What drives microfinance adoption among rural MSMES? a configurational FSQCA approach

Financial inclusion and business resilience in Sabah, Malaysia, continue to face significant challenges, as acceptance of microfinance services among rural micro, small, and medium enterprises (MSMEs) remains uneven. This study analyses the interaction among attitude, subjective norms, perceived behavioural control, perceived benefit, perceived risk, and entrepreneurial motivation to predict high and low intentions to adopt microfinance. A total of 135 rural MSME operators in Sabah were surveyed, and the data were analysed using fuzzy-set Qualitative Comparative Analysis (fsQCA). The necessity analysis reveals that none of the conditions is strictly required for high intention, but attitude and subjective norms are highly relevant. The sufficiency analysis reveals three equifinal configurations that result in high intention, and the core configurational condition that is common across the solutions is favourable attitude. Low intention, on the other hand, is primarily associated with a lack of perceived benefit, suggesting a causal asymmetry between high and low intention. This study has revealed that the intention of the rural MSMEs to adopt microfinance is not based on a single predictor, but on various combinations of social, cognitive, motivational, and risk factors. The study enriches the microfinance and financial inclusion literature by highlighting the importance of a configurational approach and can inform the design of more targeted, trust-building, and capability-enhancing interventions by MFIs and policymakers for rural entrepreneurs.