Examining the impact of microfinance on microenterprise performance (implications for women-owned microenterprises in Indonesia)

Abstract

Purpose The purpose of this paper is to examine the impacts of microfinance on women-owned microenterprises’ (WMEs) performance in Indonesia. It especially observes how financial, human and social capital influences performance of enterprises. Design/methodology/approach Data were collected from a survey conducted in Surabaya, Indonesia’s second largest city, covering more than 100 WMEs. The ordered probit technique is applied to estimate the performance vis-à-vis financial, social and human capital relationships. Findings This study finds a negative relationship between performance and financial capital, and positive relationships between performance-human capital and performance-social capital. However, with respect to human capital, the level of education has a marginally significant relationship with performance. Practical implications Microcredit for the purposes of enhancing business performance might not necessarily be a good idea, if it is unable to generate higher returns. As a business develops, the volume of microcredit should be reduced, and replaced by owners’ own savings and retained profits. Regarding the non-financial factors, it might be useful for policy makers to contemplate providing incentives for spouse involvement in microenterprises run by women, and to consider them in designing credit policies. Group meetings activities should be extended to facilitate members to engage in business-related conversations and to develop social relationships. The ability of loan officers and group leaders to facilitate such conversations appears important. Originality/value To the best of the authors’ knowledge, this study provides the first in-depth understanding of the role of microfinance programmes in the case of performance of WMEs in Indonesia, one of the world’s most populous economies.

Is Vulnerability Factors Discourages Women-Empowerment? The moderating role of Environmental, Health, Economic and Political Vulnerability between Microfinance Institutions and Women-Empowerment

“…Moreover, according to Zoynul and Fahmida (44), micro-credit enhances the social and women economic empowerment. On the other hand, Atmadja, Su (45) found that financial capital has negative impact on women micro-enterprise. As the micro-enterprise generate income and enhance empowerment, in case of negative impact it decreases the income which leads to decrease in WE.…”

“…help people to resolve their health emergencies (50). On the other hand, as discussed above, financial capital which is also include savings have negative impact on women micro-enterprises (45). This negative effect is due to the vulnerabilities which reduces the positive influence of microfinance institutes on women.…”

Performance, behaviour and organization of maize trading in Malawi

“…Taking age of the business as an indicator of business survivability and resilience (Atmadja et al 2016), in Table 7 we estimated a model of key success factors of business resilience. We used a normally distributed prior with mean 1.6 and the model variance from the sample to estimate the posterior distribution of parameters using 20000 Monte-Carlo Markov Chain (MCMC) simulations.…”

“…For example, Levine et al (2014) reported that ethnic proximity of traders may promote price bubbles and thereby bring about undesirable market outcomes such as market inefficiency. In addition, Atmadja et al (2016) found that firms that are run by ethnically cohesive individuals perform poorly on indicators such as profitability and survivability-i.e. resilience measured as time in years a business stays profitable before closure.…”

Barriers in Financing Microenterprises From the Perspective of Czech and Slovak Microentrepreneurs

“…In order to grow, microenterprises need capital to buy assets, to finance their operational activities and meet their living costs. Financial capital can be accessed from various external and internal resources, such as debt and personal savings (Atmadja, Jen-Je, & Sharma, 2016;Bhaird & Lucey, 2010;Gbandi & Amissah, 2014). Pecking order theory emphasizes the existence of a hierarchy in the selection of these resources: enterprises look first for financing from internal and then from external sources, because of the higher costs of external financing (Osei-Assibey, Godfred, Bokpin, & Twerefou, 2012;Daskalakis, Jarvis, & Schizas, 2013;Ryan, O'Toole, & McCann, 2014).…”