The Effects of Services by Microfinance Institutions on the Welfare of Urban Households in Malaysia

Koh Her Loke, Solarin Sakiru Adebola, Suganthi Ramasamy, Jauhari Dahalan

Abstract


ABSTRACT

The primary aim of this paper is to investigate the impact of financial (microcredit and microinsurance) and nonfinancial services (training), services by microfinance on the welfare of their urban clients in Malaysia. We contribute to the existing literature by using income as a mediating variable in the analysis. Questionnaires were distributed to 400 respondents across three different urban areas in Malaysia in order to collect the relevant data for this study. We have adopted the quota sampling to collect the data. The results show that most of the services provided by the microfinance institutions including microcredit, micro insurance and training have assisted the urban households to earn more income and enhance their socio-economic welfare. The recommendations arising from the results of this study are: 1) an environment that promotes cooperation between microfinance institutions and households should be enhanced and 2) well-diversified and dynamic microfinance programs and specific skills-building training programs should be created.

Keywords: Microfinance; socio-economic welfare; income

ABSTRAK

Matlamat utama kertas ini adalah untuk mengkaji impak perkhidmatan kewangan (kredit mikro dan insuran mikro) dan perkhidmatan bukan kewangan (latihan) oleh pembiayaan mikro terhadap kebajikan pelanggan bandar mereka di Malaysia. Sumbangan kajian kepada literatur sedia ada adalah dengan menggunakan pendapatan sebagai pengantara dalam analisis. Soal selidik telah diedarkan kepada 400 responden yang berada di tiga kawasan bandar yang berlainan di Malaysia untuk mengumpulkan data yang relevan. Kami telah menggunakan kaedah persampilan kuota untuk mengumpul data. Hasil kajian menunjukkan bahawa kebanyakan perkhidmatan yang disediakan oleh institusi kewangan mikro termasuk kredit mikro, insuran mikro dan latihan telah membantu isi rumah di kawasan bandar untuk mendapatkan lebih banyak pendapatan dan meningkatkan kebajikan sosio-ekonomi mereka. Cadangan yang timbul daripada hasil kajian ini adalah: 1) persekitaran yang mendorong kerjasama antara institusi kewangan mikro dan isi rumah harus dipertingkatkan, 2) program pembiayaan mikro yang pelbagai jenis dan dinamik serta khusus program latihan pengembangan kemahiran harus dijalankan.

Kata kunci: Pembiayaan mikro; kebajikan sosio-ekonomi; pendapatan


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