Financial Inclusion and COVID-19 Effects on Financial Well-Being of Amanah Ikhtiar Malaysia’s Micro-Entrepreneurs

The COVID-19 pandemic increased the vulnerability of low-income micro-entrepreneurs, particularly women who rely on microfinance as a pathway to financial inclusion and improved financial well-being. This study examined the effects of financial inclusion and Amanah Ikhtiar Malaysia (AIM) micro financing adoption on financial well-being among women micro-entrepreneurs, as well as the mediating role of micro financing adoption and the moderating role of COVID-19 consequences. A cross-sectional survey was conducted among 278 women micro-entrepreneurs who were active AIM borrowers from the Tapah and Tanjung Malim branches in Perak, Malaysia. Data were collected using self-administered questionnaires and analysed using descriptive statistics and the PROCESS macro in SPSS. The results showed that financial inclusion had a strong and significant positive effect on AIM micro financing adoption. Both financial inclusion and micro financing adoption significantly improved financial well-being. Further analysis revealed that AIM micro financing adoption partially mediated the relationship between financial inclusion and financial well-being, indicating that financial inclusion enhanced financial well-being both directly and through increased use of micro financing. However, COVID-19 consequences did not significantly moderate the relationship between micro financing adoption and financial well-being. These findings highlight the important role of financial inclusion and microfinance in improving the financial well-being of low-income women micro-entrepreneurs, even during periods of economic disruption.