THE IMPACT OF MICROFINANCE ON GROWTH OF MICROENTERPRISES (MEs) IN MALAYSIA

Abstract

This study examined the impact of microfinance criteria on growth of Microenterprises (MEs) in Malaysia. The critical issues arising in the study is the ability of MFIs and business itself to let their business expand and fully utilize the sources remain uncertain. There are ten variables were used in the study which are growth (MEG) as a dependent variable and 6 independent variables (IV) involved, there are Loan Size (LoanSiz), Loan Duration (LoanDur), Loan Repayment (LoanRep), Loan Utilization (LoanUti), Contact with Lender (ContactLen) and Training (Training). A multiple regression method has been used in the study to identify the impact of the growth among MEs in Malaysia. Based on the findings, this surely stated that microfinance criteria meet the significance level and contributes to MEs growth. Hence, the study recommends that MEs must be linked up to the larger financial sources such as SME bank and non-government agencies in terms of financial support. Besides that, Micro finance Institutions should provide a moral support such as entrepreneurial skills in order to enhance their financial management and operation as well as in handling resources efficiently. The policy makers should seek some strategies in the aim to promote MEs in the market penetration. Finally, for the future study, the study suggests to use longitudinal data for future research because this method can monitor changes before and after the joining microfinance schemes. Apart, also can make a comparison between borrower and non-borrower in the aspect of business growth among MEs in Malaysia. As a conclusion, the findings of the study have answered the research objectives.