Financial access for starting a business: Evidence of internal and external financial sources, and performance of Malaysian SMEs

Ismail, Noor Azina

doi:10.17687/jeb.0301.01

Cited by 9 publications

(10 citation statements)

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“…Conversely, Ayyagari et al (2010), Klapper et al (2006), Ayyagari et al (2011) and Beck et al (2005) found that improved access to formal finance correlates with faster firm growth, promotes new entrance and enhances rapid innovation and dynamism among firms. Mohamad et al (2015) employed structural equation modelling to examine the relationship between firm performance and internal and external sources of finance in Malaysia and found that internal and external sources of finance have no significant effect on SMEs' performance. However, business experience, level of education and firm size have a positive effect on performance.…”

Section: Performance Of Msmes In Eswatinimentioning

confidence: 99%

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Financial inclusion and performance of MSMEs in Eswatini

Fomum

Opperman

2023

IJSE

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PurposeMicro, small and medium-sized enterprises (MSMEs) are the backbone of economic development for every economy. They contribute to local economic development through household wealth creation, employment generation and poverty reduction. Despite this pivotal role, MSMEs lack access to finance, and scholarship on the enabling role of financial inclusion on micro, small and medium-sized enterprises' performance is scant. The authors contribute to closing the knowledge gap by examining the enabling effect of financial inclusion on MSMEs using the FinScope MSME 2017 survey for the Kingdom of Eswatini. This paper aims to discuss the aforementioned objective.Design/methodology/approachThe study used the re-centered influence function regression framework to estimate unconditional quantile regressions and the generalized ordered logit model to analyze the data.FindingsThe findings from the unconditional quantile regression revealed that small changes in access to bank accounts, saving for business, formal saving, stokvel and informal saving at the 50th and 75th percentiles have a positive and statistically significant effect on microenterprises' annual turnover profit. Conversely, small changes in formal insurance have a mixed effect on annual turnover profit. At the 10th and 25th percentiles, a small increment in insurance reduces annual turnover profit but increases microenterprise annual turnover profit at the 75th percentile. Meanwhile, the evidence from the generalized ordered logit model showed that financial inclusion reduces the likelihood of microenterprises being classified as least developed and increased the chances of microenterprises falling into emerging and developed business categories.Research limitations/implicationsThis study makes use of a cross-sectional survey dataset, as a result, it does not infer causal relationships over the long term, but rather an association between the independent and dependent variables.Practical implicationsOverall, formal and informal financial inclusion enhances the annual turnover profit for microenterprises, particularly at the 50th and 75th percentiles in the Kingdom of Eswatini. The authors recommend a specialized institution such as a micro, small and medium-sized partial credit guarantee scheme to improve the quality and affordability of credit for microenterprises, and a mix of financial and non-financial supports depending on the development stage to boost a sustainable microenterprises' sector.Originality/valueThe study uses two advanced cross-sectional techniques, the recentered influence function framework and the generalized ordered logit model to analyze the data. The paper is original and contributes to the discussion of the role of financial inclusion in enabling microenterprises' success in Africa, using the FinScope 2017 survey of microenterprises in Eswatini as a case study.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-10-2020-0689.

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Section: Performance Of Msmes In Eswatinimentioning

confidence: 99%

“…Mohamad et al. (2015) employed structural equation modelling to examine the relationship between firm performance and internal and external sources of finance in Malaysia and found that internal and external sources of finance have no significant effect on SMEs' performance.…”

Section: Literature Reviewmentioning

confidence: 99%

Financial inclusion and performance of MSMEs in Eswatini

Fomum

Opperman

2023

IJSE

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“…Por outro lado, a de se considerar que os APLs são compostos, em sua maioria, por pequenas empresas (SIMONETTI; KAMIMURA; OLIVEIRA, 2015), e que a continuidade empresarial desses negócios depende do acesso a fontes externas de financiamento. Sobre esse assunto, Cerbusca (2015) argumenta que, em sua fase inicial de funcionamento, as pequenas e médias empresas contam principalmente com fontes internas de financiamento, contudo, quando o custo de crescimento dessas empresas ultrapassa a disponibilidade de recursos financeiros dos proprietários, esses empreendimentos passam a depender de fontes externas de financiamento (HUSSAIN; MILLMAN;MATLAY;2006), que assumem papel de destaque na produtividade e crescimento desses negócios (MOHAMAD et al, 2015).…”

Section: Arranjo Produtivo Local (Apl) Pequena Empresa E Financiamentounclassified

Financiamento Externo Em Apl: Uma Análise No Apl De Móveis De Máceio/Al

Lopes

Rocha

2022

E&G

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Diante das dificuldades enfrentadas pelas pequenas e médias empresas na obtenção de crédito, essa pesquisa endereçou a seguinte questão: quais barreiras e fatores limitantes impedem o acesso de empresas participantes de APL a financiamentos externos? Nesse cenário, esse estudo tem como objetivo discutir o acesso a financiamentos externos por empresas participantes do Arranjo Produtivo Local (APL) de Móveis de Maceió, Alagoas. Especificamente essa pesquisa buscou identificar as barreiras para prospectar apoio financeiro externo, descrever os fatores limitantes no acesso a crédito, assim como mencionar as ações de apoio desenvolvidas pela gestão do APL. Para alcance dos objetivo proposto foi realizada uma pesquisa qualitativa, por meio de um estudo de caso único integrado, cujas unidades de análise foram duas empresas participantes e a gerência do APL de Móveis de Maceió/AL. Os resultados indicam ampla diversidade de dificuldades enfrentadas pelas empresas, assim como o papel moderador exercido pela entidade gestora do arranjo.

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“…The main sources of external financing offered in Malaysia come from financial institutions, namely Banking Institutions (BIs) and the Development Financial Institutions (DFIs) (Mohamad et al, 2015). Unfortunately, it is often not readily accessible for SMEs as financial institutions provide financing for businesses particularly successful ones and those which continue to grow (Abdesamad and Wahab, 2014).…”

Section: Youth Entrepreneurs and Sources Of Financingmentioning

confidence: 99%

SMEs Financing Issues in Malaysia: Youth Entrepreneurs Perspective

Salim¹,

Kassim²,

Thaker³

2020

theijhss

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Introduction Youth unemployment is regarded as a major issue worldwide including Malaysia. The youth unemployment rate in Malaysia is three times higher than the total population. Unemployment rate among youth can have negative effects on the economy and social landscape if not curbed. It is widely accepted that entrepreneurship is capable to reduce unemployment as well as stimulate economic growth. Youth entrepreneurship may generate employment opportunities for youth, raise income for them and alleviate poverty (Chigunta, 2002). Hence, youth entrepreneurs have been known to play an important role in the process of economic development and guarantee sustainable growth (Sitoula, 2015). Recently, Malaysian government has launched the National Entrepreneurship Policy 2030 (NEP2030) and the Shared Prosperity Vision 2030 (SPV2030) where among the main objectives is to encourage the development of youth entrepreneurs in Malaysia. The government of Malaysia has placed serious emphasis on the development of youth entrepreneurs and considers it a key element in positively contributing to the country's gross domestic product (GDP). The Malaysian government has always provided support to youth entrepreneurs including assisting them in terms of financing, physical infrastructure, and business advisory support through the establishment of various agencies like, the Malaysian Global Innovation and Creativity Centre (MaGIC) and the Graduate Entrepreneurship Fund which were initiated by the government to expand the development of youth entrepreneurs in Malaysia (Nor, Masdek and Maidin 2015). Despite the importance of youth entrepreneurs in the national economy and the considerable support from the government, the results are rather disappointing when the impacts of these extensive support systems are found to be insignificant. This is evidenced by a survey conducted by Khazanah Research Institute (2018) where only 8% of young job seekers are selfemployed. The Graduates Tracer Study (2018) conducted by the Ministry of Higher Education (MoHE) found that there is a total of 170,105 graduates and only 6.5% are self-employed. According to Ridzwan et al., (2017), there are 107,306 cases of bankruptcies among entrepreneurs in Malaysia from January to April 2015, where 948 of them are youth. Furthermore,

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Financial access for starting a business: Evidence of internal and external financial sources, and performance of Malaysian SMEs

Cited by 9 publications

References 39 publications

Financial inclusion and performance of MSMEs in Eswatini

Financial inclusion and performance of MSMEs in Eswatini

Financiamento Externo Em Apl: Uma Análise No Apl De Móveis De Máceio/Al

SMEs Financing Issues in Malaysia: Youth Entrepreneurs Perspective

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