Access to Finance: Ar-Rahnu as an Alternative Financing to Enhance Financial Inclusion Among Women Micro Entrepreneurs in Malaysia

Abstrak

In Malaysia, the role of women microentrepreneurs is crucial for socio-economic development, poverty alleviation, and the provision of employment opportunities for the lower-income group. Nevertheless, access to finance remains a significant challenge for women micro-entrepreneurs, hindering their entrepreneurial growth and sustainability. Given the numerous financial institutions and government initiatives to foster entrepreneurship, these mechanisms often fail to address the barriers to formal credit. Many women continue to face challenges in accessing finance, such as poor credit records, a lack of formal documentation, and collateral requirements. These are the limitations that often hinder women’s ability to set up businesses, maintain, and grow their operations, thereby affecting their involvement in the economy and limiting their empowerment. To address these issues, this paper explored the role of Ar-Rahnu as an alternative financing option to enhance financial inclusion among women microentrepreneurs in Malaysia. A qualitative method was utilized to obtain an in-depth understanding of Ar-Rahnu as an alternative financing mechanism using semi-structured interviews with women microentrepreneurs in Kelantan. The findings of this study provide insight into the barriers to women’s access to formal financial services and highlight the role of Ar-Rahnu as an alternative financing mechanism for microenterprises. This study demonstrates the benefits for women micro-entrepreneurs, society, and Ar-Rahnu institutions, and highlights the role of Ar-Rahnu and its broader impact on women’s financial empowerment and financial inclusion in the context of Malaysia.