THE IMPACT OF MICROFINANCE TOWARDS MICROENTERPRISES (MEs) PRODUCTIVITY IN MALAYSIA

Abstract

This study examined the impact of microfinance criteria on Microenterprises (MEs) productivity in Malaysia. The main issues in this paper is the capability of MFIs to allow the business to fully utilize the sources are ambiguous. There are seven (7) variables have been used in this paper which are Productivity (PROD) as a dependent variable and Six (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 productivity among MEs in Malaysia. Based on the findings, microfinance criteria meet the significance level and contribute to MEs growth. Based on that, the solid and complete questionnaires are only 199 (41.50 %) of AIM and 277 (57.70 %) of TEKUN. The findings revealed that microfinance criteria enhance the MEs growth and productivity and accept most hypotheses in the study. In the aspect of significance, the variable of productivity shows a significant sign contributes to MEs in Malaysia at 5% respectively.

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 nonborrower in the aspect of business growth among MEs in Malaysia. As a conclusion, the findings of the study have answered the research objectives.