Abstract
The objective of this study is to investigate the relationship between the microcredit program and the performance of microenterprises, as well as assessing the impact of the intermediary service delivery system on the relationship between the microcredit program and the performance of microenterprises. Primary data were collected from 756 micro-enterprises under the microcredit program Amanah Ikhtiar Malaysia (AIM) and Tabung Ekonomi Kumpulan Usaha Niaga (TEKU N), which are two most active microcredit programs in Malaysia. The multiple regression analysis showed a significant positive correlation between the performance of microcredit program and microenterprises. Empirical findings also explain the elements of modes of financing under the management of credit products, as well as the two elements under the social development programs (entrepreneurship development, monitoring and supervision) as having a clear effect of the mediators of the relationship between the microcredit program and the performance of microenterprises. However, the study found that elements of operational efficiency in the management of credit products do not affect the relationship between the two variables. These findings lucidly reveal the importance of balance between the efficiency of the management of credit products and a program of social development in the service delivery system of microcredit program. DOI: 10.5901/mjss.2015.v6n6s2p691
Highlights
Microcredit programs have become a critical mechanism in the growth and development of small and micro enterprises in most countries
This article scrutinizes the relationship between microcredit programs and service delivery program on the performance of micro and small enterprises (MSEs)’
Data were obtained from a total of 756 samples of two major microcredit programs in Malaysia namely Amanah Ikhtiar Malaysia (AIM) and Tabung Ekonomi Kumpulan Usaha Niaga (TEKUN) through survey methods
Summary
Microcredit programs have become a critical mechanism in the growth and development of small and micro enterprises in most countries. Until the end of 2011, there were a total of 3,703 institutions offering microcredit program and the total numbers of borrowers has grown spectacularly to over 195 million, of whom 124.3 million are among the poorest. This positive development shows that microcredit programs have the ability to act as a catalyst to the development of entrepreneurial activities at the grassroots level (Bhatt et al, 1999) and generate economic growth in many countries (Colman, 2006). Involvement of target groups in entrepreneurial activities through microcredit program is to increase revenue, improve living standards and eventually reduce poverty (Makina & Malobola, 2004)
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