Factors Affecting the Acceptability of Islamic Micro-Finance in Emerging Economy

Abstract

Purpose: Microfinance institutions impose a very high interest rate only to enhance the wealth of owner of the institution and stockholders. However, Islamic microfinance is the opposite of traditional microfinance; it is a form of interest-free financing dedicated to societal well-being. The research's primary objectives are to identify public knowledge of Shariah-based microfinance and ascertain the factors that contribute to the acceptance of Islamic microfinance in Pakistan. Design/Methodology/Approach: This study investigated the significance of shariah-based microfinance in Pakistan, which is based on the Islamic financial system, and used a quantitative descriptive technique to estimate the factors. Findings: There are several factors that give to the acceptability of Islamic banking. The most important variables are: cost-benefit analysis, business support, product and service quality, religious obligation, awareness and knowledge, trust and reputation. After an examination of all the acceptability factors, it was found that each factor has an effect on the acceptability of Islamic microfinance in Pakistan. Implications: The study has various implications for policymakers wishing to promote Islamic microfinance at the national and international level.