Islamic financing selection among small and micro-scale entrepreneurs

• Main Authors: Duasa, Jarita, Zainal, Nur Hidayah, Syafril, Ilza Febrina
• Format: Article
• Language: English
• Published: USIM Press 2021
• Subjects: BPH Islamic Economics; HA29 Theory and method of social science statistics; HG3368 Islamic Banking and Finance
• Online Access: http://irep.iium.edu.my/93357/7/93357_Islamic%20financing%20selection%20among%20small%20and%20micro-scale%20entrepreneurs.pdf; http://irep.iium.edu.my/93357/; https://jfatwa.usim.edu.my/index.php/jfatwa/article/download/401/325/1139
• Institution: Universiti Islam Antarabangsa Malaysia

The study attempts to investigate the probability of small and micro entrepreneurs who received financial assistance from microfinance program of Amanah Ikhtiar Malaysia (AIM) to select Islamic financing in business activities. A survey was conducted on the participants of AIM in Kelantan and Perak and data collected are analyzed using binary logistic regressions. The findings of the study show that the likelihood that Islamic financing is selected among small and micro entrepreneurs is likely to be determined by higher level of education, more asset value obtained and more understanding on the concept of ‘riba’. Variables of age, amount of loan, household size, income obtained from AIM program, spending, understanding on concept of ‘gharar’, ‘mudharabah’, ‘musyarakah’, ‘bai’ bithamin ajil’, ‘istisna’, ‘salam’, ‘qard al-hasan’ and ‘al-inah’ are not significantly influence the tendency to choose Islamic financing among small and micro entrepreneurs.