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To What Extent do Joint Liability Models and the Theory of Planned Behavior Explain Repayment Behavior in Microfinance?

Author

Listed:
  • Wan Nor Aisyah Wan Yussof

    (Academy of Contemporary Islamic Studies, MARA University of Technology Malaysia, Cawangan Negeri Sembilan)

  • Wan Hakimah Wan Ibrahim

    (University Sultan Zainal Abidin, Malaysia)

  • Adibah Bahori

    (Academy of Contemporary Islamic Studies, MARA University of Technology Malaysia, Cawangan Negeri Sembilan)

Abstract

Microfinance has become a pivotal instrument for promoting financial inclusion among underserved communities, with repayment performance recognized as a key determinant of institutional sustainability. This study investigates repayment behavior in group lending settings, exploring whether high repayment rates necessarily reflect full compliance by all members or mask instances of free riding, and examining the factors that shape repayment decisions. Drawing on two dominant theoretical perspectives—the Joint Liability Model (JLM) and the Theory of Planned Behavior (TPB)—the paper develops an integrated conceptual framework for understanding repayment dynamics in microfinance group lending. The JLM highlights contractual mechanisms, including collective responsibility, peer monitoring, and group sanctions. At the same time, the TPB explains individual decision-making through attitudes, subjective norms, perceived behavioral control, and, in specific socio-cultural contexts, religious norms. Methodologically, the study adopts a conceptual research design, synthesizing theoretical constructs and empirical evidence from global case studies—including Bangladesh, Turkey, Pakistan, Vietnam, Armenia, and Malaysia’s Amanah Ikhtiar Malaysia (AIM)—to formulate a model that bridges structural and behavioral perspectives. The findings contribute to theory by integrating institutional and psychological determinants of repayment behavior and to practice by offering policy insights for designing repayment-enhancing strategies in microfinance institutions.

Suggested Citation

  • Wan Nor Aisyah Wan Yussof & Wan Hakimah Wan Ibrahim & Adibah Bahori, 2025. "To What Extent do Joint Liability Models and the Theory of Planned Behavior Explain Repayment Behavior in Microfinance?," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(8), pages 6934-6944, August.
    • Handle: RePEc:bcp:journl:v:9:y:2025:issue-8:p:6934-6944
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    References listed on IDEAS

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