Promoting the Adoption of Islamic Microfinance in Nigeria: The Moderating Role of Religiosity

Abstract

Islamic microfinance banks are generally known for promoting financial and social inclusion, especially in areas with low level of financial access resulting from either voluntary or non-voluntary factors. This paper, thus, examined the determinants of intention to adopt Islamic microfinance (IMF) in Nigeria, and the moderating role of religiosity between the constructs. The paper employed the proportionate stratified random sampling technique to collect data from 450 respondents, using close-ended questionnaires. The data was analyzed using Analysis of Moment Structures-Structural Equation Modeling (AMOS-SEM). The decomposed theory of planned behavior (DTPB) was used as the underlying theory to test six hypotheses. Results showed that intention to adopt Islamic microfinance is high in Nigeria, and attitude, subjective norm and perceived behavioral control were positive and significant in influencing the intention to adopt Islamic microfinance. Furthermore, religiosity was found to moderate the relationship between subjective norms and behavioral intention. Consequently, the study recommends the need for stakeholders in the Nigerian financial system to enhance advocacy aimed at improving public attitude towards Islamic microfinance banks. On their part, Islamic microfinance banks Islamic microfinance banks needs to expand their marketing operations, in order to promote adoption and social inclusion. Overall, the study provided additional insights to the growing literature of Islamic finance in Nigeria, which will assist in shaping Islamic microfinance policy. The study also showed the role of referents among highly religious people, in influencing the behavioral intention to adopt Islamic microfinance.