ISSN: 2222-6990
Open access
There is an urgent call for a potential justification on how and to what extent customers (micro-entrepreneurs) of Ar-Rahnu institutions in Malaysia are successfully driven their living standards from B10 (hardcore poverty) to B40 (low income). This study classified Ar-Rahnu’s adoption factors into three categories, namely, Shari’ah governance, uniqueness of Ar-Rahnu, and efficiency. 150 questionnaires were distributed to micro-entrepreneurs that used Ar-Rahnu and analysed using SmartPLS 3.0. Based on the results, it shows that Shari’ah governance has a low correlation and insignificant relationship towards Ar-Rahnu adoption. Stated differently, it means that customers find Shari’ah¬-compliance requirements not as important and it does not get in their way of getting instant cash from Ar-Rahnu. The other two constructs, namely as uniqueness and efficiency, have positive relationships with Ar-Rahnu adoption. It shows a significant and positive relationship with the Ar-Rahnu financing output. Unlike previous studies within the body of knowledge that mainly focuses on the adoption factors of Ar-Rahnu, this study went a step further by addressing the after-effect or impact of Ar-Rahnu adoption towards customers’ wellbeing, especially in terms of financial wellbeing and have found positive results.
Abbas, K., Razak, D. A., & Saad, N. M. (2014), “The perception of micro-entrepreneurs and petty traders on conventional and Islamic microfinance: a case study of Pakistan”, Journal of Islamic Finance, Vol. 3 No. 1, pp. 038-048.
Abdul-Razak, A. (2011), “Economic and Religious Significance of the Islamic and Conventional Pawnbroking in Malaysia: Behavioural and Perception Analysis”, Doctoral dissertation, Durham University.
Alufohai, G. O. (2006), “Sustainability of Farm Credit delivery by Cooperatives and NGOs in Edo and Delta states, Nigeria”, Educational Research and Reviews, Vol. 1 No. 8, pp. 262.
Amin, H. (2011), “Modelling Ar-Rahnu use in Eastern Malaysia: Perspectives of Muslimah”, Journal of Islamic Economics, Banking and Finance, Vol. 7 No.3, pp. 63-76.
Amin, H., Chong, R., Dahlan, H., & Supinah, R. (2007). An Ar-Rahnu shop acceptance model (ARSAM). Labuan E-journal of Muamalat and Society, 1, 82-94.
Azman, N. H. N., & Kassim, S. H. (2017), “Ar-Rahnu as a Source of Financial Sustainability for Women Micro-Entrepreneurs in Malaysia”, Journal of Islamic Monetary Economics and Finance, Vol. 2, No. 2, pp. 221-250.
Azli, R. M., Palil, M. R., & Nor, M. S. (2016), “Benefits-Sacrifices Exchange (BSX) in Islamic pawn broking transaction: An exploratory factor analysis”, International Journal of Business, Economics and Law, Vol. 10 No. 1, pp. 38-52
Azmi, A., Non, N., & Ab Aziz, N. (2017), “Challenges to Shari’ah equity screening, from Shari’ah scholars’ perspective”, International Journal of Islamic and Middle Eastern Finance and Management, Vol. 10 No. 2, pp. 229-242.
Bahari, N. F., Safii, Z., Ahmad, N. W., Fisal, S., & Shahar, W. S. S. (2015), “A Reviews on the Regulation and Conflicting Issues of Ar-Rahnu Operation in Malaysia”, in Proceeding of the 2nd International Conference on Management and Muamalah, 16-17 November 2015, Bangi-Putrajaya Hotel, Malaysia.
Balqis, Y. (2014), “Faktor-faktor yang mempengaruhi kesedaran usahawan kecil Muslim terhadap skim Ar-Rahnu (pajak gadai Islam)”, Doctoral dissertation, Universiti Utara Malaysia.
Bhatt, P., & Sinnakkannu, J. (2008), “Ar-Rahnu (Islamic pawning broking) opportunities and challenges in Malaysia”, paper presented 6th International Islamic Finance Conference (pp. 255-268).
Bhuiyan, A. B. (2013), “Microcredit and sustainable livelihood: an empirical study of Islamic and conventional credit on the development of human capital of the borrowers in Bangladesh”, Journal of Economic Cooperation & Development, Vol. 34 No. 3, pp.101.
Campbell, D. T., & Fiske, D. W. (1959), “Convergent and discriminant validation by the multitrait-multimethod matrix”, Psychological Bulletin, Vol. 56 No. 2, pp. 81.
Carter, S. P., & Skiba, P. M. (2012), “Pawnshops, behavioral economics, and self-regulation”, Review of Banking and Financial. Law, Vol. 32 No. 1, pp. 193.
Casu, B., & Molyneux, P. (2003), “A comparative study of efficiency in European banking”, Applied Economics, Vol. 35, No.17, 1865-1876.
Chapra, M. U. (2008), “The Islamic Vision of Development”, Thoughts on Economics, The Quarterly Journal of Islamic Economics Research Bureau (Bangladesh), Vol. 18 No. 3, pp. 7-38.
Cohen, J. (1988), “Statistical power analysis for the behavioral sciences”, Hillsdale, NJ: Erlbaum, pp.
Pellegrina, D. L. (2011), “Microfinance and investment: A comparison with bank and informal lending”, World Development, Vol. 39, No. 6, pp. 882-897.
Darmansyah, A., Nasution, R. A., Sutardi, A., & Zen, T. S. (2013), “Microfinance Institutions (MFIs) Profit Sharing Pattern for the Development of Micro and Small Enterprises (MSEs) in Indonesia”, Sains Humanika, Vol. 64 No. 2.
Farook, S., Hassan, K. M., & Lanis, R. (2011), “Determinants of corporate social responsibility disclosure: The case of Islamic banks”, Journal of Islamic Accounting and Business Research, Vol. 2, No.2, pp. 114-141.
Fornell, C., & Larker, D. (1981), “Structural equation modeling and regression: guidelines for research practice”, Jour
In-Text Citation: (Azman et al., 2020)
To Cite this Article: Azman, N. H. N., Zabri, M. Z. M., Masron, T. A., & Malim, N. A. K. (2020). The Adoption of Ar-Rahnu and Financial Wellbeing of Micro-entrepreneurs in Malaysia. International Journal of Academic Research in Business and Social Sciences, 10(6), 36–53.
Copyright: © 2020 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode