Designing a Participatory Governance Framework for Home-Based Business Financing: A Case Study of Mehr Iran Qard al-Hasan Bank in Sanandaj

Abstract

This study aimed to develop a contextualized, multilevel framework for participatory governance in home-based business financing based on the experiences of key stakeholders of Mehr Iran Qard al-Hasan Bank in Sanandaj. This qualitative study employed a hermeneutic phenomenological approach. The participants comprised 30 stakeholders from five groups, including home-based business applicants and operators, bank employees, facilitators and managers of nongovernmental organizations, university academics, and policymakers. They were selected through purposive maximum-variation sampling, which continued until theoretical saturation was achieved. Data were collected through in-depth semi-structured interviews and analyzed using thematic analysis at descriptive, interpretive, and integrative levels. Credibility and trustworthiness were enhanced through member checking, data triangulation, peer review, reflexive note-taking, and theoretical saturation. The analytical process generated 127 initial codes, 24 axial codes, and seven principal categories. The findings indicated that transparency and distributive justice constituted the most fundamental classical principles of governance in home-based business financing. Continuous monitoring, facilitation of administrative and collateral procedures, specialized training and counseling, establishment of sustainable sales networks, and equitable distribution of risks and benefits emerged as the principal determinants of successful financing partnerships. Governance barriers were organized into three interconnected levels: macro-level economic instability and complex regulations; meso-level institutional fragmentation, rent-seeking, and humiliating banking procedures; and micro-level historical distrust, diminished self-confidence, and existential passivity. Four novel governance dimensions were also identified: procedural justice, healing governance, institutional agility, and existential eligibility assessment. The proposed causal model suggested that macro-level constraints operate through ineffective meso-level institutions, intensify applicants’ existential wounds, and ultimately increase the likelihood of business failure. Effective governance of home-based business financing requires moving beyond narrowly financial and administrative approaches toward a participatory, human-centered, and multilevel framework. Such a framework should simultaneously ensure transparency, equitable resource allocation, institutional responsiveness, respectful treatment, trust restoration, and assessment of applicants’ psychological, motivational, and meaning-related readiness.