The determinants of microcredit quality in Malaysia: A panel evidence

Research output: Contribution to journalArticle

Abstract

This paper examines the determinants on microcredit quality in Malaysia that is measured by using the number of microcredits late in repayment (microcredit at risk). The study utilizes a static panel technique for 13 states and 3 federal territories in Malaysia from 2011 to 2015. Additionally, the study expands the understanding of microcredit quality, which captures the intensity of the default rate measured by the number of microcredits late in payment concerning Microcredit Organization’s (MO) variable. Results show that the MO female clients have a significant negative effect on the microcredit quality. The average number of borrowing per branch and lower income household are positively significant on microcredit quality. The findings suggest that the MOs should increase their number of branches or microcredit officers but depending on the cost effectiveness. Opening up new branches and hiring more microcredit officers may be impracticable to the organization. The MOs may also seek a better balance by having prospective borrowers and provide technical training assistance in order to improve the microcredit quality in Malaysia, besides enhancing the ability and skill of the borrowers. Therefore in order to sustain, the MO should have quality regulation on loan disbursement and enhance the ability and skills of the borrowers in Malaysia.

Original languageEnglish
Pages (from-to)642-656
Number of pages15
JournalInternational Journal of Business and Society
Volume20
Issue number2
Publication statusPublished - 1 Jan 2019

Fingerprint

Malaysia
Microcredit
Cost-effectiveness
Technical training
Low income
Hiring
Loans
Household
Borrowing
Payment
Default rate

Keywords

  • Lower income group
  • Malaysia
  • Microcredit organization
  • Microcredit quality

ASJC Scopus subject areas

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management

Cite this

The determinants of microcredit quality in Malaysia : A panel evidence. / Selvaraj, Thilagarani; Karim, Zulkefly Abdul; Abdul-Rahman, Aisyah; Chamhuri, Norshamliza.

In: International Journal of Business and Society, Vol. 20, No. 2, 01.01.2019, p. 642-656.

Research output: Contribution to journalArticle

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