Micro-takaful Adoption: Application of Perceived Characteristics of Innovation (PCI) Theory

Abstract

For religious reasons, many low-income Muslim households may choose not to use conventional microfinance. This study seeks to identify the determinant factors of adoption of micro-takaful among the members of Islamic informal insurance arrangements. Very few studies examined the factors that affect micro-takaful adoption using the theory of perceived characteristics of innovation (PCI) and among the members of informal insurance arrangements in Africa. This study investigated several factors that affect the adoption of micro-takaful. Primary data was obtained from 654 informal insurance service users in different regions of Ethiopia. One of the key findings of this study revealed that social networking in the extant informal insurance system has a significant and positive influence on the intention to adopt micro-takaful. Besides, perceived compatibility, perceived results demonstrability, and perceived voluntariness were found to significantly impact adoption intention. Contrary to the existing literature, perceived relative advantage, perceived complexity and perceived cost were found to have no significant impact on the intention to adopt micro-takaful. The findings of this research will have theoretical and practical significance.