Applicability of Mudarabah and Musharakah as Islamic Micro-equity Finance to Underprivileged Women in Malaysia

  • Reazul IslamEmail author
  • Rubi Ahmad
Original Article


No microfinance institutions (MFIs) in Malaysia offer mudarabah and musharakah (M&M) as micro-equity instruments. This study looks into the possibility of introducing M&M for underprivileged women entrepreneurs in Selangor State. Hence, it assesses clients’ willingness to accept Shariah rules, religiosity, product knowledge and entrepreneurial skills. Data from 330 respondents were collected from female Muslim members of an MFI, namely Amanah Ikhtiar Malaysia (AIM). The data were analysed by using exploratory factor analysis (EFA), confirmatory factor analysis (CFA) and structural equation modelling (SEM). The findings show that women entrepreneurs prefer those Shariah principles that seem easy to comprehend and preserve their interests. They possess primary knowledge of M&M and fairly practise intrinsic and extrinsic religiosity, but lack proper entrepreneurial skills. Therefore, application of M&M would be viable if clients’ knowledge of Shariah and M&M were improved along with their religiosity and entrepreneurial skills. These findings would help include M&M within the context of microfinancing.


Mudarabah and Musharakah Profit and loss sharing Islamic microfinance Poverty alleviation 


Aucune institution de microfinance (IMF) en Malaisie n’offre de Mudarabah et de Musharakah (M&M) en tant qu’instruments de micro-capital investissement. Cette étude examine la possibilité d’introduire M&M aux femmes entrepreneurs défavorisées de l’État de Selangor. Par conséquent, il évalue la volonté des clientes d’accepter les règles de la charia, leur religiosité, leur connaissance du produit et leurs compétences entrepreneuriales. Les données de 330 participantes ont été recueillies auprès de femmes musulmanes appartenant à une IMF, à savoir Amanah Ikhtiar Malaysia (AIM). Les données ont été analysées en utilisant les méthodes d’analyse factorielle exploratoire (EFA), d’analyse factorielle confirmatoire (CFA) et les modèles d’équation structurelle (SEM). Les résultats montrent que les femmes entrepreneurs préfèrent les principes de la charia qui semblent faciles à comprendre et qui préservent leurs intérêts. Elles possèdent les connaissances de base en matière de M&M et pratiquent équitablement la religion intrinsèque et extrinsèque. Mais elles manquent de compétences entrepreneuriales à proprement parler. Par conséquent, l’application viable du M&M ne serait possible que si les clientes connaissaient mieux la charia et le M&M, et si leur degré de religiosité et leurs compétences entrepreneuriales étaient améliorés. Ces résultats contribueraient à inclure M&M dans le contexte de la microfinance.



Funding was provided by Institut Pengurusan dan Pemantauan Penyelidikan (IPPP), University of Malaya "Peruntukan Penyelidikan Pascasiswazah (PPP)"-2013 (Grant Ref. No. UM.TNC2/IPPP/PPGP/638/PPP).


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Copyright information

© European Association of Development Research and Training Institutes (EADI) 2019

Authors and Affiliations

  1. 1.Asia–Europe InstituteUniversity of MalayaKuala LumpurMalaysia
  2. 2.Faculty of Business and AccountancyUniversity of MalayaKuala LumpurMalaysia

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