Impact of microfinance loans on the performance of SMEs: the case of Lebanon
Abstract
Microfinance is the arrangement of budgetary administrations to low-income individuals and to SMEs. An empirical study was undertaken to identify the relationship between micro credits from MFIs and the SMEs’ financial performance. Secondary data were collected from 17 SMEs in North Lebanon. Another secondary data were collected from four MFIs in Lebanon concerning the characteristics of their beneficiaries. Data were analyzed using SPSS Ver. 23. The results showed notable relationships between amount of micro loan and the dependent variables, the number of women recipients of credits remains little in Lebanon, the categories of businesses mostly profiting from the MFIs in Lebanon are commerce, service, and trade sectors and the beneficiaries are primarily situated at Mount Lebanon, South, Bekaa, and at the north. The research contributes to the enduring deliberation on the effect of micro loans on the SMEs’ financial performance. It is vital to see how MFIs could add to the monetary advancement of the country, by improving the welfare levels of all the needy individuals. This study can be utilized to provide useful empirical evidence for future research and to raise awareness on this significant matter for SMEs’ managers, MFIs’ managers and clients, and for the analysts.
Keyword : microfinance, MFIs, micro credits, micro loans, SMEs, SMEs’ performance, miniaturized scale loans
How to Cite
Moussa, F. (2020). Impact of microfinance loans on the performance of SMEs: the case of Lebanon. Business: Theory and Practice, 21(2), 769-779. https://doi.org/10.3846/btp.2020.11110
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Tan, P.-W., Ashari, Z. M., Faizal, D. R., Nassir, A. M. (2016). Impact of microfinance facilities on performance of small medium enterprises in Malaysia. World Applied Sciences Journal, 34(12), 1845–1849.
Wahidi, I. (2017). Microcredit in Lebanon: First data on its beneficiaries. International Business Research, 10(4), 1913–9004. https://doi.org/10.5539/ibr.v10n4p32
Waliaula, R. (2012). Relationship between microcredit and the growth of small and medium enterprises in Kenya. Working paper, University of Nairobi, Kenya.
Weisberg, S. (2005). Applied linear regression (3rd ed.). John Wiley & Sons, Inc. https://doi.org/10.1002/0471704091
Allen, M. (1997). Understanding regression analysis. Plenus Press.
Ashenafi, D. (2017). Financial operating performance and challenges of OMO and WISDOM microfinance institutions in Dilla town, Ethiopia. International Journal of Advanced Research, 6(2), 778–790. https://doi.org/10.21474/IJAR01/6494
Awuah, S., & Addaney, M. (2016). The interactions between microfinance institutions and small and medium scale enterprises in the Sunyani municipality of Ghana. Asian Development Policy Review, 4(2), 51–64. https://doi.org/10.18488/journal.107/2016.4.2/107.2.51.64
Azeref, A., & Gelagil, Y. (2018). Role of financial institution on the growth of small and medium enterprises: the case in North Shewa Zone, Amhara region, Ethiopia. Journal of Investment and Management, 6(5), 143–150. https://doi.org/10.11648/j.jim.20180705.12
Bawley, D. (1999). Corporate governance and accountability: what role for the regulator director and auditor? Quorum Books.
Bhaskar, A. (2015). Microfinance in South India: A case study [PhD’s Thesis]. USA: University of Pennsylvania.
Boateng, G., Boateng, A., & Bampoe, H. (2015). Microfinance and poverty reduction in Ghana: evidence from policy beneficiaries. Review of Business and Finance Studies, 6(1), 99–108.
Delija, A. (2017). The Impact of the SME Financing by MFIs in Albania. Mediterranea Journal of Social Science, 8(3), 315–320. https://doi.org/10.5901/mjss.2017.v8n3p315
Fauster, A. (2014). The impact of micro-finance on the performance of small-scale enterprises: A comparison of Sinapi Aba Trust and Maata-N-Tudu Associations in Wa Municipality, Ghana. Ghana Journal of Development Studies, 11(2), 1–13. https://doi.org/10.4314/gjds.v11i2.1
Florido, J., Adame, M., & Tagle, M. (2015). Financial strategies, the professional development of employers and performance of SME’s (AGUASCALIENTES Case). Procedia, 174, 768–775. https://doi.org/10.1016/j.sbspro.2015.01.613
Geoffrey, A., & Emenike, K. (2017). Microfinance institutions’ support and growth of small and medium enterprises. Journal of Business and Economics, 22(1), 19–44.
Green, C., Kirkpatrick, C., & Murdinde, V. (2006). Finance for small enterprise growth and poverty reduction in developing countries. Journal of International Development, 18, 1017–1030. https://doi.org/10.1002/jid.1334
Grob, C. (2018). Inventory management in multi-echelon networks: on the optimization of recorder points. Springer. https://doi.org/10.1007/978-3-658-23375-4
Kasali, T., Ahmad, S., & Lim, H. (2016). The role of microfinance in Poverty alleviation: Empirical Evidence from South-West Nigeria. Asian Social Science, 11(21), 19911–2025. https://doi.org/10.5539/ass.v11n21p183
Kibet, D. K., Achesa, K., & Gedion, O. (2015). Effects of microfinance credit on the performance of small and medium enterprises in Uasin Gishu county, Kenya. Working paper, University of Eastern Africa, Kenya.
Kihara, D. (2016). The effect of micro finance services on financial performance of small and medium enterprises in Nairobi County. Working paper, University of Nairobi, Kenya.
Kimotho, M. W. (2007). The key success factors in microfinance: wide outreach and long-term sustainability. The Nigerian Microfinance, 4.
Mayoux, L. (2001). Impact assessment of microfinance: Towards a sustainable learning process. EDIAIS Application guidance note.
Mendenhall, M., Beaver, R. M., & Beaver, B. (2009). Introduction to probability and statistics (13th ed.). Cenage learning.
MoET. (2018). M/SMEs in Lebanon, Status, strategy and outcomes. https://www.economy.gov.lb/media/11222/smes-in-lebanon-180412-19-website.pdf
Monge, J. (2016). The impact of microcredit in the performance of small and medium enterprises in Tanzania: A case of Temeke municipality. Working paper, Open University of Tanzania,Tanzania.
Murdoch, A. J. (2000). The microfinance schism. World Development, 28, 617–629. https://doi.org/10.1016/S0305-750X(99)00151-5
Nendakulola, K. (2015). The impact of microfinance institutions on the growth of micro and small enterprises in Tanzania. Working paper, Mzumbe University, Tanzania.
Owusu, G. (2012). The impact of microfinance institutions on the development of micro and small scale enterprises in Ghana. Working paper, Kwame Nkrumah University of Science and Technology, Ghana.
Peprah, J., & Ayayi, A. (2016). Return to micro‐credit on small‐scale businesses: a case study of Ghanaian MFI. Journal of International Development, 28, 606–622. https://doi.org/10.1002/jid.3139
Pérez-Goméz, P., Arbelo-Peréz, M., & Arbelo, A. (2018). Profit efficiency and its determinants in small and medium-sized enterprises in Spain. BRQ Business Reasearch Quarterly, 21(4), 238–250. https://doi.org/10.1016/j.brq.2018.08.003
Quaye, I., Abrokwah, E., Sarbah, A., & Osei, J. (2014). Bridging the SME financing gap in Ghana: The role of microfinance institutions. Open Journal of Business and Management, 2, 339–353. https://doi.org/10.4236/ojbm.2014.24040
Reed, J. (2014). The birth control movement and American society: From private vice to public virtue. Paperback.
Robinson, M. (2001). The microfinance revolution: Sustainable finance for the poor. World Bank Publications. https://doi.org/10.1596/0-8213-4524-9
Rono, L. (2018). Microcredit and its relationship to the growth of small and medium enterprises in Konoin subcounty, Kenya. International Journal of Advanced Research, 6(4), 961–968. https://doi.org/10.21474/IJAR01/6935
Samer, S., Majid, I., Rizal, S., Muhamad, M., Halim, S., & Rashid, N. (2015). The impact of microfinance on poverty peduction: Empirical evidence from Malaysian perspective. Social and Behavioral Sciences, 195, 721–728. https://doi.org/10.1016/j.sbspro.2015.06.343
Statistics. (2018). https://statistics.laerd.com/spss-tutorials/one-way-manova-using-spss-statistics-2.php
Tan, P.-W., Ashari, Z. M., Faizal, D. R., Nassir, A. M. (2016). Impact of microfinance facilities on performance of small medium enterprises in Malaysia. World Applied Sciences Journal, 34(12), 1845–1849.
Wahidi, I. (2017). Microcredit in Lebanon: First data on its beneficiaries. International Business Research, 10(4), 1913–9004. https://doi.org/10.5539/ibr.v10n4p32
Waliaula, R. (2012). Relationship between microcredit and the growth of small and medium enterprises in Kenya. Working paper, University of Nairobi, Kenya.
Weisberg, S. (2005). Applied linear regression (3rd ed.). John Wiley & Sons, Inc. https://doi.org/10.1002/0471704091