Abstract
This paper aims to explore the importance of micro financing to the development of micro-enterprises (MEs) in Malaysia. MEs play a vital role in developing Malaysian economy. MEs accounted about 80% of the total Small and Medium Enterprises (SMEs) and 78.7% of business establishments in Malaysia. However, MEs face numerous problems such as lack of marketing, technology and credit facility. Therefore, micro financing is a choice to the MEs because it provides an easy, faster and convenient financing facility. The paper examines the microfinance programs offer to the MEs in Malaysia. The paper concludes that a small credit can help micro entrepreneurs to boost up their business.
Highlights
Background of the StudyMicro-enterprises (MEs) are a backbone for most of the country in the world including Malaysia (The Star, 27 March 2009)
MEs play a vital role in developing the Malaysian economy
MEs accounted for 79.4% (412,000 from a total of 552,804) of the total SMEs and 78.7% of business establishments in Malaysia (Department of Statistics, 2005; p.7)
Summary
Micro-enterprises (MEs) are a backbone for most of the country in the world including Malaysia (The Star, 27 March 2009). Micro and small enterprises have been recognized as a major source of employment and income in many countries of the Third World (Mead & Liedholm, 1998). Schoombee (2000) found that lack of access to formal bank credit is one of the important problems faced by South African MEs in the informal sector. The limitation of the formal financial institutions in providing financial services especially credit encouraged the microfinance program to evolve. Microfinance around the world shows that a small credit to MEs may help them grow (Khandker, 2005; Woller & Parsons, 2002; Mead & Liedholm, 1998; Hossain, 1988).
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