporary survey of islamic banking literature," Journal of Financial Stability, Elsevier, vol. 34(C), pages 12-43.
    3. Safiullah, Md & Shamsuddin, Abul, 2018. "Risk in Islamic banking and corporate governance," Pacific-Basin Finance Journal, Elsevier, vol. 47(C), pages 129-149.
    4. Fan, Yaoyao & John, Kose & Liu, Frank Hong & Tamanni, Luqyan, 2019. "Security design, incentives, and Islamic microfinance: Cross country evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 62(C), pages 264-280.
    5. Muhammad Nouman & Karim Ullah & Saleem Gul, 2018. "Why Islamic Banks Tend to Avoid Participatory Financing? A Demand, Regulation, and Uncertainty Framework," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 10(1), pages 1-32, March.
    6. Beck, Thorsten & Demirgüç-Kunt, Asli & Merrouche, Ouarda, 2013. "Islamic vs. conventional banking: Business model, efficiency and stability," Journal of Banking & Finance, Elsevier, vol. 37(2), pages 433-447.
    7. Sandrine Kablan & Ouidad Yousfi, 2015. "Performance of Islamic Banks across the World: An Empirical Analysis over the Period 2001-2008," International Journal of Empirical Finance, Research Academy of Social Sciences, vol. 4(1), pages 27-46.
    8. Pejman Abedifar & Shahid M. Ebrahim & Philip Molyneux & Amine Tarazi, 2015. "Islamic Banking And Finance: Recent Empirical Literature And Directions For Future Research," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 637-670, September.
    9. Pejman Abedifar & Philip Molyneux & Amine Tarazi, 2013. "Risk in Islamic Banking," Review of Finance, European Finance Association, vol. 17(6), pages 2035-2096.
    10. Richard J. Cebula & Fabrizio Rossi, 2021. "Religiosity and corporate risk-taking: evidence from Italy," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 45(4), pages 751-763, October.
    11. Mushtaq Hussain Khan & Mohammad Bitar & Amine Tarazi & Arshad Hassan & Ahmad Fraz, 2021. "Corruption and bank risk-taking: The deterring role of Shari'ah supervision," Working Papers hal-03366460, HAL.
    12. Shakir Ullah & Ian A. Harwood & Dima Jamali, 2018. "‘Fatwa Repositioning’: The Hidden Struggle for Shari’a Compliance Within Islamic Financial Institutions," Journal of Business Ethics, Springer, vol. 149(4), pages 895-917, June.
    13. Mamoru Nagano, 2016. "Who issues Sukuk and when?: An analysis of the determinants of Islamic bond issuance," Review of Financial Economics, John Wiley & Sons, vol. 31(1), pages 45-55, November.
    14. Ibrahim, Mansor H. & Rizvi, Syed Aun R., 2018. "Bank lending, deposits and risk-taking in times of crisis: A panel analysis of Islamic and conventional banks," Emerging Markets Review, Elsevier, vol. 35(C), pages 31-47.
    15. Jay Cai & Guifeng Shi, 2019. "Do Religious Norms Influence Corporate Debt Financing?," Journal of Business Ethics, Springer, vol. 157(1), pages 159-182, June.
    16. Muhammad Nouman & Karim Ullah, 2014. "Constraints in the Application of Partnerships in Islamic Banks: The Present Contributions and Future Directions," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 6(2), pages 47-62, October.
    17. Murat Ocak & Bekir Emre Kurtulmuş & Emrah Arıoğlu, 2024. "Do Individual Auditors from More Religious Hometowns Enhance Audit Quality? Evidence from an Islamic Country," Journal of Business Ethics, Springer, vol. 190(2), pages 439-481, March.
    18. Saad Azmat & Haiqa Ali & Kym Brown & Michael Skully, 2021. "Persuasion in Islamic finance," Australian Journal of Management, Australian School of Business, vol. 46(2), pages 272-286, May.
    19. Ghlamallah, Ezzedine & Alexakis, Christos & Dowling, Michael & Piepenbrink, Anke, 2021. "The topics of Islamic economics and finance research," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 145-160.
    20. Chuluunbat Tsendsuren & Prayag L. Yadav & Seung Hun Han & Seongjae Mun, 2021. "The effect of corporate environmental responsibility and religiosity on corporate cash holding decisions and profitability: Evidence from the United States' policies for sustainable development," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(5), pages 987-1000, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:eurjdr:v:32:y:2020:i:1:d:10.1057_s41287-019-00225-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.