Assessing money attitude dimensions and loan default, moderated by religiosity among Muslims small and medium enterprises (SMEs)

Small and Medium Enterprises (SMEs) play a vital role in a nation’s development and economic growth. However, in spite of their contributions SMEs are criticized for their high rate of bankruptcy which was caused by the non-performing loan (NPL) and default problem. This study is conducted with the aim of assessing the relationship between money attitude dimensions towards loan default and moderated by religiosity among Muslim Small and Medium Enterprises (SMEs). The theoretical underpinning Plan Behavior and Default Behavior serves as the basis framework of this study. The objectives of this study are to examine the relationship between money attitude dimensions which include power-prestige, retention-time, distrust, anxiety towards loan default and to investigate whether religiosity moderates the relationship between money attitude dimensions and loan default among Muslim owner-manager of SMEs in state of Kedah. The study employs a quantitative approach through self-administered survey structured questionnaires. Using multistage cluster and systematic sampling technique, a total of 612 questionnaires were distributed. The finding validates a significant effect of money attitude dimensions and religiosity on loan default. The study indicates significant relationships between power-prestige, retention-time, and distrust with loan default. In addition, religiosity fully moderates the relationship between the power-prestige and distrust dimensions and loan default. The implications of finding are discussed and recommendations are made to the financial institutions and the policy maker of SMEs sector to improve the performance of loan record parallel with their vital role contributing in the economic growth of country. Suggestion also made on the direction of research in future time.