Exploring the challenges faced by microfinance industry in facilitating ecosystem financing for microenterprises in Malaysia

The alleviation of poverty is the most challenging task that is faced by all countries. One of the effective tools to alleviate poverty, applied across nations, is microfinance. Microfinancing is one of the most effective tools being used to alleviate poverty in most nations, including Malaysia. Microfinance services began with a single product, the microcredit small loan facility, which later evolved into a range of financial services along with non-financial services. Since then, there have been many spinoffs from developments in microfinance, such as the diversity of microfinance models and products. Likewise, there have been similar efforts made in Malaysia. Despite the efforts, participation by microenterprises remains low in comparison to small and medium enterprises. Thus, this study intends to analyse and better understand the challenges faced by microenterprises with the aim of developing a conceptual model for the microfinance ecosystem to increase their participation. This study involves qualitative research using one-to-one interviews with microenterprises, focus group discussions with industry participants, and case studies of selected microfinance institutions. The research is an exploratory study with purposive sampling using simple random clustered sampling. Firstly, the study discovered that microenterprises' low participation is mainly due to differing beliefs, negative perceptions, and unfavorable experiences. Secondly, the study used thematic analysis to identify five main challenges faced by microenterprises, including a lack of knowledge and skills, poor management practices by microfinance institutions, inadequate outreach efforts, insufficient social support systems, and ongoing problems with business sustainability. Thirdly, the study proposes a conceptual model that integrates core functions, rules, and supporting functions through a market system approach to address the challenges faced by microenterprises. This approach ensures a coherent and continuous flow of activities. Finally, the study contributes to existing literature on microfinance in Malaysia by identifying key elements and challenges of the industry, providing practical insights to stakeholders for developing effective strategies. It proposes a model for an inclusive microfinance ecosystem and underscores the importance of education and tailored approaches due to heterogeneity of microenterprises while suggesting that government and donor agencies act as facilitators rather than core players. The study also lays a foundation for future research, including comparative studies and assessment of the proposed model's applicability

Name dc:type.qualificationname

dba

Level dc:type.qualificationlevel

doctoral

Grantor dc:publisher.institution

University of Wales Trinity Saint David

Year dc:date.issued

2023

Author dc:creator

• Non, Roszy

• H Gwyddorau Cymdeithasol (Cyffredinol)
• HG Cyllid

Dc Identifier Grantnumber

UWTSD

OAI identifier oai:identifier

oai:repository.uwtsd.ac.uk:2395