Asian Social Science; Vol. 11, No. 27; 2015

 

AN ESTIMATION OF MARKET SIZE FOR MICROFINANCE   STUDY ON THE URBAN MICROENTREPRENEURS IN SELANGOR, MALAYSIA


Salwana Hassan , Md. Mahmudul Alam & Rashidah Abdul Rahman

 

Abstract  

Malaysia is a fast growing developing country where majority of the people are Muslim. Due to the religious bindings, Muslim prefers Shariah compliant Islamic credits instead of conventional interest based credits. At the same time, non-Muslims can also consider Shariah compliant Islamic credit because it is considered as the ethical credit. However, still many micro entrepreneurs are not receiving the Shariah compliant Islamic microfinance products because they have negative perceptions about the credit and interest (riba). Therefore, this study aims to assess the demand for microfinance among the micro entrepreneurs in the State of Selangor, Malaysia and thus, determine the potential market size. Data of the study were collected based on a questionnaire survey from 550 micro entrepreneurs from the urban areas of Selangor. It was found that only 12.2 per cent of them received microfinance from various microfinance institutions and banks. However, the study found that still there is potential for microfinance borrowing with around 55,000-128,000 microenterprises in Selangor, Malaysia. Therefore, Islamic microfinance institutions should try to expand their market size by promoting these potential microfinance borrowers among the existing micro entrepreneurs.