The relationship and impact of microfinance on growth and productivity of microenterprises in Malaysia

• Main Author: Maisyarah Mohamad Nor
• Format: text::Thesis
• Language: English
• Published: 2023

This study examined the impact of microfinance criteria and characteristics of business on growth and productivity of Microenterprises (MEs) in Malaysia. The study investigated on micro finance criteria in terms of financial and non-financial give an impact on MEs growth and productivity. The critical issues arise in the study is the ability of MFIs and business itself to let their business expand and fully utilize the sources remain uncertainty. The hypotheses formulated were developed based on the previous studies that related to this study and from the theories of financial growth, pecking order theory and also contract theory. There are two dependent variables (DV) used which are growth (MEG) and productivity (MEP) while, there are nine independent variables (IV) involved in the study. The IV involved in the study are, Loan Size (LoanSiz), Loan Duration (LoanDur), Loan Repayment (LoanRep), Loan Utilization (LoanUti), Service Charge (ServiceCha), Contact with Lender (ContactLen) and Training (Training) for micro finance criteria while Age of business (BussAge) and Size of business (BussSiz) have been chosen for characteristics of business. Based on that, the solid and complete questionnaires are only 199 (41.50 %) of AIM and 277 (57.70 %) of TEKUN. The study was employed a multiple regression method to identify the impact of explanatory variables on Dependent variables (DV) that are growth and productivity. The findings revealed that micro finance criteria enhance the MEs growth and productivity and accept most of hypothesis in the study. In the aspect of significance, both growth and productivity show a significant sign and contributes to MEs in Malaysia at 1% and 5% respectively. The study therefore, recommends that MEs should be linked up with larger financing windows such as SME bank or nongovernment agencies in terms of social capital. It also suggests to Micro Finance Institutions (MFIs) should give entrepreneurial skills to manage their income and handle resources efficiently. Apart, the study also perceived that there is a miss-use of loan among MEs in Malaysia. To the policy makers should adopt some policies that aimed to the promoting the MEs in market penetration for expand their business into a growth level. Lastly to the future study, the study suggests to use a longitudinal data for future research because this method can monitor changes before and after join microfinance schemes and future research also can make a comparison study between borrower and non-borrower in term of business growth and productivity. Hence, the findings of the study s answered the research objectives.