Determinants of repayment performance in microfinance programs in Malaysia: The case of Tekun Nasional programs

The objective of this study is to assess the potential factors influencing micro entrepreneur’s repayment performance in microfinance programs in Malaysia by developing a model of repayment performance. The study chooses TEKUN Nasional (TN) microfinance programs as a case study. The research framework of this study is built by four factors namely individual/borrower factors, firm/business factors, loan factors and institutional/lender factors. The study used mixed methodology, combining between quantitative and qualitative data through survey questionnaire and in depth interviews. However, the main study is based on quantitative data and supported by qualitative data. The analysis began with a descriptive exploration, followed by multinomial logit regression analysis and content analysis. Data were collected using multi stage random sampling in Peninsular Malaysia. 401 microentrepeneurs were selected as a sample for quantitative data and 21 microentrepreneurs and 6 TN State managers were selected for qualitative data. The results show that in terms of individual/borrower characteristics, only micro entrepreneur’s religious education level is statistically significant in the relationship between delinquent and good borrowers and between default and good borrowers. Whereas, in firm/business characteristics, the result shows that distance, business formality and total sales are statistically significant. The finding shows that total loan received, loan type and repayment schedule are the loan characteristics that affect micro entrepreneur’s loan repayment. In terms of institutional/lender characteristics, the finding shows that loan monitoring is statistically significant in the relationship between delinquent and good borrowers. This study contributes significantly to the knowledge of microfinance program at large, wherein it explains that repayment performance plays an important role to ensure that MFIs can continue providing microfinance to the micro entrepreneurs without depending on subsidie

Repayment performance in microfinance programs: An individual lending approach

This paper analyzes the repayment performance in microfinance programs in Malaysia that apply individual lending approach.The research framework of this study is built by four factors namely individual/borrower factors, firm/business factors, loan factors and institutional/lender factors as independent variables and repayment performance either paid on time, delinquent and default as dependent variables.The study used a mixed-method combining between quantitative and qualitative data through questionnaire survey, in-depth interviews, published and unpublished reports.The data of this study is gathered from 401 respondents in Peninsular Malaysia through multistage random sampling.The data is analysed by descriptive analysis and multinomial logit model. Meanwhile, for qualitative data, a total of 21 respondents (7 respondents who paid on time, 7 respondents who delinquent and 7 respondents who default) were selected randomly and structured interviews with 6 MFI’s State Managers.The results show that in terms of borrower characteristics, only micro entrepreneur’s religious education level is statistically significant in the relationship between delinquent and good borrowers and between default and good borrowers.Whereas, in firm/business characteristics, the result shows that distance, business formality and total sales are statistically significant.The finding shows that total loan received, loan type and repayment schedule are the loan characteristics that affect micro entrepreneur’s loan repayment.In terms of institutional/lender characteristics, the finding shows that loan monitoring is statistically significant in the relationship between delinquent and good borrowers.This study contributes significantly to the knowledge of microfinance program at large, wherein it explains the factors affecting repayment performance and repayment performance plays an important role to ensure that MFIs can continue providing microfinance to the micro entrepreneurs without depending on subsidies

Factors affecting repayment performance in microfinance programs in Malaysia

This paper attempts to determine the factors affecting repayment performance in microfinance programs in Malaysia by using a multinomial logit regression model.The data used in this study is gathered through a survey on 309 respondents of TEKUN Nasional clients in Peninsular Malaysia. Results of the study indicate that gender, formal religious education, distance to the lender office, business formality, total sales per month, total loan received, loan monitoring and loan disbursement lag have significantly affected borrower's repayment performance.The result also shows that no pressure from Microfinance Institutions to pay the loan may cause the clients delayed their payment or just pay at a minimum amount. Besides, 11 percent of responden ts also admitted that they not fully utilised the loan given for business that makes them finally default. The study suggests rebate should be given to the good borrowers to encourage them to repay their loan on schedule without delay and the establishment o f a formal specialized microfinance banking institution to cater for the financial needs of micro and small entrepreneurs, especially in Malaysia

A Descriptive Analysis of Corporate Governance Mechanisms and Earnings Management in Palestine

Research aims: The article aims to describe corporate governance (CG) characteristics and the extent of earnings management (EM) practices in non-financial firms listed on the Palestine Exchange from 2011 to 2018.Design/Methodology/Approach: The study employed the quantitative methodology. Collected data were summarized quantitatively using descriptive analysis with STATA 14. CG data were retrieved manually from published annual financial reports, while financial data for the EM calculation were collected from Thomson ONE.Research findings: Listed non-financial firms in Palestine only moderately complied with the Palestinian Code of Corporate Governance. Some Palestinian firms have also established an audit committee, one of the most important corporate governance mechanisms.Theoretical contribution/Originality: The findings provide insight into CG and EM in Palestine for regulators and policymakers. Practitioner/Policy implication: The results can assist policymakers in strengthening existing regulations and updating the current code of CG or introducing new policies to mitigate EM

Determinants of repayment performance in micro finance programmes in Malaysia

This paper analyses the repayment performance in microfinance programmes in Malaysia that applies in individual lending approach.The research framework of this study is built by four factors namely individual/borrower factors, firm/business factors, loan factors and institutional/lender factors as independent variables and repayment performance either paid on time, delinquent and default as dependent variables.The study used mixed methodology, combining between quantitative and qualitative data through questionnaire survey, in-depth interviews, published and unpublished reports.The data of this study is gathered from 401 respondents in Peninsular Malaysia through multistage random sampling.The data is analysed by descriptive analysis and multinomial logit model.Meanwhile, for qualitative data, a total of 21 respondents (7 respondents who paid on time, 7 respondents who delinquent and 7 respondents who default) were selected randomly and structured interviews with 6 MFI’s State Managers.The results show that in terms of borrower characteristics, only microentrepreneur’s religious education level is statistically significant in the relationship between delinquent and good borrowers and between default and good borrowers.Whereas, in firm/business characteristics, the result shows that distance, business formality and total sales are statistically significant.The finding shows that total loan received, loan type and repayment schedule are the loan characteristics that affect microentrepreneur’s loan repayment.In terms of institutional/lender characteristics, the finding shows that loan monitoring is statistically significant in the relationship between delinquent and good borrowers.This study contributes significantly to the knowledge of microfinance programme at large, wherein it explains the factors affecting repayment performance and repayment performance plays an important role to ensure that MFIs can continue providing microfinance to the microentrepreneurs without depending on subsidies

The importance of micro financing to the microenterprises development in Malaysia’s experience

This paper aims to explore the importance of micro financing to the development of micro-enterprises (MEs) in Malaysia.MEs play a vital role in developing Malaysian economy.MEs accounted about 80% of the total Small and Medium Enterprises (SMEs) and 78.7% of business establishments in Malaysia.However, MEs face numerous problems such as lack of marketing, technology and credit facility.Therefore, micro financing is a choice to the MEs because it provides an easy, faster and convenient financing facility. The paper examines the microfinance programs offer to the MEs in Malaysia.The paper concludes that a small credit can help micro entrepreneurs to boost up their business

Intermediary role performance analysis of Malaysian Islamic and conventional banks

The objective of this paper is to investigate the effect of bank specific characteristics and macroeconomics variables on bank margin (NIM) which reflects the intermediary role of Islamic and conventional banks in Malaysia for the period of 2006 to 2014. By using static panel analysis, the results show that management efficiency is positively related to the bank margin for both Islamic and conventional banks. For Islamic banks, bank size and liquidity ratio have significant negative relationship on bank margin. The default risk is positively related to bank margin for Islamic banks. As for conventional bank, the non interest to total asset ratio has significant positive relationship on bank margin. Therefore, the results show that there are similarities and differences in terms of determinant factors that affect the bank margin between Islamic banks and conventional banks. These empirical results suggest an important policy on issues pertaining to how Islamic and conventional banks have to adjust the changes in the banking environment. The conventional banks have more comparative advantages specifically on management efficiency as its intermediary role performance is also not affected by size

A Review on Product Development of Islamic Social Finance in Tijari Sector

Social finance is not new, but most low-income earners are not keen to utilize social finance products due to its association with riba (usury). Islamic social finance on the other hand offers the alternative to generate economy and create wealth, with its Shariah-compliant underlying principles. This new mechanism offers the alternative for people under the paradigm of Islamic economic system. This instrument covers the deficiency of Islamic finance, in both ijtimaie and tijari sectors. Thus, it is crucial to the stages involved in the creation of Shariah-compliant products that can meet the objectives of ijtimaie and tijari sectors. The main objective of this paper is to review the concept and paradigm of Islamic economic system and the position of Islamic social finance. It also reviews the product development and innovation of this mechanism. The methodology used for this is qualitative in nature, namely content analysis of the secondary sources of similar themes. It was found that there is very limited discussion on product development in Islamic social finance

The role of TEKUN Nasional in financing micro enterprise sector in Malaysia

In line with the government’s intention to become high income nation by 2020, SME development has become national priority to achieve Vision 2020. The government aims to bring SME, including micro enterprises into the economic mainstream to become an important engine in Malaysia’s economic growth.Therefore, many programs were implemented such as 1Azam program which builds up the capabilities of the poor and creates jobs for them in varied industries including agricultural and agro-based and small-business plus self-employment to create opportunities for low-income households to earn income independently.The government allocates a lot of funds such as Economic Stimulus Package, Economic Planning Unit (EPU) funds and SME development scheme.The government channels the funds through Micro Finance Institutions namely Amanah Ikhtiar Malaysia, TEKUN Nasional, MARA, PUNB and selected banks that offer microfinancing.This monograph discusses the Intermediary Model in financing micro enterprise sector in Malaysia and analyzing as well as determining the factors affecting repayment performance in microfinance programs in Malaysia