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Determinants of microcredit loans repayment problem among microfinance borrowers in Malaysia

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  • Suraya Hanim Mokhtar

    (Lecturer, Department of Social Science,Faculty of Agriculture and Food Sciences,Universiti Putra Malaysia)

  • Gilbert Nartea

    (Senior Lecturer, Faculty of Commerce,Department of Accounting, Economics and Finance,Lincoln University, Canterbury, New Zealand)

  • Christopher Gan

    (Associate Professor, Faculty of Commerce,Department of Accounting, Economics and Finance,Lincoln University, Canterbury, New Zealand)

Abstract

Microfinance has been widely accepted as a policy option for alleviating poverty. However, microfinance institution often facing loan repayment problem. Loan default or lower loan collection can be caused by borrowers’ themselves or unfavourable loan product’s characteristics designed by the microfinance institutions. This paper investigates the determinants of loan repayment problems among microfinance borrowers in TEKUN and YUM institutions in Malaysia. By using logistic regression model, the empirical results showed borrower’s characteristic (age, gender and type of business involved) and microcredit loan’s characteristics (mode of repayment, repayment amount) are among the factors contribute to microcredit loan repayment problem among TEKUN and YUM borrowers in Malaysia.

Suggested Citation

  • Suraya Hanim Mokhtar & Gilbert Nartea & Christopher Gan, 2012. "Determinants of microcredit loans repayment problem among microfinance borrowers in Malaysia," International Journal of Business and Social Research, LAR Center Press, vol. 2(7), pages 33-45, December.
    • Handle: RePEc:lrc:larijb:v:2:y:2012:i:7:p:33-45
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    Cited by:

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    2. Bilau, José & St-Pierre, Josée, 2018. "Microcredit repayment in a European context: evidence from Portugal," The Quarterly Review of Economics and Finance, Elsevier, vol. 68(C), pages 85-96.
    3. Meishan Jiang & Krishna P. Paudel & Seydina O. Sene, 2022. "Does counter‐guarantee affect microcredit mechanism's performance on repayment? Evidence from Guangzhou, China," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 1807-1817, April.
    4. Mutaleb, Md Z. & Baharanyi, Ntam R. & Tackie, Nii O. & Zabawa, Robert, 2014. "An Assessment Of Microlending Programs In The Alabama Black Belt Region," Professional Agricultural Workers Journal (PAWJ), Professional Agricultural Workers Conference, vol. 2(2), pages 1-11.
    5. Selay Sahan & Euan Phimister, 2023. "Repayment performance of joint‐liability microcredits: Metropolitan evidence on social capital and group names," Bulletin of Economic Research, Wiley Blackwell, vol. 75(2), pages 287-311, April.
    6. Dorfleitner, Gregor & Oswald, Eva-Maria, 2016. "Repayment behavior in peer-to-peer microfinancing: Empirical evidence from Kiva," Review of Financial Economics, Elsevier, vol. 30(C), pages 45-59.
    7. Ellis Kofi, Akwaa-Sekyi & Portia, Bosompra, 2015. "Determinants of business loan default in Ghana," MPRA Paper 71961, University Library of Munich, Germany.
    8. Abu, Benjamin Musah & Domanban, Paul Bata & Haruna, Issahaku, 2017. "Microcredit Loan Repayment Default among Small Scale Enterprises: A Double Hurdle Approach," MPRA Paper 101576, University Library of Munich, Germany, revised 12 Mar 2017.
    9. Jorge Mota & António Carrizo Moreira & Cristóvão Brandão, 2018. "Determinants of microcredit repayment in Portugal: analysis of borrowers, loans and business projects," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 17(3), pages 141-171, November.
    10. Leite, Rodrigo & Mendes, Layla & Camelo, Emmanuel, 2024. "Innovating microcredit: how fintechs change the field," Journal of Economics and Business, Elsevier, vol. 128(C).
    11. Adil EL Fakir & Richard Fairchild & Youssef Lamrani Alaoui & Dora Chan & Mohamed Tkiouat & Zaid Amer, 2024. "Kinship, gender and social links impact on micro group lending defaults," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(2), pages 2527-2542, April.
    12. Uma Murthy & Paul Anthony Mariadas, 2017. "An Exploratory Study on the Factors Contributing Loan Repayment Default among the Loan Borrowers in Micro Finance Institutions in Shah Alam, Selangor," International Journal of Business and Management, Canadian Center of Science and Education, vol. 12(12), pages 242-242, November.
    13. Salvador Cruz Rambaud & Joaquín López Pascual & Emilio M. Santandreu, 2023. "A socioeconomic approach to the profile of microcredit holders from the Hispanic minority in the USA," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-25, December.

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