Assessing Financial Returns on Microloans from Economic, Social and Environment Impact: A Case in Kota Kinabalu

Abstract

In Malaysia microfinance programs have been implemented since 1987 as one of the poverty eradication approaches. There are three large microfinance institutions in Malaysia known as Amanah Ikhtiar Malaysia (AIM), Yayasan Usaha Maju (YUM) and The Economic Fund for National Entrepreneurs Group (TEKUN). The main objective of this study being carried out is to determine whether financial and non-financial services influence the impact of microcredit among AIM, TEKUN and YUM recipients by using economic, social and environment as the impact of microcredit. In this study, financial services cover loan services in loan disbursements, loan repayment, loan size, loan usage and loan interest rate. The non-financial services cover training, monitoring, communication and pressure. A total of 350 questionnaires were distributed. However, only 300 questionnaires were returned. Based on 300 respondents, data was analyzed using Statistical Package for Social Science (SPSS) for profile of the respondents and Partial Least Square (SmartPLS) for measurement model and structural model. The result indicates that financial services has an impact on economy and social only, while non-financial services has an impact on economy, social as well as environment. This study also consistents with previous studies regarding financial services and nonfinancial services and its impact with microcredit. Finally, this study discusses some practical and theoretical implication as well as some suggestion for both borrowers and microfinance
institutions to improve and develop economically, environmentally financial instruments. Keywords: Financial return, microloans, economic, social, environment