Modeling the Demand for Islamic Microfinance Services: An Application of PLS-SEM Approach

Mohamed Asmy Bin Mohd Thas Thaker, Salina Kassim, Md Fouad Bin Amin, Marhanum Che Mohd Salleh, Nadhrah Othman, Siti Nadhirah Kassim

Abstract


The access to capital is very crucial for ensuring the financial sustainability of microfinance clients. It is also equally important to determine the demand for microfinance services among the clients. This study aims to identify the factors affecting the demand for Islamic microfinance (IsMF) services among the women micro-entrepreneurs in Malaysia. This study has collected a total of 250 samples from the field survey on women micro-entrepreneurs who are also the clients of Amanah Ikhtiar Malaysia (AIM). In addition, Partial Least Squares (PLS) method used to identify the potential factors (4As) i.e., affordability, accessibility, adequacy and awareness affecting the demand for IsMF. The results show that only “accessibility” has significant and positive relation with the demand for IsMF. Besides, the measurements items of accessibility such as distance of IsMF institution, collateral requirement, guarantor requirement, application procedure and process, repayment method, service efficiency, advise and consultation, and number of IsMF centers are the key factors affecting the demand for IsMF services in Malaysia. This paper provides some insights for the policy makers of Islamic microfinance and recommends that IsMF providers should take accessibility factor into greater consideration for the economic upliftment of women in microenterprises in Malaysia

Keywords


Islamic Microfinance; Women; Amanah Ikthiar Malaysia; 4As

Full Text:

PDF

References


Amanah Ikhtiar Malaysia. (n.d.). Retrieved from http://www.aim.gov.my

Al Mamun, A. (2011). Impact of Amanah Ikhtiar Malaysia’s schemes on hardcore poor households in Peninsular Malaysia. (Doctoral Thesis). Faculty of Management, Multimedia University, Malaysia.

Amin, H., Baba, R. and Muhammad, M. Z. (2007). An analysis of mobile banking acceptance by Malaysian customers. Sunway Academic Journal, 4, 1-12.

Anderson, J. and Billou, N. (2007). Serving the world's poor: innovation at the base of the Economic pyramid, Journal of Business Strategy, 28 (2), 14-21.

Bhatti, T. (2007). Exploring factors influencing the adoption of mobile commerce. Journal of Internet Banking & Commerce, 12(3), 1–14.

Chikweche, T. and Fletcher R. (2012). Revisiting the marketing mix at the bottom of Pyramid (BOP): From theoretical considerations to practical implications, Journal of Consumer Marketing, 29(7),507-520.

Fornell, C., and Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. J. Mark. Res. 18, 39–50.

Gertler, P., Levine, D.I., Moreti, E. (2003). Do microfinance programs help families iinsure consumption against illness? (Working Paper series C03-129) Center for International Development Economics Research (CIDER), University of California, Berkeley.

Gold, A. H., Malhotra, A., & Segars, A. H. (2001). Knowledge management: An organizational capabilities perspective. Journal of Management Information Systems, 18(1), 185–214.

Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2009). Multivariate data analysis. Upper Saddle River, NJ: Prentice Hall.

Hair, J. F., Ringle, C. M., & Sarstedt, M. (2011). PLS-SEM: Indeed a silver bullet. Journal of Marketing Theory and Practice, 19(2), 139–151.

Harman, H.H. (1976), Modern Factor Analysis, Chicago: University of Chicago Press.

Henseler, J., Ringle, C.M. and Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1), 115–135.

Kamande, S., & Jarhult, W. (2013). Reaching the mass market of the base of the pyramid-using the five A’s concept. (Master Thesis). Linnaeus University, Sweden.

Khandker, S. (2003). Micro finance and poverty: Evidence using panel data from Bangladesh. (Research Paper series 2945), World Bank Policy. World Bank. Washington.

Kline, R. B. (2011). Principles and practice of structural equation modeling. New York: Guilford Press.

London, T. and Hart, S. (2011). Next-generation business strategies for the base of the pyramid: New approaches for building mutual value, in a. upper saddle river (Eds.), Financial Times Press.

Mason, D. J., Jones, D. A., Roy, C., Sullivan, C. G., & Wood, L. J. (2015). Commonalities of nurse-designed models of health care. Nursing Outlook, 63(5), 540-553.

Park, A. and Ren, C. (2001). Microfinance with Chinese characteristics. World Development, 29(1), 39-62.

Podsakoff, P. M., MacKenzie, S. B., Lee, J. Y. and Podsakoff, N. P. (2003). Common method biases in behavioral research: A critical review of the literature and recommended remedies. The Journal of Applied Psychology, 88(5), 879.

Prahalad C. K. (2009) The fortune at the bottom of the pyramid: Eradicating poverty through profits. Pearson Education Publishers, United States. 358

Prahalad, C. K. (2010). The fortune at the bottom of the pyramid: Eradicating poverty through profits. Revised and updated 5th anniversary. New Jersey (Eds.), Pearson Education.

Prahalad, C. K. (2012). Bottom of the pyramid as a source of breakthrough innovations. Product Development & Management Association, 29(1), 6-12.

Prahalad, C.K. (2011). The fortune at the bottom of the pyramid: Eradicating poverty through profits, Revised and Updated 5th Anniversary. New Jersey (Eds.), Prentice Hall.

Ramayah, T., Cheah, J., Chuah, F., Ting, H., & Memon, M. A. (2016). Partial least squares structural equation modeling (PLS-SEM) using SmartPLS 3.0: An updated and practical guide to statistical analysis. Singapore: Pearson.

Ringle, C. M. and Sarstedt, M. (2016). gain more insight from your pls-sem results: The importance-performance map analysis. Industrial Management & Data Systems, 116(9), 1865-1886.

Riquelme, H.E. and Rios, R.E. (2010). The moderating effect of gender in the adoption of mobile banking. The International Journal of Bank Marketing, 28, 328-341.

Seelos, C. and Mair, J. (2007). Profitable business model and market creation in the context of deep poverty: A strategic view, Academy of Management Perspectives, 21(4), 49-63.

Shah, Ali M. (2012). Business strategies in the emerging markets. Journal of Asia-Pacific Business, 13, 4–15.

Soete, L. 2010. From science and technology to innovation for development. African Technology Development Forum Journal, 7(3/4), 9–14.




DOI: https://doi.org/10.18196/ijief.v5i1.11776

Refbacks

  • There are currently no refbacks.


Copyright (c) 2022 International Journal of Islamic Economics and Finance (IJIEF)

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.


International Journal of Islamic Economics and Finance (IJIEF)
International Program for Islamic Economics and Finance 
Department of Economics  
Faculty of Economics and Business
Universitas Muhammadiyah Yogyakarta

Office:
Pascasarjana Building, Ground Floor
Jl. Brawijaya (Ringroad Selatan), Kasihan, Bantul
D.I. Yogyakarta 55183, INDONESIA
Official email: ijief@umy.ac.id