Borrowers’ Intention to Participate in Waqf Based Islamic Microfinance Schemes in Indonesia:An Approach through Islamic Moral Obligation, Empathy, and Trust in Institution
DOI:
https://doi.org/10.35891/zeaxbd17Keywords:
Islamic Microfinance, Productive Waqf, Waqf based IMFI Scheme, Microentrepreneurship Empowerment, Participation Intention (Niyyah), Islamic Moral Obligation, Empathy, Trust in Institution, Poverty Alleviation, BorrowersAbstract
Introduction: This study examines borrowers’ intention to participate in waqf based Islamic microfinance in Indonesia, particularly for small-scale entrepreneurship empowerment. Despite waqf’s potential for poverty alleviation, empirical evidence on public readiness and behavioral intention remains limited. This study adapts a model developed in Bangladesh by adding Trust in Institution as a key variable influencing borrowers’ intention.
Methods: A quantitative survey was conducted among prospective micro-entrepreneurs in rural Indonesia. A total of 280 respondents participated by completing structured questionnaires. Data were analyzed using Structural Equation Modeling (SEM) with SmartPLS-4. The variables included Islamic Moral Obligation, Empathy, Trust in Institution, favorable and unfavorable decision-making reasons, and Intention as the dependent variable.
Results: The findings show that Islamic Moral Obligation significantly influences Empathy, which strongly affects borrowers’ Intention to participate in Islamic microfinance. Trust in Institution also significantly reinforces participation intention, highlighting the importance of institutional trust in decision-making. Of the four mediating effects tested, two were statistically significant.
Conclusion and Suggestion: Theoretically, the study highlights the role of Islamic moral values and institutional trust in shaping Muslim communities’ economic behavior. Public education on productive waqf schemes and greater operational transparency by Islamic financial institutions are recommended to strengthen participation and community trust.
Practical Implications: The findings support waqf based financing models such as the Humanitarian Economic Loan Program (HELP), based on Qard al-Hasan. Such schemes can empower micro-entrepreneurs and support inclusive Islamic social enterprises.
Originality/Value: This study provides early empirical evidence on waqf based Islamic microfinance in Indonesia. The inclusion of Trust in Institution offers a novel perspective on participation in Islamic financial institutions.
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