Dynamic Financial Management Behavior of Small-Scale Fisheries Community in the East Coast of Peninsular Malaysia: A System Simulation Approach

Small-scale fisheries (SSF) play in the global marine economy, especially in developing countries like Malaysia and provide significant employment opportunities and income for coastal communities. Despite their importance, small-scale fishing communities in Malaysia face several challenges of constant poverty risk and financial instability, particularly irregularity of income sources posing a significant challenge in the poverty eradication and socio-economic development of the fishermen. Indeed, irregular income significantly impacts consumption patterns, and indebtedness and which challenges household’s savings capacity. Despite the implementation of government policies for the community’s socio-economic development, the vicious cycle of poverty and financial instability among the small-scale fishery community still exists. The study focuses on evaluating the dynamic financial management behavior of small-scale fishery communities in the East Coast of Peninsular Malaysia. A system dynamics (SD) simulation approach is proposed to analyses the complex interactions and feedback mechanisms which influences household financial management of small-scale fishermen communities. The different scenarios with alternative financial management policies are analyzed using an SD simulation model to understand potential impacts on household financial and community resilience. Lastly, the study proposes the effective financial management policies as the possible policies for poverty eradication in SSF communities in Malaysia. The study will provide a comprehensive understanding of the financial management practices of Malaysia’s small-scale fishing communities, benefiting not only the nation but also other countries facing similar challenges.