International Journal of Management and Commerce Innovations ISSN 2348-7585 (Online) Vol. 7, Issue 2, pp: (1181-1185), Month: October 2019 - March 2020, Available at: www.researchpublish.com
ACCEPTABILITY OF DECREASED PARTICIPATION MODEL IN ISLAMIC MICROFINANCE AMONG SMALL BUSINESS OWNERS IN SELANGOR 1
Muhammad Saeed Zakaria, 2Barjoyai Bin Bardai 1,2
Al-Madinah International University
Abstract: Islamic microfinance modes of financing are reportedly lacking penetration and characterized by high costs of transactions which resulted in the efficiency of many of the existing institutions. In this study, a model based on Decreased Participation has been proposed as an alternative to the modes of financing to improve the efficiency of the institutions. However, investigating the acceptability of innovation is a very important component for its adoption by potential beneficiaries. Using the theory of diffusion of innovation, this study conducted a survey to understand the behaviour of business owners in Klang Valley to determine the factors that are responsible for their acceptability. A total of 208 respondents were collected and analyzed using descriptive techniques, correlation analysis and regression analysis. It is found that all the independent variables are correlated with the dependent variables at a significance level of p < .001. In the regression analysis as well all the variables investigated were significantly influencing the acceptability of the business owners. With respect to the observed link between acceptability and the dimensions of the theory of diffusion of innovation, the study concludes that the acceptability of Decreased Participation will be influenced significantly by more relative advantage, compatibility, observability, trainability and less complexity. Keywords: Islamic Microfinance, Decreased Participation.
1. RESEARCH BACKGROUND The global efforts in fighting poverty have succeeded in alleviating poverty of hundreds of millions of people that live at below USD1 per day from 1.2 billion people to 1 billion, especially in the developing countries between 1990 and 2002. The impact of such intervention programmes was more felt in Asian countries (Aslam, 2014). But, more than half of the global population are still in extreme poverty, with a larger proportion of poverty in East Asia and the Pacific. Also, it was estimated that more than 1 billion people are living at less than $1.25 per day and about 80% of this number is in SubSaharan Africa and South Asia. More precisely, this fraction is spread majority in the five largest developing countries: Bangladesh, China, the Democratic Republic of Congo, India, and Nigeria (Adnan & Ajija, 2015). A common reason for poverty in these regions is attributed to the lack of financial access. The statistics of poverty particularly on the food is more disturbing. According to the World Food Programme (WFP), about one out of nine people in the world do not have enough food to live a healthy life which is about 795 million people. This number is found majorly in the developing world which means that about 12.9% of the people in such areas are malnourished. It is also found that Asia has the highest number of hungriest people with about two-thirds of poor people in the world with more concentration in Western Asia. But hunger is more prevalent in Africa since in almost every four individuals, one person is malnourished. Their study suggests that if women could get access to resources like men about 150 million people will become much less poor (O’Connor et al., 2017). One of the important tools used over the years in addressing financial inclusion is microfinance institutions. The products in the conventional microfinance institutions are interest-based, which is another major reason that Muslims are more excluded due to the prohibition of interest in Islam. Islamic microfinance institutions have been introduced to primarily address the prohibited elements inherent in the conventional microfinance institutions. The products used in the Islamic microfinance are based on Sharia’s compliant contracts that try to eliminate the interest component.
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