Open AccessThe Perception of Micro-Entrepreneurs towards the Adoption of an Islamic Equity-Based Financing: Evidence from Malaysia
Author(s) -
Siti Hajar Binti Mohd Abd Khar,
Muhammad Pisol bin Mohd Mat Isa,
Maran Marimuthu,
Amin Jan
Publication year - 2019
Publication title -
business management and strategy
Language(s) - English
Resource type - Journals
ISSN - 2157-6068
DOI - 10.5296/bms.v10i2.15586
Subject(s) - business , finance , equity (law) , islam , sample (material) , perception , default , islamic finance , philosophy , chemistry , theology , chromatography , neuroscience , political science , law , biology
This paper aims to explore the perception of micro-entrepreneurs towards the adoption of equity-based financing models in Malaysia. The investigation has covered the following characteristics of equity-based financing such as fairness, partnership, risk sharing, business size, and MFI. The current micro-financial products in Malaysia are focusing more on debt-based financing, which is holistically increasing the financial risk level of entrepreneurs in the case of defaults. There is a dire need to identify the relevancy and viability of equity-based financing in Malaysia, it will ultimately reduce the financial risks of entrepreneurs in case of default. The Islamic financial concept offers a solution to this problem, Musharakah and Mudarabah are among the other Islamic products that offer equity-based micro-financing to entrepreneurs. However, its practical implementation is still vague. In relation to this, the study adopts a cross-sectional study with a sample size of 700 micro-entrepreneurs from the state of Selangor Malaysia. The results of this study found that micro-entrepreneurs tend to register a positive perception of the characteristics of equity-based financing and risk-sharing score as the highest factor towards the adoption of the proposed equity-based PLS model in Malaysia.