Does institutional logic matter in microfinance delivery? An empirical study of microfinance clients

Abstract

Purpose From an institutional theory perspective, the purpose of this paper is to investigate the combined impact of financial capital (microcredit) and human capital development (entrepreneurship training) delivered by financial non-governmental organisations (FNGOs) on the performance of micro and small enterprises (MSEs) in Ghana. Design/methodology/approach Adopting a multiple linear regression analysis, the study used primary data collected from 506 Ghanaian MSEs. Microcredit was measured using four main constructs, namely, loan cost, loan amount, the flexibility of loan repayment and loan accessibility. Entrepreneurship training was measured using four main constructs, namely, training content, training efficiency, training frequency and training accessibility. MSE performance was also measured using three main indicators, namely, sales, employment and profitability growth. The study controlled for business age, industry category, manager’s educational level and gender. Findings The results of this study show that the combined delivery of financial and human capital development by FNGOs has a significant impact on MSE performance. The social welfare logic adopted by FNGOs seems to be legitimate to the needs and growth of MSEs in Ghana. However, the cost of microcredit remains a drawback, constraining the performance of MSEs in Ghana. Research limitations/implications This study was carried out in the Volta Region, which is one of the ten regions of Ghana. Even though the sample size suffices, the findings from this study could not be generalised to the whole of Ghana. Also, this study is a quantitative study and could benefit from a triangulated method where the qualitative inputs could offer insights into the findings in this study. Originality/value Theoretically, this study contributes to the understanding of institutions and the type of impact they have on the growth of MSEs. Practically, the provision of a conducive environment and access to financial capital is crucial to the growth of MSEs. Also, the adoption of the social welfare logic in microfinance delivery could be one of the major steps in promoting the performance of MSEs in Ghana.

The Effectiveness of Microfinance Services on Poverty Alleviation: Comparative Analysis of Anuradhapura District and Colombo District in Sri Lanka

“…The relationship between poverty alleviation and entrepreneurship training was statistically significant at the 0.001 level, and it was shown to be positive and strong in both districts. The result was matched with previous researchers (Atiase et al, 2019;Herath, 2015;Khanam et al, 2018;Mensah &Benedict, 2010 andNavirathan, 2018) also revealed that entrepreneurship training has a significant and positive impact on poverty alleviation. Micro-credit and poverty alleviation in both districts have a strong positive relationship and it was statistically significant at the 0.001 level.…”

“…Households benefited from credit-plus services by increasing their income through investment projects. Financial non-governmental organizations (FNGOs) offer financial capital (microcredit) and human capital development (entrepreneurship training) to micro and small businesses (MSEs) in Ghana, according to (Atiase et al, 2019). The four primary dimensions utilized to measure microcredit were loan cost, loan size, loan repayment flexibility, and loan accessibility.…”

Navigating the crowdfunding landscape: a study of knowledge trajectories based on main path analysis

“…The final cluster of CF research features keywords such as “microcredit”, “sustainable development goals”, and “corporate social responsibility”. This cluster demonstrates that scholars are curious about the potential of CF to foster economic growth and social development in emerging economies (Atiase et al. , 2020; Chen and Yuan, 2021).…”

“…The final cluster of CF research features keywords such as "microcredit", "sustainable development goals", and "corporate social responsibility". This cluster demonstrates that scholars are curious about the potential of CF to foster economic growth and social development in emerging economies (Atiase et al, 2020;Chen and Yuan, 2021). The keyword "microcredit" has a high occurrence frequency, referring to a type of financing that provides small loans to individuals who lack access to traditional banking services (Bhuiyan and Ivlevs, 2019;Jebarajakirthy and Lobo, 2015;Selvaraj et al, 2019).…”

Impact of Owners’-Managers’ Demographic Characteristics on the Performance of MSEs in Ethiopia

“…Performance of MSEs can be measured by using sales volume, size of employment, total assets, profit, market share and productivity (Atiase, Mahmood, & Wang, 2019). The dependent variable which is the performance of MSEs in this research paper is proxied by sales volume and size of employees since they are the more objective indicators of firm performance.…”