Publication: Repayment Performance In Microfinance Programmes: An Individual Lending Approach
Loading...
Date
2015
Journal Title
Journal ISSN
Volume Title
Publisher
Co-operative and Entrepreneurship Development Institute
Abstract
This paper analyzes the repayment performance in microfinance programs in Malaysia that apply
individual lending approach. The research framework of this study is built by four factors namely
individual/borrower factors, firm/business factors, loan factors and institutional/lender factors as
independent variables and repayment performance either paid on time, delinquent and default as
dependent variables. The study used a mixed-method combining between quantitative and qualitative
data through questionnaire survey, in-depth interviews, published and unpublished reports. The data
of this study is gathered from 401 respondents in Peninsular Malaysia through multistage random
sampling. The data is analysed by descriptive analysis and multinomial logit model. Meanwhile, for
qualitative data, a total of 21 respondents (7 respondents who paid on time, 7 respondents who
delinquent and 7 respondents who default) were selected randomly and structured interviews with 6
MFI’s State Managers. The results show that in terms of borrower characteristics, only micro
entrepreneur’s religious education level is statistically significant in the relationship between
delinquent and good borrowers and between default and good borrowers. Whereas, in firm/business
characteristics, the result shows that distance, business formality and total sales are statistically
significant. The finding shows that total loan received, loan type and repayment schedule are the loan
characteristics that affect micro entrepreneur’s loan repayment. In terms of institutional/lender
characteristics, the finding shows that loan monitoring is statistically significant in the relationship
between delinquent and good borrowers. This study contributes significantly to the knowledge of
microfinance program at large, wherein it explains the factors affecting repayment performance and
repayment performance plays an important role to ensure that MFIs can continue providing
microfinance to the micro entrepreneurs without depending on subsidies.
KEYWORDS: Repayment Performance, Individual Lending, Microfinance, Malaysia
Description
Conference on Business Management Research 2013,
December 11, 2013,
EDC, Universiti Utara Malaysia, Sintok.
Keywords
Repayment Performance,, Individual Lending,, Microfinance,, Malaysia