Borrowers’ intention to participate in Islamic small entrepreneurship

Purpose The main purpose of this paper is to explore the borrowers’ intention to participate in small entrepreneurship based on Islamic principles. In doing so, this study has conducted an investigation in the case of a new Waqf -based model for Islamic microfinance in Bangladesh, which targets extending loans to the rural poor to alleviate rural poverty in society. Design/methodology/approach The researchers used the survey technique to investigate the microentrepreneurs’ intention to participate in this new Islamic microfinance scheme. A total of 290 responses were collected from the rural poor located in three different districts of Bangladesh and the participation of respondents was on a voluntary basis. The structural equation modeling technique was used to analyze the data using the SmartPLS-3 software. Findings Findings of the study indicate that Islamic moral obligations are observed to be substantially significant to influence empathy, favorable and unfavorable reasons to participate in the scheme. In turn, empathy is also found to be robust to influence intention or niyyah toward borrowing microfinance to initiate microentrepreneurship. However, among the four mediating effects, only two are found to be statistically significant. Research limitations/implications Theoretical implications suggest that Islamic moral obligations remain at the core of the present research model. The significant impact of this variable implies that Islamic moral values and obligations are substantially important for the people in Bangladesh who strictly follow Islam in their daily lives. The research recommends the necessity for an awareness program on Islamic microfinance and the role of a Waqf -based scheme in the economic empowerment of the rural poor in society. Practical implications This institution practically implies harnessing the role of the Waqf -based philanthropic scheme to empower microentrepreneurs in society to alleviate poverty. Practical implications also highlight that Humanitarian Economic Lending Program (HELP) is a new type of Islamic microfinance institute based on Karz-e-Hassanah scheme and started in a small business initiative. In this study, one of the most important findings is that most people are strongly concerned about reasons, which may help the founder of HELP to propagate its branches across Bangladesh. Social implications The model of this scheme may empower poor microentrepreneurs and consolidate the potential of a Waqf -based scheme for attaining socio-economic development. This fund may be used for social Islamic business as well. Originality/value Only a few studies have been directed on microfinance from an Islamic perspective in Bangladesh. This is the first initiative for a new scheme to be verified using an empirical method. Thus, testing the viability of this scheme in the Bangladesh context will certainly add value to the clients, institutions and policymakers in the Islamic microfinance paradigm.