Microfinance Credit Research Articles

Do Micro Finance Banks Influence The Performance Of Small Scale Business Entrepreneurs In Ijebu North Lga, Ogun State, Nigeria?

This paper contributes to the debate on the impact of Microfinance financial and non-financial services on the development of small-scale entrepreneurs. This study actually investigated the influence of Access to Microfinance Credit and Microfinance services on the development of small-scale entrepreneurs in Ijebu North Local Government Area of Ogun State, Nigeria. Survey research design using simple random sampling technique was employed to select 90 out of 175 registered small-scale entrepreneurs in Ijebu North LGA. Applying regression analysis on the primary data collected showed that a positive and significant relationship exists between Access to Microfinance credit and performance of small-scale entrepreneurs in the sampled areas. In addition, Microfinance service was also found to exert a significant influence on small-scale entrepreneurs’ performance, albeit, the correlation coefficient and the coefficient of determination were below average. This notwithstanding, the study concludes that Microfinance provision of credit; financial services, business support, and empowerment have positively influenced business performance, income generation, asset accumulation, and overall well-being of small-scale entrepreneurs in the sample area. It is recommended that microfinance institutions should continue to focus on expanding access to credit and other financial and advisory services to small-scale entrepreneurs to continuously improve their overall performance.

Microcredit and Economic Growth in Ecuador from 2013 to 2023

Microcredit has emerged as an effective instrument for achieving financial inclusion, stimulating productive activities, and with this support, reinforcing economic growth. This study aims to examine the characteristics of microcredit financing in Ecuador and to quantify its impact on economic growth. The study employs quarterly data from 2013 to 2023. An Error Correction (VEC) model was utilized to ascertain the short- and long-term effects of microcredit and investment on GDP. The findings indicate that microcredit and investment do not exert a significant short-term influence on GDP. However, in the long term, a 1% change in investment is associated with a 0.11% positive impact on GDP. Similarly, a 1% shift in microcredit is linked to a 1.17% favorable effect on GDP. Ultimately, there is a unidirectional causal relationship between GDP and microcredit.

Kinship networks and financial inclusion nexus: the mediating effect of extended social cohesion among poor microentrepreneurs post COVID-19

Financial inclusion has been a major tool for poverty alleviation in Africa and, as such, it has become a topic of great interest among scholars working on the difficulties of African microentrepreneurs to access financial resources. Thus, this research examines whether extended social cohesion mediates the relationship between kinship networks and financial inclusion of poor microentrepreneurs post COVID-19 in the unbanked rural sub-Saharan Africa. Analyzing data from a sample of 304 microentrepreneurs of Uganda, we find that extended social cohesion resulting from social capital significantly affect the relationship between kinship networks and financial inclusion as it acts as substitute for the lack of physical collateral. The theoretical contribution of this research is that, it introduces the social cohesion theory, a theory developed in sociology, in the literature of microcredit finance and shows that social cohesion can serve as collateral, of which the absence has often prevented microentrepreneurs from having access to microcredit.

Gender-based Acceptance of Ar-Rahnu Among Muslim Micro-Entrepreneurs

Women entrepreneurs often encounter difficulty in obtaining capital financing. Banks are hesitant to offer loans to women entrepreneurs due to their small-scale businesses. As one of the services that provide microcredit financing to entrepreneurs, Ar-Rahnu offers excellent opportunities to small entrepreneurs to acquire funds for their entrepreneurial activities. The objective of this study is to identify and analyze the acceptance of Ar-Rahnu based on gender among Muslim micro-entrepreneurs in Kelantan. Quantitative research was used in this study through the distribution of questionnaires to Muslim micro-entrepreneurs in Kelantan. Empirical research was conducted to answer all research objectives. The results were analyzed using the Statistical Package for Social Science (SPSS) version 22.0 software through descriptive statistics, and inference (t-test) was used to analyze the primary data obtained. The findings of this study found that there was a significant difference in the number of women and men entrepreneurs in Kelantan. Women entrepreneurs dominate business, particularly in large markets around Kelantan. In addition, there was a significant difference in the acceptance of Muslim small entrepreneurs in Kelantan according to gender. Thus, it was found that women entrepreneurs in Kelantan accepted Ar-Rahnu more positively than male entrepreneurs. This implies that women entrepreneurs are pivotal for the development of Ar-Rahnu in Kelantan due to their significant participation in this micro-credit scheme. It is suggested that the Ar-Rahnu institutions in Kelantan elevate their efficiency in the future by spreading the inherent benefits to entrepreneurs as one of the Islamic financing approaches. Therefore, small capital and financial problems among entrepreneurs can be overcome.

Micro-Finance and Performance of Micro, Small and Medium Enterprises in Jos Metropolis

The Micro, Small and Medium Enterprises (MSME) sector plays a vital role in the growth of the economies of developing countries. Similarly, microfinance facilities are crucial to MSMEs financial performance as they facilitate the growth and development of MSMEs. This study, therefore, investigates the effects of microfinance on MSME performance in Jos metropolis of Plateau State. The research design is descriptive and employs the survey method. Simple random sampling technique was adopted as a technique in selecting the 323 MSMEs that form the sample size of the study. A structured questionnaire was used in the collection of relevant data used for analysis. Data was presented through the use of frequency tables and Chi-square test was used to carry out the analysis. The study found that microfinance has a positive effect on sales revenue and profitability and non-current assets. The study recommends creating awareness especially for women on the importance of microfinance in entrepreneurship development. The study also recommends that the Plateau State government should set up and implement policies that will ease access to microfinance credit by MSMEs, especially from microfinance banks. The study also recommends the granting of more loans to women to increase the number of women engaged in entrepreneurship activities within Jos metropolis.

PEMBIAYAAN MIKRO KREDIT QARD HASAN MELALUI DANA ZAKAT: ANALISIS PELAKSANAANNYA DI NEGERI KEDAH

Qard hasan is an Islamic contract that pertains to interest-free lending in financial transactions. It serves as a means to provide financial assistance to individuals in need without imposing interest charges during loan repayment. This instrument underscores the principles of cooperation (ta'awun) and benevolence (ihsan) as the underlying wisdom behind the implementation of the qard hasan contract as a benevolence-based agreement. Consequently, banking institutions driven by profit perceive this contract as non-commercial in nature. Therefore, the concept of qard hasan holds potential for application through zakat instruments due to their shared purpose and foundation of aiding those in need. This study aims to examine the implementation of microcredit financing through qard hasan using zakat funds by Lembaga Zakat Negeri Kedah (LZNK) through the Smart Sawah Berskala Besar Asnaf (Smart SBBA) program. Qualitative methods, including library research and field research for data collection, were employed in this study. The research involved the examination of articles, statutes, books, and relevant circulars. From an empirical perspective, field research entailed conducting unstructured interviews with an LZNK officer. The study findings indicate that the Smart SBBA program, organized by LZNK, is an initiative aimed at assisting asnaf groups in augmenting their monthly income by involving them in paddy field cultivation. Throughout the program's duration, participants also received qard hasan loans made possible by zakat funds to support their livelihoods. The program has proven successful in alleviating poverty among the asnaf groups and holds potential for transforming them into zakat payers in the future.

Dynamics in digital finance and its impact on SME financing

Employing the Complex Adaptive System (CAS) framework, we analyzed the evolution of digitally transformed financial networks, underscoring the pivotal role of adaptation and learning among network participants. Government funds supporting banks and platforms in digital transformation prove more effective than direct subsidies to SMEs. Achieving sustainable development requires an optimal balance between investment and efficiency due to the impact of digitalization costs on constructing digital financial networks. The study advocates for a long-term microcredit financing mode tailored to SMEs, aiding them in maintaining financial stability. Additionally, intermediary nodes within the network, such as credit rating companies, can facilitate information sharing, thereby fostering the growth of digital financial networks. This heightened information sharing enhances the payoff for each subject and reduces financing constraints. Furthermore, the study establishes that digital financial networks can alleviate the repercussions of unforeseen events, such as the COVID-19 pandemic. Finally, empirical analysis of the Beijing University Inclusive Finance Index data and financial records of Chinese SMEs listed on the New Third Board from 2016 to 2018 confirms that digital finance can alleviate the financing constraints of SMEs. In summary, the progression of digital financial networks is intricate, necessitating a thorough comprehension of diverse factors. The government is encouraged to guide the enhancement of relevant systems and regulations, bolstering supervision, and facilitating the high-quality development of digital finance networks.

Determinants of microfinance credit uptake and the amount of credit by smallholder dairy cattle farmers in Maara sub-county, Tharaka Nithi County, Kenya

Microfinance institutions play a crucial role in enhancing the production and productivity of smallholder farmers by providing them with the necessary financial resources. However, the adoption and utilization of microfinance credit in the Maara sub-county fall short of their potential benefits. Despite various credit service providers, not all smallholder dairy cattle farmers in this region have been able to capitalize on these services. Several factors contribute to the low uptake of microfinance credit among smallholder dairy farmers, including inadequate financial literacy, absence of collateral, high transaction costs, and insufficient infrastructure. Acknowledging that these factors are dynamic and can vary across different regions is and essential. Therefore, a comprehensive understanding of the dynamics influencing microfinance credit adoption and utilization in the Maara sub-county is lacking. This study examined microfinance credit uptake from two angles: the factors affecting its adoption and the determinants of credit size once accessed. Recognizing the interdependence of these choices, the study employed the Heckman selection model. Results indicated that factors such as years of schooling, household size, organization membership, access to extension services, and collateral availability significantly (p < 0.01) influenced microfinance credit uptake. Furthermore, schooling years, household size, and daily milk production per cow emerged as the most impactful credit size determinants (p < 0.05). The study suggests that promoting organization membership among smallholder dairy cattle farmers could enhance access to microfinance credit facilities, thereby ensuring sustainable milk production. By addressing the identified factors, the Maara sub-county could unlock the potential of microfinance credit to benefit its agricultural sector.

Making Social Entrepreneurship More Social: An In-Depth Examination of Goonj, Rang De and Agastya International Foundation

In a world as capitalistic as today’s, it becomes hard-pressed to find businesses working for the good of the people with no ulterior motive. That is where social entrepreneurs come in. They observe the world through a lens different from most traditional businesses- their goal being social betterment, not monetary benefit. Social entrepreneurship has been on the rise for the past few decades and it is picking up speed. From reusing and recycling scrap cloth to provide women with menstrual aid like Goonj, to assisting people with a simple microfinance credit model, to changing the education system by training teachers and students alike, social enterprises in India are revolutionizing the way businesses run. They are people-centred, their primary focus being enhancing human value, not profits. This paper attempts to elucidate how social enterprises operate and how they work together with the community to bring about a positive change in their quality of living.

Unlocking the Potential of Microfinance Solutions on Urban Woman Entrepreneurship Development in East Africa: A Bibliometric Analysis Perspective

Empowering women is essential for poverty alleviation and open involvement of woman entrepreneurs in line for entrepreneurship development. Nonetheless, several woman-led enterprises and woman entrepreneurs have scarce opportunities to revitalize beyond the dearth of financial services to realize financial freedom. This article’s approach hinges on a bibliometric analysis to survey recent developments and trends in microfinancing woman-owned enterprises and how this field is expected to transform to recent financial technological progress over successive years. We review existing evidence from 402 published articles indexed in the Scopus database from January 2003 to March 2023 to explain the current research development and interrelated prospects for enhancing studies on microfinance for woman entrepreneurship. The results vividly indicate that access to a stream of microfinancing credit is fundamental to the prosperity of urban woman-led enterprises across all countries. Despite this, woman entrepreneurs still encounter several obstacles when starting new businesses or expanding existing ones. With a growing demand for substantial sums of external financing to transition to sustainable business practices, their contribution to sustainable development is most often unreachable. Thus, any financing strategies focused on allowing access to microfinance credit by woman entrepreneurs are necessary to enable this sector to receive the benefits of economic freedom. This study offers good insights for current and potential entrepreneurs to bridge the financing gaps in emerging economies as a strategy for strengthening the capability of woman entrepreneurs to pursue economic opportunities that can inspire sustainable business enterprises and contribute to sustainable development. Finally, the study provides a foundation for future research in the domain of entrepreneurial financing for MSMEs.

Effect of Credit Financing on Financial Performance of Small and Medium Enterprises (Smes) in Thika Town, Kiambu County

Purpose: To determine effect that credit financing has on the financial performance of SMEs in Thika Town, Kiambu County.
 Methodology: The study adopted a descriptive survey design and the targeted population was 468 registered SMEs in Thika town. A structured questionnaire was used to collect both qualitative and quantitative data. The quantitative data collected was analyzed for both inferential and descriptive statistics and the qualitative data from the open-ended questions were analyzed using content analysis.
 Results: The study found that trade credit has a significant effect on financial performance of SMEs in Thika town (B=0.804; p=0.026) and that bank credit has a significant effect on financial performance of SMEs in Thika town (B=0.956; p=0.000). The study also revealed that micro-finance credit has a significant effect on financial performance of SMEs in Thika town (B=0.783; p=0.000) and that informal associations credit has a significant effect on financial performance of SMEs in Thika town (B=0.892; p=0.002).
 Unique contribution to theory, policy and practice: The study concluded that bank credit had the greatest effect followed by informal associations credit, then trade credit while micro-finance credit had the least effect on financial performance of SMEs in Thika town. The study recommends that the Kenyan government should devise strategies of regulating and reducing interest rates in order to protect small and medium-sized enterprises (SMEs) from unfair shylocks who lend money at unsustainable high interest rates coupled with undisclosed fees.

Implication of Microenterprises’ and Entrepreneurs’ Characteristics on Microfinance Credit Demand in Kakamega County, Kenya

Implication of Microenterprises’ and Entrepreneurs’ Characteristics on Microfinance Credit Demand in Kakamega County, Kenya

THE EFFECT OF MICROFINANCE BANKS ON THE ECONOMIC GROWTH: EVIDENCE FROM NIGERIA

<p>The study seeks to examine the impact of microfinance institutions on the economic growth of a country, thus using Nigeria as a case study. The review utilizes the various relapse examination given that the information is cross-sectional and time series in nature. Optional information on all business banks was extricated from the National Bank of Nigeria’s measurable release and yearly reports. The information utilized in this model are time series optional information for the period 1992 to 2019. The discoveries of the review show that microfinance credits emphatically affect the short-run monetary presentation in Nigeria. Microfinance credits improved utilization per capita in the short run with a great coefficient, albeit these bank credits don't fundamentally affect monetary development over the long haul. Microfinance speculation be that as it may, essentially affects monetary execution in Nigeria over the long haul. Albeit miniature money advances are significant in the development process in Nigeria, different measures, for example, helping farming creation and finding a way suitable way to upgrade per capita pay are similarly significant in supporting the Nigerian monetary development. That's what we suggest, microfinance foundations ought to credit to further develop utilization in the short run, while the long run objective ought to be to further develop speculation and other capital aggregation.</p><p> </p><p><strong>JEL</strong>: D01, D04, G21</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0001/a.php" alt="Hit counter" /></p>

Micro Finance Institution Services and Performance of Restaurants in Mombasa County, Kenya

The expansion of the economy depends on the availability of financial services, notably credit and savings options. As a result, Kenya's economy has not grown and developed as expected as a result of MSMEs. Medium and Small entities encounter several weaknesses that hinder their potential usefulness towards long-term sustainability of the economy. The lack of credit services is one of these concerns. The efforts of microfinance institutions to make their services available to small and medium-sized businesses that have not profited from the traditional formal banking system have been recognized as a result of the growth and expansion of SMEs. Because of this, the researcher evaluates how microfinance services affect the performance of restaurants in Mombasa's core business district. Researchers hope to learn how microfinance training affects the performance of Mombasa CBD restaurants; how the regulatory framework for microfinance affects Mombasa CBD restaurants; whether access to credit affects Mombasa CBD restaurant performance; and the impact of microfinance credit cost on Mombasa CBD restaurant performance. The study was based on Balance Scorecard theory, Resource-based theory, Pecking order theory, Credit Access theory and Management theory. A descriptive survey design was used in this investigation for restaurants over seven years and above. 114 people who worked at the selected restaurants in Mombasa's core business centre were selected whereby, 57 of whom were managers and 57 were waiters. The researchers used the census approach, in which all employees were included. The study data was through questionnaires. Statistical Package for Social Science (SPSS) Version 25 for Windows was used for data analysis. In order to get the most accurate results, we used a variety of statistical methods such as means, frequency tables, percentages, standard deviations correlation and regression. The study found that training and microfinance regulatory framework indicated an insignificant relationship with performance of restaurants in Mombasa County however access to microfinance credit and microfinance credit cost indicated a positive significant relationship with performance by SMEs in Mombasa County. The study concluded that Owners of businesses can benefit from training in the form of expanded professional networks, the transfer of technology, the formation of new businesses, and the acquisition of superior management practices. Business success and continued operation depend on the availability of debt financing. However, MFIs are hesitant to lend to SMEs because they are seen as higher risks and SMEs typically do not have collateral to back up their loans. The study also concludes that the amount of the loan is a crucial factor in microfinance lending since it affects the overall cost of financial intermediation. The study recommends that Microfinance institutions should continue training restaurant owners on financial management for the purposes of sustaining enterprises. This will create better understanding on how to manage their funds more efficiently and effectively. In order to make it easier MFIs to have favorable financial performance, the institutions ought to adopt methods that will make it easier for MFIs to have improved liquidity. This will allow the institutions to be more efficient in their financial operations. The study also recommends that microfinance institutions and policymakers should think about incorporating an affordable micro-insurance plan as part of the microfinance package for all its clients who seek for loans. Small and medium-sized enterprise management should be more proactive in approaching MFIs to analyze their business progress and share their current needs and concerns.

A Quantitative Analysis of Microfinance Credit Facilities for MSMEs and their Impact on Liquidating Poverty in Delhi-NCR Region: With Special Reference to AU Small Finance Bank

A Quantitative Analysis of Microfinance Credit Facilities for MSMEs and their Impact on Liquidating Poverty in Delhi-NCR Region: With Special Reference to AU Small Finance Bank

Analysing the Rural B40 Society in the Microcredit Programmes of Amanah Ikhtiar Malaysia (AIM)

The term microcredit finance refers to the provision of access to various financial services such as credit, savings, micro insurance, remittances as well as leasing to the poor or the low-income households. The purpose is to allow them to grow and support their small-sized businesses and eventually increase their level of income and standard of living. This study is about the methods of developing a framework for rural community that is categorised as B40 society to elevate their household income from the perspective of AIM members or formally called Sahabat. AIM provides small scale financial services and trainings to the poor and hard core poor households to improve their socio-economic conditions. Thus, the objective of this study is to assess the economic level and needs of Sahabat of AIM who are categorized as B40 rural society and to propose a sustainable microcredit conceptual framework for them. One major finding is that, majority of the respondents has quite high range of monthly expenditure and their monthly income is insufficient to cover their expenses. Even though majority of the respondents used the loans for business purposes, but there are still some respondents who used the loans for purposes other than business such as for food supply, health as well as education purposes. While majority of the respondents had received trainings from AIM, they realized that the programme held were still inadequate and the diversity of programme and trainings should be increased in accordance with the challenges they are facing today.

Impact of microfinance on enhanced wellbeing of self-help group women in post-COVID scenario

In the past few years, Microfinance has been usually contemplated as an effective strategy instrument in the fight against poverty. The SHG women situation in India has been particularly difficult during COVID-19. It had distressing consequences on SHG women life, their income making activities and livelihoods. Therefore, the question arises whether Microfinance credit leads to poverty reduction and improve their decision-making ability in the post COVID era. To address this question, the present study undertakes to identify the impact of Microfinance, Micro Credit and Savings on the Decision making ability of SHG women in the post COVID era. A number of non-governmental organisations (NGOs) provide micro-finance programmes to women in need in order to gain access to credit and savings services. In the current research, the NGO named ‘Peetambra Foundation’ registered in 2008 in Pink City Jaipur, Rajasthan is instrumental in providing data related to SHG women registered with them. Total 306 SHG women were surveyed in the nearest village of Jaipur city. The findings revealed positive but insignificant impact of Microfinance on Financial improvement. In addition, Financial improvement has a both negative and significant impact on the Decision Making ability.

Spatial analysis of the effect of microfinance on poverty and inequality in Ghana.

Although microfinance is usually delivered with a spatial outlook, the literature is so far silent on the potential spatial effect of microfinance delivery. The aim of this study was, therefore, to examine the effect of microfinance intensity on spatial inequality and poverty in Ghana. Using the 6th (2012/2013) and 7th (2016/2017) rounds of data from a national survey on living standards in Ghana, the study first examined the pattern of district-level poverty and inequality in Ghana and then adopted spatial econometric techniques to explore the spatial correlation between microfinance, inequality, and poverty. The results revealed that microfinance has a significant negative impact on spatial inequality and poverty in Ghana. The spatial effect of microfinance intensity on poverty and inequality is characterized by both direct and spillover effects on neighbours. It was identified that the outreach of microfinance drives within-district disparity, whereas the disparity in microfinance credit distribution powers between-district disparity. Additionally, while there is evidence of an indirect effect, the indirect effect diffuses monotonically as the number of neighbours increases. The study's findings advocate for a complementary approach to microfinance delivery, as well as the elimination of institutional barriers that limit access, availability, and operational delivery of microfinance services in order to achieve spatially optimal microfinance delivery.Supplementary InformationThe online version contains supplementary material available at 10.1007/s40847-022-00210-3.

Microfinance Institutions as a Vehicle for Poverty Eradication in Developing Countries: Evidence from the East African Community Member States

This paper focuses on examining the link that exists between microfinance institutions (MFIs) and poverty eradication efforts in developing countries, specifically focusing on the East African member states of Burundi, Democratic Republic of Congo (DRC), Kenya, Rwanda, South Sudan, Tanzania, and Uganda. The study was driven by the varying interpretations, debates, and opposing opinions in literature on the effects of MFIs on poverty eradication in developing economies, particularly in the East African Community (EAC). The study used a depth literature search using secondary data on the role of MFIs in poverty eradication in the EAC context. The results pointed out that despite the challenges such as high transaction rates, limited funding and others, microfinance credit has played a significant role in poverty eradication among poor/low-income families in the EAC Member States. Therefore, the study recommends that governments of the EAC Member States should increase government support, and conducive working environments should be provided to ensure microfinance institutions reach as many less privileged individuals as possible so as to raise their economic status.

Microfinance Credit and Poverty Alleviation in Nigeria (2008 to 2019)

The study examined the relationship between microfinance credit and alleviation of poverty in Nigeria, Poverty can be regarded as the denial of choices and opportunities, a defiance of human dignity. Despite all the policies and measures, taken to reduce poverty , no noticeable success has been achieved in this direction. The key issue is to find out the relationship between microfinance credit and poverty alleviation in Nigeria. using unemployment rate, fixed capital formation and per capita income as proxy for poverty alleviation, while micro finance credit was used as the independent variable of the study. The study covered a period of eleven years from 2008 to 2019. Ordinary least square regression analysis was used in testing the hypotheses of the study. The regression result found that there is a significant relationship between microfinance bank and unemployment rate in Nigeria, there is a significant relationship between microfinance bank and capital formation in Nigeria and there is a significant relationship between microfinance bank and per capita income in Nigeria. The study therefore concluded that microfinance credit has the ability of reducing rate of poverty in the country. The study therefore recommends that the Central Bank of Nigeria should regulate and monitor the activities of Microfinance and also administer specialized funds set aside to improve microcredit access at affordable cost, especially SME Credit Guarantee Schemes.