This paper aims to explore the perception of micro-entrepreneurs towards the adoption of\nequity-based financing models in Malaysia. The investigation has covered the following\ncharacteristics of equity-based financing such as fairness, partnership, risk sharing, business\nsize, and MFI. The current micro-financial products in Malaysia are focusing more on\ndebt-based financing, which is holistically increasing the financial risk level of entrepreneurs\nin the case of defaults. There is a dire need to identify the relevancy and viability of\nequity-based financing in Malaysia, it will ultimately reduce the financial risks of\nentrepreneurs in case of default. The Islamic financial concept offers a solution to this\nproblem, Musharakah and Mudarabah are among the other Islamic products that offer\nequity-based micro-financing to entrepreneurs. However, its practical implementation is still\nvague. In relation to this, the study adopts a cross-sectional study with a sample size of 700\nmicro-entrepreneurs from the state of Selangor Malaysia. The results of this study found that\nmicro-entrepreneurs tend to register a positive perception of the characteristics of\nequity-based financing and risk-sharing score as the highest factor towards the adoption of\nthe proposed equity-based PLS model in Malaysia.
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