Delivery Mechanisms and Microenterprises Performance: An Analysis of Microcredit Program

Rosman Mahmood, Ahmad Suffian Mohd Zahari


Purpose: The process of identifying and defining effective delivery mechanisms is a critical issue in the management of microcredit programs to meet the firm's objectives and the customers’ needs. The purpose of this paper is to look at the relative importance of delivery mechanism in microcredit programs. In addition, this paper analyses the relationship between delivery mechanism and business performance among micro enterprises involved in microcredit programs. Methodology: The primary data of the study were obtained from 756 micro entrepreneurs under two major microcredit programs (AIM and TEKUN). Descriptive and t-test analysis were used to explain the findings of the study. Findings: Analysis of the study shows that cooperation from staff, the duration and method of loan repayment and monitoring of loan capital are important mechanism in the management of microcredit programs. T-test analysis revealed a significant difference in delivery mechanism between the two microcredit programs involved. Empirical findings show that the performance of micro enterprises under the AIM microcredit program is better than that of micro enterprises under the TEKUN microcredit program. Practical Implications: The performance of a microcredit program depends largely on their resource management. This involves operational efficiency, credit products offered, and customer support services. These three elements are critical factors in determining the effectiveness of the delivery mechanism in a microcredit program. Originality/value:The efficiency of delivery mechanisms through strategic resource management not only can enhance the competitive advantage of the AIM microcredit program but also affect the performance of the micro enterprises involved.


Doi: 10.28991/esj-2021-01281

Full Text: PDF


Delivery Mechanism; Microcredit; Micro Enterprises; Operational Efficiency; Credit Product; Social Development Programs; Performance.


Barney, Jay. “Firm Resources and Sustained Competitive Advantage.” Journal of Management 17, no. 1 (March 1991): 99–120. doi:10.1177/014920639101700108.

Collins, Christopher J. “Expanding the Resource Based View Model of Strategic Human Resource Management.” The International Journal of Human Resource Management 32, no. 2 (January 10, 2020): 331–358. doi:10.1080/09585192.2019.1711442.

Santos-Rodrigues, Helena, Pedro Figueroa Dorrego, and Carlos Fernandez Jardon. “The Influence of Human Capital on the Innovativeness of Firms.” International Business & Economics Research Journal (IBER) 9, no. 9 (December 20, 2010): 53–63. doi:10.19030/iber.v9i9.625.

Kamukama, Nixon, Augustine Ahiauzu, and Joseph M. Ntayi. “Competitive Advantage: Mediator of Intellectual Capital and Performance.” Journal of Intellectual Capital 12, no. 1 (January 18, 2011): 152–164. doi:10.1108/14691931111097953.

Gibbons, David S., and Jennifer W. Meehan. "The microcredit summit's challenge: Working toward institutional financial self-sufficiency while maintaining a commitment to serving the poorest families." Journal of Microfinance/ESR Review 1, no. 1 (1999): 131-192.

Yu, Jie, Xiao Han, Baozhen Chen, and Jinzheng Ren. “Estimating the Impact of Poverty Alleviation Microcredit on the Income of Poor Households Using the Propensity Score Matching Method: Evidence from China.” Agriculture 10, no. 7 (July 14, 2020): 293. doi:10.3390/agriculture10070293.

Prathap, B. N., K. C. Subrahmanya, and B. S. Harisha. “Microfinance Delivery – Challenges and Remedies.” International Journal of Management Studies V, no. 3(9) (July 1, 2018): 138-144. doi:10.18843/ijms/v5i3(9)/17..

Mahmood, Rosman, and M. Mohd Rosli. “Microcredit Position in Micro and Small Enterprise Performance: The Malaysian Case.” Management Research Review 36, no. 5 (April 19, 2013): 436–453. doi:10.1108/01409171311327226.

Zheng, Chen, and Junru Zhang. “The Impact of COVID-19 on the Efficiency of Microfinance Institutions.” International Review of Economics & Finance 71 (January 2021): 407–423. doi:10.1016/j.iref.2020.09.016.

McKernan, Signe-Mary. “The Impact of Microcredit Programs on Self-Employment Profits: Do Noncredit Program Aspects Matter?” Review of Economics and Statistics 84, no. 1 (February 2002): 93–115. doi:10.1162/003465302317331946.

Duasa, Jarita, and Nur Hidayah Zainal. “Determinants of Household Income of Micro-Finance Women Participants: a Quantile Regression Approach.” Ecofeminism and Climate Change 1, no. 1 (June 1, 2020): 63–74. doi:10.1108/efcc-03-2020-0002.

Ponsignon, F., P.A. Smart, and R.S. Maull. “Service Delivery System Design: Characteristics and Contingencies.” Edited by Patrik Jonsson. International Journal of Operations & Production Management 31, no. 3 (February 22, 2011): 324–349. doi:10.1108/01443571111111946.

Painter, Gary, and Shui-Yan Tang. "The microcredit challenge: A survey of programs in California." Journal of Developmental Entrepreneurship 6, no. 1 (2001): 1-16.

Olabamiji, Ogunlade, and Oseni Michael. “Credit Management Practices and Bank Performance: Evidence from First Bank.” South Asian Journal of Social Studies and Economics (April 19, 2018): 1–10. doi:10.9734/sajsse/2018/v1i125772.

Ravicz, R. Marisol. “Searching for Sustainable Microfinance: A Review of Five Indonesian Initiatives.” Policy Research Working Papers (November 30, 1999). doi:10.1596/1813-9450-1878.

Fatimah-Salwa, A. H., A. Mohamad-Azahari, and B. Joni-Tamkin. "Success factors of successful microcredit entrepreneurs: Empirical evidence from Malaysia." International journal of Business and Social science 4, no. 5 (2013): 153-159.

Ogunsanwo, Odunayo Femi, Rasheed Alade Abdulai, and Mojisola Abere. “Effects of Credit Policies on Delinquency Management of Microfinance Banks in Southwest, Nigeria.” International Journal of Academic Research in Business and Social Sciences 10, no. 5 (May 12, 2020): 456–470. doi:10.6007/ijarbss/v10-i5/7216.

Pereira, Sofia, and Paulo Mourao. “Why Does the Microcredit Borrowing Rate Differ Across Countries? A Cross-country Study.” International Journal of Social Economics 39, no. 8 (June 29, 2012): 536-550. doi:10.1108/03068291211238428.

Derban, William K., Jane M. Binner, and Andy Mullineux. “Loan Repayment Performance in Community Development Finance Institutions in the UK.” Small Business Economics 25, no. 4 (November 2005): 319–332. doi:10.1007/s11187-004-6483-y.

Obamuyi, Tomola M. “Credit Delivery and Sustainability of Micro‐credit Schemes in Nigeria.” Edited by Garth Cant. Journal of Enterprising Communities: People and Places in the Global Economy 3, no. 1 (March 27, 2009): 71-83. doi:10.1108/17506200910943689.

Ibn Boamah, Mustapha, and Jasmine Alam. “Canadian Micro-Credit Programs: An Investigation of Model Differences.” Journal of Small Business & Entrepreneurship 28, no. 4 (June 8, 2016): 307–324. doi:10.1080/08276331.2016.1189685.

Seibel, Hans Dieter, and Uben Parhusip. “Attaining Outreach with Sustainability: A Case Study of a Private Micro-Finance Institution in Indonesia.” IDS Bulletin 29, no. 4 (October 1998): 81–90. doi:10.1111/j.1759-5436.1998.mp29004009.x.

Estapé-Dubreuil, Glòria, and Consol Torreguitart-Mirada. “Microfinance and Gender Considerations in Developed Countries.” Management Research Review 33, no. 12 (November 15, 2010): 1140-1157. doi:10.1108/01409171011092194.

Rubach, Michael J., Don B. Bradley III, and Justin Eric Brown. "The determinants of the success of microlending: A comparison of Iraq and the United States." International Journal of Entrepreneurship 14 (2010): 59-70.

Armendáriz, Beatriz, and Jonathan Morduch. “The Economics of Microfinance.” MIT Press, (2010).

Richardson, Molly. "Increasing Microlending Potential in the United States through a Strategic Approach to Regulatory Reform." Journal of Corporation Law 34 (2008): 923-942.

Hung, C. R. "From south to north: A comparative study of microcredit programs in developing and developed countries." In 21st Annual Research Conference of the Association for Public Policy Analysis and Management, November, (1999): 4-6.

Sainz-Fernandez, Isabel, Begoña Torre-Olmo, Carlos López-Gutiérrez, and Sergio Sanfilippo-Azofra. “Crisis in Microfinance Institutions: Identifying Problems.” Journal of International Development 27, no. 7 (August 7, 2015): 1058–1073. doi:10.1002/jid.3129.

McNamara, Nora, and Stephen Morse. “Donors and Sustainability in the Provision of Financial Services in Nigeria.” IDS Bulletin 29, no. 4 (October 1998): 91–101. doi:10.1111/j.1759-5436.1998.mp29004010.x.

Christen, R. P. “Banking services for the poor: Managing for financial success: An expanded and revised guidebook for microfinance institutions.” Somerville: ACCION International, (1997).

Getubig, Ismael P., J. V. Remenyi, and B. Quinones. “Creating the Vision: Microfinancing the Poor in Asia-Pacific: Issues, Constraints, and Capacity-building.” Asian and Pacific Development Centre, Kuala Lumpur, Malaysia, (1997): 127.

Nourani, Mohammad, Nurhafiza Abdul Kader Malim, and Md Aslam Mia. “Revisiting Efficiency of Microfinance Institutions (MFIs): An Application of Network Data Envelopment Analysis.” Economic Research-Ekonomska Istraživanja 34, no. 1 (September 19, 2020): 1146–1169. doi:10.1080/1331677x.2020.1819853.

Wheelock, David C., and Paul W. Wilson. “The Evolution of Cost-Productivity and Efficiency among U.S. Credit Unions.” SSRN Electronic Journal (November 2010): 75-88. doi:10.2139/ssrn.1359349.

Dokulilová, Lenka, Karel Janda, and Pavel Zetek. “Sustainability of Microfinance Institutions in Financial Crisis.” European Financial and Accounting Journal 4, no. 2 (June 1, 2009): 7–33. doi:10.18267/j.efaj.65.

Farrington, Todd. "Efficiency in microfinance institutions." MicroBanking Bulletin 4, no. 1 (2000): 18-23.

Bhatt, Nitin, Gary Painter, and T. A. N. G. Shui-Yan. "Can microcredit work in the United States?" Harvard Business Review 77, no. 6 (1999): 26-27.

Salas-Velasco, Manuel. “The Technical Efficiency Performance of the Higher Education Systems Based on Data Envelopment Analysis with an Illustration for the Spanish Case.” Educational Research for Policy and Practice 19, no. 2 (November 2, 2019): 159–180. doi:10.1007/s10671-019-09254-5.

Harry, Mikel, and Richard Schroeder. “Summary: Six Sigma: Review and Analysis of Harry and Schroeder’s Book.” Currency (2006).

Peppard, Joe, and Philip Rowland. “The essence of business process re-engineering.” New York: Prentice-Hall Editions, (1995).

Dalla Pellegrina, Lucia, Giorgio Di Maio, Paolo Landoni, and Emanuele Rusinà. “Money Management and Entrepreneurial Training in Microfinance: Impact on Beneficiaries and Institutions.” Economia Politica (February 4, 2021). doi:10.1007/s40888-021-00217-9.

Roslan, Abdul H., and Mohd ZA Karim. "Determinants of microcredit repayment in Malaysia: The case of Agrobank." Humanity & Social Sciences Journal 4, no. 1 (2009): 45-52.

García, Mercedes Úbeda. “Training and Business Performance: The Spanish Case.” The International Journal of Human Resource Management 16, no. 9 (September 2005): 1691–1710. doi:10.1080/09585190500239341.

Chinomona, Richard. "Business owner’s expertise, employee skills training and business performance: A small business perspective." Journal of Applied Business Research (JABR) 29, no. 6 (2013): 1883-1896. doi:10.19030/jabr.v29i6.8224.

Tax, Stephen S., and Ian Stuart. “Designing and Implementing New Services: The Challenges of Integrating Service Systems.” Journal of Retailing 73, no. 1 (March 1997): 105–134. doi:10.1016/s0022-4359(97)90017-8.

Aragón-Sánchez, Antonio, Isabel Barba-Aragón, and Raquel Sanz-Valle. “Effects of Training on Business Results1.” The International Journal of Human Resource Management 14, no. 6 (September 2003): 956–980. doi:10.1080/0958519032000106164.

Zinger, J. Terence, Rolland LeBrasseur, and Louis R. Zanibbi. "Factors influencing early stage performance in Canadian microenterprises." Journal of Developmental Entrepreneurship 6, no. 2 (2001): 129-150.

Ang, Mei Hwa. “Empowering the Poor through Microcredit.” International Journal of Entrepreneurship and Innovation Management 4, no. 5 (2004): 485-494. doi:10.1504/ijeim.2004.005756.

Anku-Tsede, Olivia. “Microfinance Intermediation: Regulation of Financial NGOs in Ghana.” International Journal of Law and Management 56, no. 4 (July 8, 2014): 274–301. doi:10.1108/ijlma-07-2012-0025.

Alam, Saad. “The Impact of Credit and Non-Credit Aspects on Self-Employment Profit: A Comparison of Microcredit Programs and Commercial Lenders in Rural Bangladesh.” The Journal of Developing Areas 47, no. 1 (March 2013): 23–45. doi:10.1353/jda.2013.0018.

Berko, Lili, and Agota Gueullette. “Policy for Support of Small and Medium-Size Enterprises in Hungary: The Case of the Central Region.” Post-Communist Economies 15, no. 2 (June 2003): 243–257. doi:10.1080/14631370308096.

Fraser, Stuart, David Storey, Julian Frankish, and Richard Roberts. “The Relationship between Training and Small Business Performance: An Analysis of the Barclays Bank Small Firms Training Loans Scheme.” Environment and Planning C: Government and Policy 20, no. 2 (April 2002): 211–233. doi:10.1068/c0111.

Sharma, Manohar, and Manfred Zeller. “Repayment Performance in Group-Based Credit Programs in Bangladesh: An Empirical Analysis.” World Development 25, no. 10 (October 1997): 1731–1742. doi:10.1016/s0305-750x(97)00063-6.

Awaworyi Churchill, Sefa. “Microfinance Financial Sustainability and Outreach: Is There a Trade-Off?” Empirical Economics 59, no. 3 (May 14, 2019): 1329–1350. doi:10.1007/s00181-019-01709-1.

Berg, Gunhild. "Evaluating the impacts of microsaving: The case of Sewa Bank in India." Journal of Economic Development 35 (March 2010): 75-96.

Singh, Sri Ram. "Micro finance programmes in India-An overview." Anusandhanika 4, no. 2 (July 2012): 23-30.

Sekaran, Uma, and Roger Bougie. “Research Methods for Business: A Skill Building Approach.” John Wiley & Sons, (2016).

Swinney, Jane L., Rodney C. Runyan, and Patricia Huddleston. “Differences in Reported Firm Performance by Gender: Does Industry Matter?” Journal of Developmental Entrepreneurship 11, no. 2 (June 2006): 99–115. doi:10.1142/s1084946706000350.

Amrani, Mohamed BS, and Faris Hamza. "A Modeling Study of the Micro-finance İmpact on the Economic Performance of Micro-enterprises and the Well-being of Borrowers in Morocco: Case of Tangier-Tetouan-Al Hoceima Region." International Journal of Economics and Financial Issues 8, no. 5 (2018): 243-250.

Nunnally, J. C. “Psychometric theory.” (2nd ed.). New York: McGraw-Hill. (1978).

Full Text: PDF

DOI: 10.28991/esj-2021-01281


  • There are currently no refbacks.

Copyright (c) 2021 Ahmad Suffian Mohd Zahari, Rosman Mahmood