Intention to Use the Islamic Micro-Investment Model in Nigeria: Empirical Evidence

Abstract

Microfinance was celebrated as an effective tool for poverty alleviation. However, evidence shows that it has been charging high interest rates and exploiting poor income earners. Islamic microfinance, on the other hand, appears too expensive and pursues debt-like contracts that are tantamount to riba.

In the case of Nigeria, conventional microfinance has failed to serve the needs of majority poor. Developing an Islamic micro-investment model (IMIM) based on genuine partnership contracts is deemed an appropriate option to overcome the challenges of the existing microfinance institutions.

This study develops and tests the Islamic micro-investment model [IMIM based on the theory of reasoned action (TRA)]. The study uses structural equation modelling to examine the applicability and acceptance of the model in Kano State, Nigeria. The result shows that the model fits the data well and that attitude is the major determinant of intention to accept the IMIM among users.