An Estimation of Market Size for Microfinance: Study on the Urban Microentrepreneurs in Selangor, Malaysia

Hassan, S., Alam, M.M., Rahman, R.A. 2015. An Estimation of Market Size for Microfinance: Study on the Urban Microentrepreneurs in Selangor, Malaysia. Asian Social Science, Vol. 11 (27), pp. 269-274

7 Pages Posted: 1 Apr 2017

See all articles by Salwana Hassan

Salwana Hassan

Universiti Teknologi MARA (UiTM)

Md. Mahmudul Alam

Universiti Utara Malaysia

Rashidah Abdul Rahman

Universiti Teknologi MARA (UiTM) - Bureau of Research and Consultancy (BRC)

Date Written: 2015

Abstract

Malaysia is a fast growing developing country where majority of the people are Muslim. Due to the religious bindings, Muslim prefers Shariah compliant Islamic credits instead of conventional interest based credits. At the same time, non-Muslims can also consider Shariah compliant Islamic credit because it is considered as the ethical credit. However, still many microentrepreneurs are not receiving the Shariah compliant Islamic microfinance products because they have negative perceptions about the credit and interest (riba). Therefore, this study aims to assess the demand for microfinance among the microentrepreneurs in the State of Selangor, Malaysia and thus, determine the potential market size. Data of the study were collected based on a questionnaire survey from 550 microentrepreneurs from the urban areas of Selangor. It was found that only 12.2 per cent of them received microfinance from various microfinance institutions and banks. However, the study found that still there is potential for microfinance borrowing with around 55,000-128,000 microenterprises in Selangor, Malaysia. Therefore, Islamic microfinance institutions should try to expand their market size by promoting these potential microfinance borrowers among the existing microentrepreneurs.

Keywords: microfinance, Islamic microfinance, microentrepreneur, microenterprise, SME, Malaysia, Shariah

JEL Classification: G21, N85, O10

Suggested Citation

Hassan, Salwana and Alam, Md. Mahmudul and Rahman, Rashidah Abdul, An Estimation of Market Size for Microfinance: Study on the Urban Microentrepreneurs in Selangor, Malaysia (2015). Hassan, S., Alam, M.M., Rahman, R.A. 2015. An Estimation of Market Size for Microfinance: Study on the Urban Microentrepreneurs in Selangor, Malaysia. Asian Social Science, Vol. 11 (27), pp. 269-274. Available at SSRN: https://ssrn.com/abstract=2942725

Salwana Hassan

Universiti Teknologi MARA (UiTM) ( email )

40450 Shah Alam
Johor
Dungun, Selangor 23000
Malaysia

Md. Mahmudul Alam (Contact Author)

Universiti Utara Malaysia ( email )

Sintok, Kedah
Malaysia

Rashidah Abdul Rahman

Universiti Teknologi MARA (UiTM) - Bureau of Research and Consultancy (BRC) ( email )

40450 Shah Alam
Malaysia
+03 55442090 (Phone)

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