Impact of Microcredit on SMEs Performance in Malaysia

Rafiatul Adlin Hj Mohd Ruslan, Christopher Gan, Baiding Hu and Quang Nguyen
Additional contact information
Rafiatul Adlin Hj Mohd Ruslan: Islamic Finance and Finance Section, Business School, Universiti Kuala Lumpur, Malaysia
Christopher Gan: Agribusiness and Commerce, Department of Financial and Business Systems, Lincoln University, New Zealand
Baiding Hu: Agribusiness and Commerce, Department of Financial and Business Systems, Lincoln University, New Zealand

International Journal of Business and Economics, 2020, vol. 19, issue 1, 109-130

Abstract: This study investigates the relationship between access to microcredit and SMEs’ performance. Using survey data on SME’s owners/managers in Terengganu, Malaysia in 2016, the study investigates how access to microcredit affects SME sales and employment growth. Employing the Propensity Score Matching method (PSM), the study showed that SMEs with microcredit borrowing had their sales 25.6% to 25.7% higher than non-microcredit borrowers. After minimizing the selection bias from both observable and unobservable characteristics using Differences in Differences method (DID), the difference was much larger (28.7%). However, both PSM and DID analyses revealed no impact of microcredit access on SME employment growth. The Endogenous Switching Regression method (ESR) confirmed these findings.

Keywords: Microcredit; Malaysia; SME performance; Propensity Score Matching; Endogenous Switching Regression (search for similar items in EconPapers)
JEL-codes: L26 O53 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://ijbe.fcu.edu.tw/assets/ijbe/past_issue/No.19-1/pdf/vol_19-1-7.pdf (application/pdf)
https://ijbe.fcu.edu.tw/assets/ijbe/past_issue/No.19-1/abstract/07.html (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ijb:journl:v:19:y:2020:i:1:p:109-130

Access Statistics for this article

International Journal of Business and Economics is currently edited by Hsiang-Tsai Chiang (Editor-in-Chief), Chiung-Ju Huang (Editor-in-Chief), Feng-Jyh Lin (Associate Editor), Tzu-Ching Weng (Associate Editor), Hsin-Yi Huang (Managing Editor) and Szu-Hsien Ho (Managing Editor)

More articles in International Journal of Business and Economics from School of Management Development, Feng Chia University, Taichung, Taiwan Contact information at EDIRC.
Bibliographic data for series maintained by Szu-Hsien Ho ().