ISLAMIC MICROFINANCE: AN ADOPTION OF EQUITY FINANCING MODEL IN MALAYSIA

Microfinance is one among the crucial finance sectors in Malaysia. The micro,
small and medium businesses rely on microfinance for finance support. These
businesses influence the economy’s growth which indirectly made microfinance to be
significant as other finance sector. This industry providing services to the unbankable
group. Yet, the studies on Islamic microfinance are less established
particularly on the finding of what products could be offered to the poor. The current
phenomena states that most of microfinance institutions are only providing debt-based
financing as their finance products to the poor community. There is a need to identify
other products of equity based financing as an alternative financing for the poor. Thus
the microfinance sector will be more helpful to the poor and micro entrepreneur by
extending the product list. The objectives of this paper are to explore the perception of
the Micro-entrepreneurs (ME) and the Experts of Islamic microfinance toward the
adoption of equity financing models in Malaysia. The quantitative method is used
where questionnaires are distributed to 611 micro-entrepreneurs in order to gauge
their perception regarding equity financing. While qualitative interview is used to
explore the perception of four experts toward the subject discussed. The integrated
result shows that the respondents of both questionnaire and interview have positive
perception toward this equity models.