Abstract
The microfinance program is believed to connect rural micro-enterprises with formal financial systems and has been emerged as an effective tool to solve poverty and unemployment problems in rural areas. To what extent Microfinance Institutions (MFIs) help in enhancing income of rural micro entrepreneurs? The present study addresses this issue by investigating the superiority of credit provided by MFIs in terms of earnings of microentrepreneurs compared to other means of financing. The dataset contains information on 200 rural microentrepreneurs, collected from Howrah district of West Bengal state of India. The result indicates that borrowing from MFIs enhance income of microentrepreneurs by 37 % compared to those running business using own sources of fund. Socioeconomic characteristics play an important role in reducing earning difference between borrowers from MFIs and others. Surprisingly, business know-how plays a miniscule role in enhancing income. This can be explained by the type of businesses they are involved. Because as majority of the credits are disbursed to petty trading, compared to manufacturing and agriculture that require more experience.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
Conversion of log difference to percentage difference is conducted by using the formula [exp(.)—1].
References
Bharathi K, Indira JP (2005) A refection on the Indian women on the entrepreneurial world. IIMA working series. W.P no 2005-08
Cliff J (1998) Does one size fit all? Exploring the relationship between attitudes towards growth, gender, and business size. J Bus Ventur 13(6):523–542
Imai KS, Arun T, Annim SK (2010) Microfinance and household poverty reduction: New evidence from India. World Dev 38(12):1760–1774
Krishna S (2007) Micro-enterprises — perspectives and experiences, ICFAI, ISBN: 8131412819
Kantor P (2002) A sectoral approach to the study of gender constraints on economic opportunities in the informal sector in india. Gend Soc 16(3): 285–302
Kumbhar VM (2013) Some critical issues of women entrepreneurship in rural india, Eur Acad Res 1(2)
Littlefield E, Morduch J, Hashemi S (2003) Is microfinance an effective strategy to reach the millenium development goals? CGAP. Focus Note 24
Ramji M, Stuti T (2009) Micro-housing loans for micro-entrepreneurs: a needs assessment. Micro Finance Rev 1(1):51–71
Sangeetha M (2013) Microfinance and women’s empowerment: A contemporary issues and Challenges. Int J Innovative Res Stud 2(5)
Sapovadia VK (2006) Micro finance: the pillars of a tool to socio-economic Development. Development Gateway, New York
Sapovadia VK (2007) Capacity building, pillar of micro finance (March 19, 2007). http://ssrn.com/abstract=975088 or http://dx.doi.org/10.2139/ssrn.975088
Saxena S. (2012) Problems faced by rural entrepreneurs and remedies to solve it IOSR. J Bus and Manage ISSN: 2278-487X 3(1)
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2014 Springer India
About this chapter
Cite this chapter
Ghosh, S., Bhandari, A.K. (2014). Microfinance and Rural Entrepreneurship: An Assessment. In: Bhandari, A., Kundu, A. (eds) Microfinance, Risk-taking Behaviour and Rural Livelihood. Springer, New Delhi. https://doi.org/10.1007/978-81-322-1284-3_4
Download citation
DOI: https://doi.org/10.1007/978-81-322-1284-3_4
Published:
Publisher Name: Springer, New Delhi
Print ISBN: 978-81-322-1283-6
Online ISBN: 978-81-322-1284-3
eBook Packages: Business and EconomicsEconomics and Finance (R0)