Reconstructing and empowering women entrepreneurs in developing country: the contribution of Islamic microfinance in post-COVID economic recovery and growth

Purpose The COVID-19 pandemic severely disrupted economic activities, which affecting micro-entrepreneurs in developing countries. This study aims to examine Islamic microfinance (IMF) and its impact on women entrepreneurs operating in rural areas of Malaysia, with a focus on post-COVID recovery assistance and the development of small and medium enterprises. Design/methodology/approach Data were collected from 330 rural women entrepreneurs in Malaysia who used IMF through a convenience sampling technique. The study integrated the theory of planned behavior with the innovation diffusion theory concept and applied “Partial Least Squares Structural Equation Modeling” for analyzing the data. Findings The salient points indicate that knowledge and perceived relative advantage are key in the acceptance and significant effects of social system norms and in women entrepreneurs’ actualization of IMF. In contrast, attitude, perceived complexity and subjective norms have no relevant impact. Furthermore, social system norms affect women entrepreneurs’ performance. Originality/value The paper’s results further contribute to academic understanding of the impact of IMF on women entrepreneurs in the post-COVID scenario. This achievement will further assist to Islamic financial institutions policymakers, and other financial bodies in devising better policies and a wide variety of microfinance products to foster economic recovery and encourage women’s entrepreneurship in the post-pandemic period. It is essential to confront the problems encountered by microfinance clients to optimize its potential impact. The solutions can enhance the accessibility and affordability of microfinance for low-income individuals and enterprises, thereby contributing to economic growth.