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Improving Small and Medium Enterprises Financing for Stronger Financial and Non-Financial Performance

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SMEs play a vital role in the economy of Malaysia. Microfinance provides small loans to the SMEs to enhance their businesses. With the SMEs representing 97.3% (645,136 establishments) of the total business establishments in Malaysia, it is crucial to have a continual investigation on the effects of microfinance have on these enterprises performance. This can expose viable areas of improvement needed for micro-financing activities. This research is aimed to investigate the relationship of microfinance with SMEs performance. The respondents are the SMEs from a district located in the state of Johor, Malaysia. Data were collected using the structured convenient sampling and analyzed with SPSS software. It was found that there is a strong positive relationship between microfinance with both the financial and non-financial SMEs performance (p < 0.001). The higher loan amount is significantly related to SMEs performance. It implies that regulators and policymakers should increase the loan amount limit of microfinance to finance the SMEs and in response, these microfinance institutions should increase their loan amount to further enhance SMEs performance.
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Keywords: Microfinance; Performance; SMEs

Document Type: Research Article

Affiliations: Faculty of Technology Management and Business, Universiti Tun Hussein Onn Malaysia, Malaysia

Publication date: April 1, 2017

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  • ADVANCED SCIENCE LETTERS is an international peer-reviewed journal with a very wide-ranging coverage, consolidates research activities in all areas of (1) Physical Sciences, (2) Biological Sciences, (3) Mathematical Sciences, (4) Engineering, (5) Computer and Information Sciences, and (6) Geosciences to publish original short communications, full research papers and timely brief (mini) reviews with authors photo and biography encompassing the basic and applied research and current developments in educational aspects of these scientific areas.
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