The Role of Entrepreneurial Empowerment in the Relationship between Islamic Microfinance and Well-Being of Clients: A View from a Service Provider

21 Pages Posted: 16 May 2019

See all articles by A. S. Usman

A. S. Usman

Gombe State University,

Rosmaini Tasmin

Universiti Tun Hussein Onn Malaysia (UTHM) - Department of Production and Operation Management

Zatul Karamah Ahmad Baharul-Ulum

Universiti Malaysia Kelantan

Date Written: January 1, 2019

Abstract

Islamic microfinance has been reported as appropriate in improving the living conditions of the poor. However, little is known about the contribution of entrepreneurial empowerment in achieving such success. The objective of this study is to examine the mediating role of entrepreneurial empowerment in the relationship between Islamic microfinance and well-being of clients. A sample of 291 respondents was selected randomly from the operational staff of Amanah Ikhtiar Malaysia in east-coast states of Malaysia. Structural Equation Modelling was used as the statistical procedure to analyse the data. The results supported three hypotheses, which confirmed that Islamic microfinance has positive relationship with entrepreneurial empowerment. However, three hypotheses were rejected on the relationship between Islamic microfinance and clients’ well-being, suggesting that Islamic microfinance does not improve the clients’ well-being. The seventh hypothesis was also supported, which indicates a full mediation role of entrepreneurial empowerment. The unique finding of the study is that, entrepreneurial empowerment is the underlying factor for the success of Islamic microfinance. To enable generalisation of this finding, further study is recommended in other Muslim countries.

Keywords: Islamic microfinance; Empowerment; Well-being; Amanah Ikhtiar; Malaysia

JEL Classification: G21; G23; G29

Suggested Citation

Usman, A. S. and Tasmin, Rosmaini and Ahmad Baharul-Ulum, Zatul Karamah, The Role of Entrepreneurial Empowerment in the Relationship between Islamic Microfinance and Well-Being of Clients: A View from a Service Provider (January 1, 2019). Islamic Economic Studies, Vol. 26, No. 2, 2019, Available at SSRN: https://ssrn.com/abstract=3379573

A. S. Usman (Contact Author)

Gombe State University, ( email )

P.M.B.127
Gombe, Gombe
Nigeria

Rosmaini Tasmin

Universiti Tun Hussein Onn Malaysia (UTHM) - Department of Production and Operation Management ( email )

Parit Raja
Malaysia

Zatul Karamah Ahmad Baharul-Ulum

Universiti Malaysia Kelantan ( email )

Karung Berkunci 36
Pengkalan Chepa
Kota Bharu, Kelantan 16100
Malaysia

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