The Adoption of Ar-Rahnu and Financial Wellbeing of Micro-entrepreneurs in Malaysia

Vol. 10, No. 6, 2020, Pg. 36 - 53


Introduction
The world has seen increased growth in Micro Small Medium Enterprises (MSMEs) since the financial crisis in 2008 (World Bank, 2020) as MSMEs have been active in developing innovative products, create conducive networking services collaboration and upscaling their businesses.Indirectly, by empowering MSMEs, this paper will inevitably work our way towards achieving the United Nation's Sustainable Development Goals (SDGs): SDG #1 (no poverty), SDG #2 (zero hunger), SDG #3 (good health and well-being), SDG #5 (gender equality), SDG #8 (promote inclusive and sustainable economic growth, employment and decent work), and SDG #9 (improve sustainable industrialisation and fostering innovation).As a result of empowering MSMEs, the number of MSMEs is increasing (53%), and surprisingly, about 47% out of the total were involved in micro-enterprises (Figure 1).Besides the increasing number of MSMEs, there is a significant challenge that needs to be faced by MSMEs, especially micro-entrepreneurs, which is the shortage of capital or limited access to finance.The financing gap is depicted in Table 1.Due to this gap, the number of entrepreneurs who are applying for micro-financing is on the rise as reported by Bank Negara Malaysia in its 2019 Annual Report.Besides, the Malaysian government has decided to set RM3,000 as the poverty line basis for the urban poor (Zainal Azim et al., 2016) and hitherto, when the number of bottom-line community increases, theoretically, it will directly increase the demand for micro-financing.
Table 1.0 MSMEs Finance Gap in Malaysia (Volume, Million) No. of MSMEs (Demand) Current Supply MSMEs Finance Gap 91,390,116,799 69,935,901,865 21,454,214,934 Source: International Finance Corporation (2019) Micro-financial institutions in Malaysia provides cash or capital to the borrowers.Usually, the process of micro-financing only takes about one hour.After one hour, the borrowers can have their money and proceed with their daily business.Microcredit can be offered, often without collateral, to an individual or through group lending.In Malaysia, there are few micro-financing institutions such as Majlis Amanah Rakyat (MARA, established in 1966), Amanah Ikhtiar Malaysia (AIM, est. 1987), Yayasan Pembangunan Ekonomi Islam Malaysia (YaPEIM, est. 1993) and Yayasan Tekun Nasional (TEKUN, est. 1993). 1 The objective of the micro-financing loans is to assist the poorest in the lowincome family, particularly micro-entrepreneurs.
Another trend of micro-financing in Malaysia is Ar-Rahnu.These micro-credit schemes are trending owing to several reasons.First, it suits the specific financing requirements of the people in need (Ismail & Ahmad, 1997;Amin, 2011).Specific financing requirements mean utilisation of funds in a myriad of ways such as financing for wedding ceremonies, home and vehicle purchases, education, and investment.Second, Ar-Rahnu is hugely popular due to its quick service and approval, lower service charges, and simple procedures (Muhamat et al., 2011).Besides, difficulties in getting funds from the formal and commercial financial institutions have been among the main reason for customers to opt for Ar-Rahnu.These difficulties can mainly be attributed to the excessive bureaucracy of the funding agencies and formal financial institutions that tend to take a longer time to disburse the loans (e.g., three to six months) with various documentations.Besides, they impose a rather high cost of borrowing and high legal documentation fees (see Saleh and Ndubisi, 2006;Westover, 2008;Hassan et al., 2011, Zabri, 2012, Darmansyah, 2013, Abbas, Abdul Razak and Saad, 2014).
Nevertheless, Ar-Rahnu is also not without issues and has always been debated by scholars ever since its inception.Among the issues are on Shari'ah governance of Ar-Rahnu (Mulazid, 2012;Rasmin and Markom, 2014;Shah and Yaakob, 2016;Shater et al. 2017), the similarities between Ar-Rahnu charges and conventional pawnshops (Naim, 2004;Abdul Razak, 2011;Yaakob, 2014), the inclusion of Ar-Rahnu as micro-finance products (Mohamed, 1986;Ismail and Ahmad, 1997;Samsudin, 2002;Abdul Khir et al., 2012;Abdullah, 2012;Hisham et al., 2013;Bahari et al., 2015;Azman et al., 2017) and the efficiency of Ar-Rahnu (Samsudin, 2012).As these issues are still being deliberated among scholars, it is highly relevant for this study to review the Ar-Rahnu's acceptance factors despite its popularity.The acceptance factors of Ar-Rahnu have also been examined by scholars such as Amin et al. (2011), Sam et al. (2012), and Azman et al. (2017).Previous studies suggested that customers are still loyal to Ar-Rahnu and continue to patronise Ar-Rahnu services.Several customers believe that Ar-Rahnu is the only option to enhance their living (economically).Therefore, there exists an imperative that besides examining Ar-Rahnu's acceptance factors, we also need to examine the aftereffect of using Ar-Rahnu, especially in the aspect of the financial wellbeing of customers.It is because, previous studies have overlooked the output or impact of Ar-Rahnu adoption towards customers' wellbeing, especially in terms of financing wellbeing.Hence, there is an urgent call for a potential justification on how and to what extent customers of Ar-Rahnu institutions in Malaysia are successfully driven their living standards from B10 (hardcore poor) to B40 (low income).
The organization of this study is as follows.The next section will review past studies on Ar-Rahnu adoption variables and Ar-Rahnu financing's impact on customers' wellbeing.In the proceeding section, this study explains the methodology used and in the fourth section, this study analyses the factors that theoretically and empirically justify the importance of determining the The Economic Fund for National Entrepreneurs Group and The Malaysian Islamic Economic Development Foundation respectively.financial wellbeing of Ar-Rahnu adoption.Subsequently, a discussion on the results and conclusion section concludes the study.

Literature Review Ar-Rahnu and Financing Well-being
The ultimate objective of Ar-Rahnu institutions is to enhance its customers' financial wellbeing.According to Chapra (2008), Ar-Rahnu could be one of the financial instruments that can ensure individual, society, and economic justice by practising the equitable distribution of income and eradicate poverty.This benefits an individual's well-being by assisting customers with their consumption (bill payments, housing-related expenses, emergency-related expenses, and expenses for ceremonies).Apart from this, Meera (2010) highlights that Ar-Rahnu also could enhance the individual well-being as it increases awareness on wealth management purposes such as saving, starting a new business, expanding the existing business, and buying a house for investment.
Generally, financing wellbeing is defined as having financial security and financial freedom of choice, at present and in the future.In the context of this study, financial wellbeing can be defined as the Ar-Rahnu financing that will affect micro-entrepreneurs in either upscaling or downscaling their businesses, having enough money to cover basic expenses, and have extra money at monthends.
As indicated by Abdul Razak (2011), about 70 percent of the Ar-Rahnu customers are agreeable with the positive role of financing in improving their economic situation.In term of economic wellbeing, Azman et al. (2017), found that Ar-Rahnu benefits women micro-entrepreneurs by helping to expand (increase the branch of business) and diversify (increase the line of product offering of) their businesses.Even though there are other options to obtain cash, yet Ar-Rahnu is preferred by women micro-entrepreneurs as it provides instant cash, operated using simpler procedures, and is easily accessible.

Shari'ah Governance of Ar-Rahnu
Shari'ah (Islamic jurisprudence) is a sacred law of Islam as it is derived from the Quran and Sunnah.2On the other hand, Shari'ah governance (SG) is a set of institutional and organizational arrangements through which Islamic Financial Institutions (IFI) ensure that there is effective and independent oversight of Shari'ah compliance over the issuance of relevant Shari'ah pronouncements, dissemination of information and an internal Shari'ah compliance review (IFSB, 2018).Based on the given definition, an IFI needs to have a Shari'ah board to review and ensure all financing transactions or procedures (such as products, instruments, operations, practices, management) to comply with Shari'ah (Mansour, 2019;Umar et al., 2018;Azmi et al., 2017;Farook et al., 2011).This Shari'ah compliance practices will directly boost the confidence of the shareholders and the public.
Ar-Rahnu is a Shari'ah-compliant concept.Ar-Rahnu uses the concepts of Wadiah Yad Dhamamah, Qardhul Hassan, and Ujrah in its transaction, indirectly eliminating the elements of Riba and Gharar (see; Ismail & Sanusi, 2005;Amin et al., 2007;Sharif et al., 2013).This means that failure to comply with the Shari'ah principles will fail to achieve the objectives of Ar-Rahnu.In this regard, there is a need to ensure the correct application and implementation of the Islamic concepts of Wadiah Yad Dhamamah3 , Qardhul Hassan4 , and Ujrah5 .These Islamic principles will make Islamicbased pawnshops distinguishable from the conventional ones and would be more appealing to customers who are very concerned with Shari'ah-compliance requirements (Ismail & Sanusi, 2005;Amin et al., 2007).These Islamic contracts benefited customers of Ar-Rahnu in terms of valuing customers' assets adhered to Shari'ah without manipulative tactics (abusive lending).According to the Islamic contracts also, the welfare of the customers is taking care of by Ar-Rahnu.For example, Ar-Rahnu offering loan without interest, low storage fees, and informing customers before lender sell the collateral and excess yield will be given back to customers.

The Uniqueness of Ar-Rahnu
This study highlights a few features of conventional pawnshops, which differs from Ar-Rahnu.The primary motivation of the conventional pawnshops is profit rather than the welfare of the customers (Ismail & Ahmad, 1997;Carter & Skiba, 2013;Mohd Hussin et al., 2016).The key requirement for large profits is the rapid turnover of capital or, in other words, fast redemptions (Whelan, 1979).In contrast, while Ar-Rahnu is also profit-oriented, they are also working towards welfare-improvement by assisting those in need.The differences of conventional pawnshops and Ar-Rahnu have been highlighted by several scholars such as Muhamad et al. (2019), Azim et al. (2016), Zuraini, and Salleh (2014), Naim (2004), Bhatt (2008) andAbdullah (2008).These scholars elucidate on the mechanical differences between conventional pawnshops and Ar-Rahnu.In a similar vein of the conventional pawnshops, the mechanism of Ar-Rahnu also has three stages.There is a lending process, redeeming process, and auctioning process.
During the lending process at conventional pawnshops, the customer must have a valid identification card, which affirms that a customer's age must be 18 years and above.The pawnbroker will not assess the customer's credit risk, such as credit scoring, but focuses on evaluating the collateral's value.The collateral is important during the lending process to determine the amount of loan that can be disbursed.Usually, conventional pawn broking accepts collateral in the form of jewellery and valuable electronic devices.As documented by Carter and Skiba (2013), about 49 percent of pawnshop loans are collateralised with jewellery, with most of the items in the jewellery category consisting of rings, including both men's and women's class and wedding rings.The next most popular category of pledges is televisions and electronics, including satellite dishes, stereos, and CD players.Customers also commonly pawn tools, household items such as small appliances, sporting equipment, guns, musical instruments, and camera equipment (Shabbir, 2019).
After the pawnbroker accepts the collateral, the fixed interest rate of two percent per month will be imposed on the customer as stated in the Pawnbrokers Act 1972, Section 17(1) (Suhana et al., 2016).The pawnbroker will then issue a pawn ticket as a proof of transaction.The pawn ticket records the customer's particulars such as the customer's name and address, a description of the collateral, the amount lent, the maturity date, and the amount that must be paid to redeem the assets.Usually, the six-month maturity period is given to customers to redeem the collateral.An extension is generally granted, but the customer must pay the previous interest rate first before continuing with the extension period.
Unlike conventional pawnbroking, the customers approach the Ar-Rahnu to place their jewellery under the principle of the Ar-Rahnu contract.Ar-Rahnu gives an interest-free loan to the customers based on the Qard contract.The maximum loan amount offered to the customers is about 70 percent of the gold value.The pledged gold is known as 'Marhum', which is kept by the Ar-Rahnu operator under the principle of Wadiah Yad Dhamamah.At this stage, the customers need to pay for service charges based on the Ujrah principle.Customers paid the service charges during the settlement of the financing.Typically, the service charges imposed by Ar-Rahnu are lower than the 2 percent imposed by conventional pawnshops.During the storage period, the Ar-Rahnu is liable to guarantee the pledged asset in case of damage.
The second stage is the redeeming process.During the redeeming process, the pawnbroker will deliver the pledged items to any person who presents the pawn ticket.If the customer is not able to redeem their pledge items in the specific period given, the pledged items will become the property of the pawnbroker if the pawned value does not exceed RM 200.The pawnbroker can dispose of the pledged items via auction if the value of the pledged items exceeds RM 200 (Pawn Broking Act, 1972).In Ar-Rahnu, during the redeeming process, the customer is required to bring the pawn receipts and pay for the loan plus with the safekeeping fees.If a customer is unable to pay for the loan, the Ar-Rahnu operator allows the customer to apply for an extension for another three months (Bhatt & Sinnakkannu, 2008).However, if a customer fails to pay within the extension period, the Ar-Rahnu operator has the authority to auction the pledged asset to pay off the loan.
The auctioning process is the final stage.In conventional pawnshops, the auction process will be handled by a licensed auctioneer (Abdul Razak, 2011).Unfortunately, in most cases, the licensed auctioneer usually collaborates with the pawn dealer on the auction-pawned items by valuing the pawned items at meagre prices resulting in a loss for the pawner, earning nothing after the auctioned process (Sulaiman et al., 2014).This can be avoided if the conventional pawnbroker uses proper documentation and is genuine or truthful to the borrower.At the same time, the borrower must also know his/her rights before engaging in such transactions so that they are not facing fraud and coercion.On the other hand, the auction method in Ar-Rahnu, as stated in the Pawnbrokers Act 1972 (Section 18): 'Auction can only be done by a licensed auctioneer.The pawnbroker must inform the pawner by post regarding the date, time and place of auction.An announcement that an auction will be held must be publicized.The pawnbroker and borrower can buy the article that is being auctioned.Auctioned articles become the property of the buyer'.Before the auctioning process, the Ar-Rahnu operator will send a letter to inform the customer about the auctioning process, i.e. the time, date, and location of the auction.In the case of surplus after the loan has been settled, the excess fund will be returned to the customer.In contrast, in the case of insufficient cash after the auction, the customer needs to pay the balance.

Efficiency of Ar-Rahnu
The efficiency of Ar-Rahnu institutions is an essential element to be addressed due to the drastic increase in the number of Ar-Rahnu outlets in Malaysia.Since Ar-Rahnu is an alternative to conventional pawn broking, there is a need to measure its effectiveness so that its existence in the financial market can be sustained (Ismail & Maamor, 2014).Therefore, this study intends to investigate the efficiency of Ar-Rahnu institutions and to link it with the ability to provide funds to the society in need.As discussed by previous studies, few factors can affect the efficiency of Ar-Rahnu, namely as Ar-Rahnu outlets' competitors (Yafeh & Yosha, 2001), size of Ar-Rahnu outlets (Casu and Molyneux, 1998;Souza et al., 2003;Stavarek, 2003;Chang and Chiu, 2006) and financial self-sufficiency (Alufohai, 2006;Chan et al., 2007;Bhuiyan, 2013;Nik Azman et al., 2017).
As mentioned by Yafeh and Yosha (2001), the competition of Ar-Rahnu outlets is one of the factors that affect its efficiency.According to Ismail et al. (2001), the competition will arise when new players see the profitability and sustainability of the Ar-Rahnu market.This could result in a positive and healthy impact as it encourages Ar-Rahnu operators to foster good relations and work harder to gather, retain as well as expanding its customers' base.The competition factor is also being supported by Berger et al. (2001) and Elsas (2005).
Firm size (i.e. the size of Ar-Rahnu outlets) is an essential factor for Ar-Rahnu efficiency towards Ar-Rahnu adoption.Previous studies such as Souza et al. (2003), Stavarek (2003), andChang andChiu (2006) found that the positive impact of the outlet size towards efficiency.Stated differently, the larger the outlet size, the larger the number of customers the outlet has.This indirectly will benefit the Ar-Rahnu institutions in terms of economies of scale as the larger Ar-Rahnu institutions can offer cheaper services to the customers.
Financial self-sufficiency is also one of the indicators for Ar-Rahnu efficiency.Financial selfsufficiency indicates whether their revenue is sufficient to cover both direct costs (financing costs, provisions for loan losses and operating expenses) and indirect costs (adjusted cost of capital) (Maamor & Ismail, 2010;Brau & Woller, 2004).In short, financial self-sufficiency reflects an entity that can meet its current needs without compromising the ability to cover for their future needs (Bhuiyan, 2013).Besides, Bhuiyan (2013) also clarifies financial self-sufficiency as an individual's ability to cope recover from external stress and shocks, while enhancing the capabilities for the present and future.Financial self-sufficiency can be measured by the number of customers per operating costs.In other words, the efficiency of Ar-Rahnu can be measured via loan disbursement at a very minimum cost.

Methodology
This research uses quantitative methods in acquiring data and information through a survey from October to December 2019.The population for this study is Ar-Rahnu customers who are directly involved with Ar-Rahnu institutions.To obtain insights from Ar-Rahnu users, especially those from B40 (low income) and M40 (middle income), the location for this research is in Penang and Kedah, two states located in the northern region of Peninsular Malaysia.In conducting the survey, the sampling method is based on purposive sampling as the simple random sampling would not be able to achieve the study objective.In order to determine the sample size of this study, a power analysis was used to calculate the sample size.Therefore, this study used power analysis (G*Power) to determine the sample size at the required 95% confidence level (Figure 2).2010), 100 is considered as sufficient size for a small sample.The primary data then be analysed by using IBM SPSS for preliminary analysis and Structural Equation Modelling (SEM) by using Smart PLS to test the hypothesised relationships.As documented by Ullman (2006), SEM also allows a set of relations between one or more independent variables (IVs), either continuous or discrete, and one or more dependent variables (DVs), either continuous or discrete, to be examined.Figure 3.0 Ar-Rahnu's Adoption and Financial Wellbeing

Analysis and Results
The questionnaires were distributed to 150 respondents.However, only 125 questionnaires were useable.Based on Table 2.0, slightly more than three quarters (68%) of the respondents are female.Most respondents are married (64%), and four respondents (4%) are single mothers.Malay is the highest ethnicity among the respondents (90%).In terms of age, a significant proportion of respondents are in the age range of 26-35 years old (51%), followed by 36-45 years old (34%), 46-55 years old (13%), and 56-65 years old (2%).Stated differently, the utilisation of Ar-Rahnu is relevant and wide-ranging across all age groups.Besides, in terms of education level, users of Ar-Rahnu are predominantly having at least a secondary level of education (98%).Surprisingly, while collecting the data, several Ar-Rahnu users even have postgraduate degrees (Master and PhD) (12%).Nevertheless, not surprisingly, almost half of the respondents (45%) are of the RM 1001 and RM 2000 income bracket and thus, putting them as an urban poor according to the Department of Statistics, Malaysia (Table 1).This study then further reviewed the measurement model.As indicated in Table 3.0, according to Hair et al. (2010), convergent validity is the degree to which indicators of a specific construct converge or share a high proportion of variance in common.This study assesses the convergent validity by following indicators suggested by Hair et al. (2017). Hair et al. (2017) proposed to have more than 0.5 for average extracted variance (AVE), cut off value for factor loading is 0.5 and all composite reliability (CR) is greater than 0.7.The loadings for all items are 0.5 and above, and the item loadings of less than 0.5 were subsequently dropped.However, it does not exceed the 20% threshold as recommended by Hair et al. (2010).All in all, AVE more than 0.5, and CR is greater than 0.7 after the process of items deletion.At this stage, it is concluded that the construct meets both reliability and convergent validities.Note.UN1, UN3, EF1, EF10, AFO10, AFO7, and AFO9 were deleted due to low loading.
Subsequently, the study assessed the model's discriminant validity.Ideally, items should load more strongly on their constructs than on other constructs in the model.Apart from that, the average variance (AVE) shared between each construct, and its measures should be greater than the variance shared between the construct, and its measures should be greater than the variance shared between the construct and other constructs (Fornell & Larker, 1981).Table 4.0 exhibits the study's discriminant validity.739 After examining the validity and reliability of the model, it is important to assess the direct hypotheses suggested in the study.This study developed four (4) hypotheses between the construct.In order to test the significance level, t-statistics for all paths are generated using SmartPLS 3.0 bootstrapping function.Based on Table 5.0, three relationships are found to have t-value>2.33,and thus, making these relationships significant at 0.01 level of significance.One relationship is found not significant (H1).Among all, the predictor of Efficiency (β=0.525,p˂0.01) shows the strongest relationship towards Ar-Rahnu adoption.The R 2 value of 0.425 is above the 0.26 value, as suggested by Cohen (1988), which indicates a substantial model.Nevertheless, Shari'ah governance (β=-0.152,p>0.10) shows an insignificant relationship towards Ar-Rahnu adoption.Therefore, only H2 and H3 are supported while the study failed to reject H1.Besides, this study further assessed the relationship between Ar-Rahnu adoption and financing wellbeing (β=0.742,p<0.01).It represents a significant relationship, demonstrated by the R 2 value of 0.546 or 54.6%, which is higher than the recommended value of 0.26 (Table 5).Thus, H4 is supported.The study then proceeded to assess the effect size (f 2 ).As mentioned by Sullivan and Fein (2012), the p-value only tells readers on the existence of the effect size, but it does not reveal the size of the effect.Therefore, it is important to report both the substantive significance (effect size) and statistical significance (p-value).To measure the effect size, Cohen (1988) suggested the following guideline to measure effect size: 0.02 (small effect), 0.15 (medium effect), and 0.35 (large effect).Based on Table 5.0, both efficiency (0.350) and Ar-Rahnu's adoption (1.226) factors have a large effect size, whereas uniqueness has a medium effect (0.170) and Shari'ah governance has a small effect (0.024) in producing R 2 .Stated differently, the omission of these two constructs will give a substantive impact on the model.It also highlights the importance of these two constructs, and therefore, future study should include these two constructs in measuring financial wellbeing.

Discussion
Ar-Rahnu is getting greater recognition especially among the Malay-Muslim community due to its ability to assist those in need, especially from the bottom line of the community, such as the lowincome group who faces insufficient cash, has emergency needs and is excluded from the mainstream financial institutions (Razak, 2011;Ismail & Ahmad, 1997).There are many Ar-Rahnu providers in Malaysia operated by different institutions, either operationalised by banking or non-banking financial institutions.Even though there are other options to obtain cash, yet Ar-Rahnu is the most preferred by customers as it provides instant cash, has simple procedures, and is easily accessible.Although the relationship between acceptance and adoption of Ar-Rahnu has been investigated in previous studies by Amin et al. (2007);Mohamad et al. (2014); Salleh (2014), and Yahaya et al. (2019), evidence on the link between the adoption of Ar-Rahnu and financing output is still scarce.There is a limited number of previous studies investigating the financing outcomes which involve individuals, society, and the overall economy, with the exception of Salleh (2014), Nik Azman et al. (2018), andYahaya et al. (2019).Besides, it is important to note that married respondents greatly used Ar-Rahnu than single or widows.This might be due to married respondents requiring more expenses, not only for business purposes, but also to cater to family expenses, child-rearing demands, and high costs of living (Johnson and Johnson, 1998;Schrader, 2000 andAbdul Razak, 2011).
The finding of this study has both theoretical and managerial implications.Theoretically, the overwhelming majority of the studies believed Ar-Rahnu is an enabling tool for the poor and bottomline community.Several studies, such as Abdul Razak (2011) highlighted Ar-Rahnu users consist of the poor level of education.On the contrary, Sharif et al. (2013) mentioned that customers with strong educational background would possess better economic and financial circumstances, and hence, has little to no need for instant cash through Ar-Rahnu as they could easily access other types of formal financial assistance to meet their needs.Notwithstanding, this study departs slightly from previous studies as almost half of the respondents are having a strong educational background (diploma, undergraduate, and postgraduate degrees).Stated differently, Ar-Rahnu is no longer exclusively serving the niche market of poor and uneducated people that it was once touted to be.More worryingly, it may also mean that Ar-Rahnu may no longer be focusing on the poor, who usually has a higher default risk profile.Apart from that, it is equally interesting to note that about one-third of the respondents are men.It can also be inferred that the acceptance and awareness of Ar-Rahnu utilization have reached male population and indirectly disputes the argument by Nik Azman et al. (2017) that men would not consider Ar-Rahnu financing as they may feel disgraced associating themselves with an institution that was more popularly associated with women in Malaysia.
There is a need to ensure the correct operationalisation of the Islamic concepts of Wadiah Yad Dhamamah, Qardhul Hassan, and Ujrah at Ar-Rahnu's institutions (Ismail & Sanusi, 2005;Amin et al. 2011;Yahaya et al. 2019).These Islamic principles will make Islamic-based pawnshops distinguishable from the conventional ones and would be more appealing to customers who are very concerned with Shari'ah-compliance requirements.Surprisingly, however, instead of strict adherence to the Shari'ah principles, the finding shows that Shari'ah governance has a negative relationship with Ar-Rahnu's adoption.This is in stark contrast to the previous literature (i.e., Omer 1992;Metwally, 1996;Amin 2011;Abdul Hamid et al., 2014;Loon Koe et al., 2012;Nik Azman et al., 2016) which mentioned the positive relationship between religious obligation and the use of Ar-Rahnu.At this point, one can only speculate.And the authors reckon that there might be two extreme, possible explanations to this finding.First, the customers are so familiar with the Ar-Rahnu operations that they no longer view Shari'ah Governance as important as it was once used to matter to them.In short, it has become second nature to them that even the complicated Arabic contractual terms and operationalisations, which are pervasively used in non-Arabic speaking countries such as Malaysia are no longer an issue.Second, the customers are somewhat worried about Shari'ah Governance (or lack thereof) by Ar-Rahnu providers.For example, there have been well-documented cases of mismanagement and misappropriation of funds by one of the largest Ar-Rahnu providers in Malaysia.
Consistent with earlier expectations, the other two constructs of this study, the uniqueness of Ar-Rahnu and the efficiency of Ar-Rahnu show a significant positive relationship towards the adoption of Ar-Rahnu.In terms of the uniqueness of Ar-Rahnu, customers might be aware of the different processes and procedures applied by Ar-Rahnu.A potential explanation for efficiency could be that these respondents have enjoyed a good experience and are comfortable in using Ar-Rahnu.A good experience may relate to the quick response to customer demands, always ensuring the security and confidentiality of each transaction and giving fair treatment to all irrespective of the customer's race, religion or creed despite it being rooted deeply in Shari'ah.Besides, Ar-Rahnu officers always fulfil the promise of its services promptly and also try to minimise work errors as well as issuing receipt(s) after each transaction.These value-added services and personal bonds build personal attachment as well as fostering a relationship with Ar-Rahnu's providers.The results of this study are in agreement with previous research such as Mansor et al. (2014), who supported the link between efficiency and use of Ar-Rahnu.Besides, Muhamad et al. (2019) highlighted the importance of respecting customer's trust by maintaining a reliable and trustworthy service.Respecting customers' trust and understanding how the customer views service quality is essential in ensuring an effective relationship with customers (Mohamad et al., 2014;Mansor et al., 2014;Bedi, 2010;Abdullah, 2010;Oliver, 1994).

Conclusion
Ar-Rahnu is well-known for its easy access by the marginalised segment of society.Consequently, it is no wonder that it has been a mainstay and provide a positive impact on its users.The literature has been highlighting the positive effects of Ar-Rahnu upon its users (Amin, 2011;Azman et al., 2016;Hussin et al., 2016;Yahaya et al., 2018;& Muhamad et al., 2019).Notwithstanding, there has been little attempt in investigating the 'how' or 'to what extent' questions.This study, therefore, included this wellbeing factor in objectively measuring whether Ar-Rahnu achieves what it originally sets out to achieve-improving the wellbeing of its users.The users find that Ar-Rahnu has a positive impact on their socio-economic lives.Be it in their children's education (C1), debt settlement (C4), reducing unemployment (C7), and social problems that usually comes with it (C8), and more importantly, help to their businesses' breadth and intensify their depth (C9 and C10).These positive findings then can be added into the contextual contribution to the body of knowledge-especially in empirically investigating the positive effect of Ar-Rahnu have on the lives of its users.Besides, this kind of positive findings can also be highlighted by Ar-Rahnu operators in its marketing effort, emphasising the positive socio-economic impact of Ar-Rahnu and instead of merely focusing on the competitive rates as compared to the conventional pawnshops or its Shari'ah-compliancy aspect.
Notwithstanding, this study only investigates a direct relationship without involving mediating or moderating variables (indirect effects), therefore for future research; this study proposes to explore the moderating or mediating effect of self-inclusion (voluntary and involuntary basis).Voluntary users of Ar-Rahnu can be defined as customers who voluntarily partake in Ar-Rahnu as a medium of financing.This might be due to insufficient income, discrimination, rotating capital, and simpler procedures.On the other hand, the involuntary users are known as customers who are against using Ar-Rahnu in the first place but have no other viable option except Ar-Rahnu.This might be due to reasons such as being blacklisted or declared as bankrupts or excluded from the formal financial service providers.This involuntary group should be given comprehensive attention as it might be categorised as a group that has a greater inclination to default in servicing their payments.

Figure
Figure 2.0 G*Power Sample Size