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Jurnal Ekonomi Malaysia

55 (1) 2021 135 – 146

Nexus between Islamic Microfinancing and Financial Wellbeing of Micro-Entrepreneurs during the Covid-19 Pandemic in Malaysia
Hubungan antara Pembiayaan Mikro Islam dan Kesejahteraan Usahawan Semasa Pandemik Covid-19 di Malaysia

School of Management
Universiti Sains Malaysia
11800 USM, Penang
MALAYSIA.

nikhadiyan@usm.my

Faculty of Business and Accountancy
University of Malaya
50603 Kuala Lumpur
MALAYSIA.

zaidizabri@um.edu.my

School of Management
Universiti Sains Malaysia
11800 USM, Penang
MALAYSIA.

emazull@usm.my

Abstract

Islamic microfinance is expanding and penetrating its potential market over the globe. Access to credit or financing, especially during the COVID-19 pandemic, is vital for micro-entrepreneurs in climbing the socio-economic ladder that will contemporaneously increase their household income. In Malaysia, most of the MEs can hardly access financing from formal financial institutions due to poor credit rating, having zero to little collateral, income instability, small loan amounts, and high transaction costs. Alternatively, MEs approach Islamic microfinance institutions for their financing solution. Therefore, this study intends to investigate how far the utilization of Islamic microfinancing by MEs could enhance their quality of life. One hundred seven (107) usable questionnaires were analysed via the Structural Equation Modelling (SEM) AMOS using IBM® SPSS and found that both investment and expansion factors played key roles in affecting the financial wellbeing of the micro-entrepreneurs. The results lend credence to the positive effect of Islamic microfinance products may have on MEs and indirectly support the long-term economic development for MEs. This study deliver implication to various angles. In practical part, it opens the eyes of micro-entrepreneurs to opt for the right path (expansion and investment) to achieve financial wellbeing. Government (regulators) can enhance the ability of Islamic microfinancing as a tool towards financial wellbeing and in theoretical part, this study deepens the scope of Schumpeter’s theory by inculcate this theory with Islamic finance scope of study.

Keywords

financial wellbeing; Islamic microfinance; micro-entrepreneurs

JEL Codes

A1, G0, G5, I3, O1, R2
http://dx.doi.org/10.17576/JEM-2021-5501-10
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Bibliography

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Nik Azman, , Md Zabri, , & Zull Kepili, E. I. (2021). Nexus between Islamic Microfinancing and Financial Wellbeing of Micro-Entrepreneurs during the Covid-19 Pandemic in Malaysia. Jurnal Ekonomi Malaysia, 55(1), 135–146. http://dx.doi.org/10.17576/JEM-2021-5501-10

@article{nikazman2021nexus,
  title={Nexus between Islamic Microfinancing and Financial Wellbeing of Micro-Entrepreneurs during the Covid-19 Pandemic in Malaysia},
  author={Nik Azman, Nik Hadiyan and Md Zabri, Mohd Zaidi and Zull Kepili, Ema Izati},
  journal={Jurnal Ekonomi Malaysia},
  volume={55},
  number={1},
  pages={135—146},
 

year={2021},
}

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