Use of bounded rationality theory to understand participation of women in Islamic microfinance

Abstract

The prime objective of this paper is to understand the participation behaviour of rural poor women in Islamic microfinance pursued with an aim to build up successful micro-entrepreneurship. In so doing, the study employs a new theory of boundedly rational planned behaviour (TBRPB) to formulate a research framework. Data (n = 390) were collected from the women borrowers of an Islamic microfinance institute, the Rural Development Scheme (RDS) in Bangladesh, following a simple random sampling procedure. Structural equation modelling (SEM) was utilized to analyse the data through AMOS software. The findings suggest that the attitudes and normative perceptions of the rural women are highly significant in influencing their subjective rational plan towards participation in the institute, which has been effectively helping build up successful micro-entrepreneurship.