Assessing the impact of microfinance on women’s business success

This study develops a conceptual framework to examine the impact of microfinance financial (FS) and non-financial services (NFS) on the socioeconomic performance of Malaysia’s Bottom 40% Income Group (B40), with a particular focus on entrepreneurial success among women entrepreneurs. Using the Household Economic Portfolio (HEP) model, the framework integrates FS (e.g., microcredit, micro-savings, micro-insurance) and NFS (e.g., training programs, business coaching) as critical interventions for economic empowerment. The Entrepreneurial Competencies (EC) are introduced as a mediating factor, highlighting how human capital development influences business success. Additionally, the Microfinance Institutions’ Efficiency (MIE) is explored as a moderating factor shaping the effectiveness of these services. The study employs a cross-sectional survey design by collecting data from 500 B40 households receiving microfinance services from Amanah Ikhtiar Malaysia (AIM). Using Partial Least Squares Structural Equation Modeling (PLS-SEM), the study examines the direct, indirect, and moderating effects of microfinance services on household economic performance. Findings suggest that microfinance interventions significantly enhance entrepreneurial competencies, equipping women entrepreneurs with the skills needed for business success. This study underscores the need for targeted support mechanisms to strengthen microfinance strategies and ensure sustainable socioeconomic development for B40 households. Future empirical validation of this framework is needed to further refine poverty alleviation policies and women’s economic empowerment initiatives.