The impact of capital structure on the performance of microfinance institutions

Abstract

In this paper, the microfinance services are evaluated in the context of small-scale businesses in Jordan. The aim of this study is to emphasize on the importance of factors related to micro-finance as it helps in enhancing the firm’s performance. This study utilizes a quantitative approach to conduct a research on approximately 308 small-scale businesses. The study employs a method of confirmatory component analysis (CFA) held by applied Structure Equation Modelling (SEM) to achieve the research objective. The results demonstrate that performance was significantly associated with various micro-finance services such as training for managers, training skills, and loan size. In particular, micro-finance programs should be considered by small entrepreneurs, micro-finance institutions, and policy makers. Thus, the contribution of this work is the incorporation of micro-finance factors on SMEs performance. Managers of the SMEs will find guidance about which micro-finance factors is the most important for them to be considered in their roles and for improving SMEs performance.

Keywords

• Microfinance
• Business performance
• Small enterprises