Microfinance services and MSE growth in Pakistan: The mediating perspective of social and psychological capital
PURPOSE: In the era of globalization and competition in a vigorous market, micro and small enterprises (MSEs) look for sustainable growth by consuming diverse resources. Previous studies have identified that financial services of microfinance are essential drivers for SMEs’ survival. Yet, the featur...
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| Format: | Article |
| Language: | English |
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Cognitione Foundation for the Dissemination of Knowledge and Science
2022-01-01
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| Series: | Journal of Entrepreneurship, Management and Innovation |
| Subjects: | |
| Online Access: | https://jemi.edu.pl/uploadedFiles/file/all-issues/vol18/issue1/JEMI_Vol18_Issue1_2022_Article4.pdf |
| _version_ | 1826906753681326080 |
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| author | Muhammad Farhan Jalil Azlan Bin Ali Zeeshan Ahmed |
| author_facet | Muhammad Farhan Jalil Azlan Bin Ali Zeeshan Ahmed |
| author_sort | Muhammad Farhan Jalil |
| collection | DOAJ |
| description | PURPOSE: In the era of globalization and competition in a vigorous market, micro and small enterprises (MSEs) look for sustainable growth by consuming diverse resources. Previous studies have identified that financial services of microfinance are essential drivers for SMEs’ survival. Yet, the feature role of other microfinance services, such as micro-credit, micro-savings, micro-insurance, training, and social networking, to achieve substantial growth of the MSE sector is still lacking, which explains why MSEs make such a small contribution to Pakistan’s economy. Therefore, the main purpose of the research is to consider the impact of microfinance services on the growth of MSEs in Pakistan, as MSEs are the most vulnerable group in the country and throughout the world. Moreover, this study also identified the mediating role of social and psychological capital in enhancing the productivity of microfinance services for MSEs. METHODOLOGY: 770 respondents from metropolitan cities in Pakistan were contacted for the survey, and the response rate was 64%. After screening the data, only 357 questionnaires appeared to be completed in all respects, so they were initially fed into the computer spread and then imported for further analysis. Structured questionnaires were used to collect the data from 357 micro and small enterprises operating in the developing market of Pakistan. Derived hypotheses were verified through Structural Equation Modelling (SEM) using AMOS 21. FINDINGS: The study’s findings revealed that microfinance services have an essential role in promoting MSE growth. Microfinance institutions’ services, such as micro-credit, micro-savings, micro-insurance, and training, play an important role in the development of MSEs. Moreover, social and psychological capital are the crucial factors that partially mediate the relationship between microfinance services and MSE growth in Pakistan. The limitation of this study is the adaptation of a crosssectional design to collect the data. Longitudinal research at different time frames may present diversified results. IMPLICATIONS: The study gives the impression that institutions of microfinance, practitioners, and other policymakers should enhance their perimeter to offer microfinance services and support group-based lending or training to maximize their social and psychological capital, through which MSEs may be able to attain substantial growth. ORIGINALITY/VALUE: This empirical study contributes to the literature on microfinance services and MSE growth by focusing on the mediating effect of social and psychological capital, and providing the foundation for further studies. |
| first_indexed | 2024-03-11T13:56:38Z |
| format | Article |
| id | doaj.art-e1285dea7401477188d5b775c5e33cb0 |
| institution | Directory Open Access Journal |
| issn | 2299-7326 |
| language | English |
| last_indexed | 2025-02-17T08:52:43Z |
| publishDate | 2022-01-01 |
| publisher | Cognitione Foundation for the Dissemination of Knowledge and Science |
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| series | Journal of Entrepreneurship, Management and Innovation |
| spelling | doaj.art-e1285dea7401477188d5b775c5e33cb02025-01-02T19:47:16ZengCognitione Foundation for the Dissemination of Knowledge and ScienceJournal of Entrepreneurship, Management and Innovation2299-73262022-01-011819313010.7341/20221814Microfinance services and MSE growth in Pakistan: The mediating perspective of social and psychological capitalMuhammad Farhan Jalil0Azlan Bin Ali1Zeeshan Ahmed2Lecturer, School of Business School, University of Technology Sarawak, Sibu, Sarawak, MalaysiaAssociate Professor, School of Business and Management, University of Technology Sarawak, Sibu, Sarawak, MalaysiaAssistant Professor, Lahore Business School, University of Lahore Gujrat Campus, Gujrat, Punjab 50700, PakistanPURPOSE: In the era of globalization and competition in a vigorous market, micro and small enterprises (MSEs) look for sustainable growth by consuming diverse resources. Previous studies have identified that financial services of microfinance are essential drivers for SMEs’ survival. Yet, the feature role of other microfinance services, such as micro-credit, micro-savings, micro-insurance, training, and social networking, to achieve substantial growth of the MSE sector is still lacking, which explains why MSEs make such a small contribution to Pakistan’s economy. Therefore, the main purpose of the research is to consider the impact of microfinance services on the growth of MSEs in Pakistan, as MSEs are the most vulnerable group in the country and throughout the world. Moreover, this study also identified the mediating role of social and psychological capital in enhancing the productivity of microfinance services for MSEs. METHODOLOGY: 770 respondents from metropolitan cities in Pakistan were contacted for the survey, and the response rate was 64%. After screening the data, only 357 questionnaires appeared to be completed in all respects, so they were initially fed into the computer spread and then imported for further analysis. Structured questionnaires were used to collect the data from 357 micro and small enterprises operating in the developing market of Pakistan. Derived hypotheses were verified through Structural Equation Modelling (SEM) using AMOS 21. FINDINGS: The study’s findings revealed that microfinance services have an essential role in promoting MSE growth. Microfinance institutions’ services, such as micro-credit, micro-savings, micro-insurance, and training, play an important role in the development of MSEs. Moreover, social and psychological capital are the crucial factors that partially mediate the relationship between microfinance services and MSE growth in Pakistan. The limitation of this study is the adaptation of a crosssectional design to collect the data. Longitudinal research at different time frames may present diversified results. IMPLICATIONS: The study gives the impression that institutions of microfinance, practitioners, and other policymakers should enhance their perimeter to offer microfinance services and support group-based lending or training to maximize their social and psychological capital, through which MSEs may be able to attain substantial growth. ORIGINALITY/VALUE: This empirical study contributes to the literature on microfinance services and MSE growth by focusing on the mediating effect of social and psychological capital, and providing the foundation for further studies.https://jemi.edu.pl/uploadedFiles/file/all-issues/vol18/issue1/JEMI_Vol18_Issue1_2022_Article4.pdfmicrofinance servicessocial capitalpsychological capitalmicro and small enterprisesstructural equation modeling |
| spellingShingle | Muhammad Farhan Jalil Azlan Bin Ali Zeeshan Ahmed Microfinance services and MSE growth in Pakistan: The mediating perspective of social and psychological capital Journal of Entrepreneurship, Management and Innovation microfinance services social capital psychological capital micro and small enterprises structural equation modeling |
| title | Microfinance services and MSE growth in Pakistan: The mediating perspective of social and psychological capital |
| title_full | Microfinance services and MSE growth in Pakistan: The mediating perspective of social and psychological capital |
| title_fullStr | Microfinance services and MSE growth in Pakistan: The mediating perspective of social and psychological capital |
| title_full_unstemmed | Microfinance services and MSE growth in Pakistan: The mediating perspective of social and psychological capital |
| title_short | Microfinance services and MSE growth in Pakistan: The mediating perspective of social and psychological capital |
| title_sort | microfinance services and mse growth in pakistan the mediating perspective of social and psychological capital |
| topic | microfinance services social capital psychological capital micro and small enterprises structural equation modeling |
| url | https://jemi.edu.pl/uploadedFiles/file/all-issues/vol18/issue1/JEMI_Vol18_Issue1_2022_Article4.pdf |
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