Investigating the Effect of Microcredit on Microenterprise Income in Peninsular Malaysia

Abstract

The primary purpose of this study is to examine the effect of Amanah Ikhtiar Malaysia (AIM)’s microcredit program on hardcore poor households’ microenterprise income in Peninsular Malaysia. A cross sectional design with stratified random sampling method was employed to obtain the above mentioned objective. Existing literature survey suggests that there is a gap in the literature on the topic of measuring the effect of AIMs microcredit programs on hardcore poor households’ microenterprise income in Peninsular Malaysia. The results of this study reveal that AIM’s microcredit program increases the microenterprise income of their clients in Peninsular Malaysia. Therefore, this study concludes that a diversified program should be undertaken with special focus on providing adequate training, flexible and diversified loan programs, and increasing outreach. In addition, there is a need to review and re-organize the existing policies to reduce the dropout rate.

Keywords: microcredit, microenterprise, hardcore poor, microenterprise income, Amanah Ikhtiar Malaysia

JEL Classification: O16, P46, I31