The Microcredit-Business Performance Relationship: Program Delivery Services as Mediator

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