Factors influencing the effectiveness of microcredit schemes in improving the welfare of its beneficiaries at Amanah Ikhtiar Malaysia Kuala Terengganu / Amir Arsyad Azman

In most countries, micro-credit programs can be regarded as an effective instrument in encouraging public participation towards both political and economic processes of the country as well as proven tool implemented to free people from the low standard of living. In the pursuit of lowering the rate of poor population in the country, the government of Malaysia had taken an initiative to work together with nongovernmental organizations (NGOs) and private sectors. As the result, several agencies including Amanah Ikhtiar Malaysia (AIM), Tabung Economi Kumpulan Usahawan National (TEKUN), Bank Simpanan and AgroBank were established to assist the poor and hardcore poor people by providing loans for their businesses both in urban and rural areas in Malaysia. Micro-credit era begins with the establishment of Amanah Ikhtiar Malaysia in the year of 1987 that inspired by Grameen Bank Model for microfinancing in rural areas in Bangladesh. Total respondents of 302 of Amanah Ikhtiar Malaysia members have been collected. By using factors such as educational background, loan sufficiency and training provision as the chosen factors, it shows that the most influential factors that affects the effectiveness of AIM is loan sufficiency, followed by educational background and training provision. Based on the Pearson correlation results. It indicates that, there are positive significant relationship between all of the factors namely educational background, loan sufficiency, training provision and the effectiveness of AIM in improving the welfare of its beneficiaries. The research hopes to contribute in helping Amanah Ikhtiar Malaysia to improve its services to low income people.