This article examines the effect of microcredit on the performance of the micro and small enterprises (MSEs) in Amhara National Regional State, Ethiopia. A total of 340 MSEs were randomly selected, and a survey method was used. Average Sales volume was used to measure performances of MSEs. The findings suggested that the majority of MSEs in Ethiopia were engaged in manufacturing and urban agriculture sectors with a share of 48.53% and 26.76% of the total, respectively. Paired t-test analysis of the study confirmed that there was a significant difference between the sales, total asset, employment and net profit performance of MSEs after microcredit loan. The study concluded that loan size, savings and entrepreneurship training had a significant positive effect on the performance of MSEs. It is suggested that microfinancial institutions should strengthen their existing policies and strategies to increase credit to MSEs, enhancing the modalities of entrepreneurship training and mobilizing savings to achieve the envisioned targets of reducing unemployment and promoting the growth of MSEs in Ethiopia.
AbiolaB. (2012). Effects of microfinance on micro and small, enterprises (MSEs) in Nigeria. Asian Economic and Financial Review, 2(4), 81–87.
2.
AkinboadeO. A. (2015). Determinants of SMEs growth and performance in Cameroon’s central and littoral provinces’ manufacturing and retail sectors. African Journal of Economic and Management Studies, 6(2), 183–196.
3.
AkingunolaR. (2011). Small and medium scale enterprises and economic growth in Nigeria: An assessment of financing options. Pakistan Journal of Business and Economic Review, 2(1), 18–97.
4.
AldabaR. M. (2012). Small and medium enterprises’ (SMEs) access to finance: Philippines (Philippine Institute for Development Studies Discussion Paper Series No. 05).
5.
AlieroI. H., & YusufM. M. (2015). Analysis of impact of credit on the performance of SMEs in Sokoto Metropolis of Sokoto State of Nigeria. International Journal of Small Business and Entrepreneurship Research, 3(4), 22–31.
6.
AmentieC., NegashE., & KumeraL. (2016). Barriers to growth of medium and small enterprises in developing country: Case study Ethiopia. Journal of Entrepreneurship & Organization Management, 5(3), 3–6.
7.
AmoahS. K., & AmoahA. K. (2018). The role of small and medium, enterprises (SMEs) to employment in Ghana. International Journal of Business and Economics Research, 7(5), 151.
8.
AnneN. (2014). Factors affecting the performance of small and medium enterprises in the Jua Kali sector in Nakuru town, Kenya. IOSR Journal of Business and Management, 16, 80–93.
9.
AsmaB. B., DiabateA., & OthmanA. (2015). Establishing the factors affecting the growth of small and medium-sized enterprises in Algeria. American International Journal of Social Science, 4(2), 101–115.
10.
AssefaA., GebrehiwotA., & MulatD. (2005). Rural finance in Ethiopia: Assessment of the financial products of microfinance intuitions (Association of Ethiopian Microfinance Institution, Occasional paper No. 12). Addis Ababa.
11.
AssefaB., ZerfuA., & TekleB. (2014). Identifying key success factors and constraints in Ethiopia’s MSE development: An exploratory research (Ethiopian Development Research Institute Research Report No.18). Addis Ababa.
12.
AzerefA. G., & GelagilY. T. (2018). Role of financial institution on the growth of small and medium enterprises: The case in North Shewa Zone, Amhara Region, Ethiopia. Journal of Investment and Management, 7(5), 143–150.
13.
BanjiO. (2003). Financial System Strategy 2020 International Conference SME: Issues, Challenges and Prospects. FSS 2020 International Conference, 1–39.
14.
BatesT. (1995). Self-employment entry across industry groups. Journal of Business Venturing, 9026(94), 143–156.
15.
BilalA. R., KhanA. A., & AkoorieM. E. M. (2016). Constraints to growth: A cross country analysis of Chinese, Indian and Pakistani SMEs. Chinese Management Studies, 10(2), 365–386.
16.
BlackD. A., NoelB. J., & WangZ. (1999). On the job training, establishment size and firm size: Evidence for economies of scale in the production of human capital. Southern Economic Journal, 66(1), 82–100.
17.
BryanJ. (2006). Training and performance in small firms. International Small Business Journal, 24(6), 635–660.
18.
ChirkosA. Y. (2014). The role of microfinance institutions in the development of small and medium size businesses in Ethiopia: A case study in Amhara credit and saving institutions. Journal of Business Administration and Management Sciences Research, 5(13), 106–120.
19.
ChristopherI. F. (2010). Impact of microfinance on small and medium-sized enterprises in Nigeria. 7th International Conference on Innovation & Management, 1864–1871.
20.
CochranW. (1977). Sampling techniques (3rd ed.). John Wiley & Sons.
21.
CooperA. C., & WooC. Y. (1988). Entrepreneurs’ perceived chances for success. Journal of Business Venturing, 3(2), 97–108.
22.
CooperA. C., GimenogasconF. J., & WooC. Y. (1994). Initial human and financial capital as predictors of new venture performance. Journal of Business Venturing, 9, 371–395.
23.
CreswellJ. W. (2014). Research design: Qualitative, quantitative, and mixed methods approaches (4th ed.). SAGE Publications.
24.
CSA (1997). The Ministry of Labour and Social Affairs: Report on Urban Informal Sector Sample Survey, Central Statistical Authority, Addis Ababa.
25.
FeMSEDA (2011). Government of the Federal Democratic Republic of Ethiopia Micro and Small Enterprise Development Strategy, Provision Framework and Methods of Implementation ( Approved ). Addis Ababa.
26.
GarcíaM. (2005). Training and business performance: The Spanish case. International Journal of Human Resource Management, 16(9), 1691–1710.
27.
GerbaY. T., & ViswanadhamP. (2016). Small scale enterprise finance sources and constraints in Ethiopia, case study of Addis Ababa. International Journal of Science and Research, 5(4), 1426–1430.
28.
GTP-I (2010). Growth and Transformation Plan 2010/11-2014/2015. I, 7–58.
29.
GujaratiD. N. (2004). Basic econometrics (4th ed.). The McGraw-Hill Companies.
30.
GyimahP. (2018). Effect of microfinance products on small business growth: Emerging economy perspective. Journal of Entrepreneurship and Business Innovation, 5(1), 59–71.
31.
Hossain (1988). Credit for alleviation of rural poverty: The Grameen Bank in Bangladesh (IFPRI Research Report 65). International Food Policy Research Institute.
32.
IreneR., CharlesL., & JaphetK. (2015). Effects of microfinance services on the performance of small and medium enterprises in Kenya. African Journal of Business Management, 9(5), 206–211.
33.
IshaqA., & MishraM. (2020). Dimensional impact of social capital on financial performance of SMEs. The Journal of Entrepreneurship, 29(1), 1–15.
34.
KhandkerS. R. (2005). Microfinance and poverty: Evidence using panel data from microfinance and poverty: Evidence using panel data from Bangladesh. The World Bank Economic Review, 19(2), 263–286.
35.
KisakaS. (2015). Effects of micro-credit, micro-savings and training on the growth of small and medium enterprises in Machakos County in Kenya.
36.
KothariC. R. (2009). Research methodology methods and techniques (2nd ed.). New Age Publications.
37.
LevyB. (1993). Obstacles to developing indigenous small and medium enterprises: An empirical assessment. The World Bank Economic Review, 7(1), 65–83.
38.
LittlefieldB. Y. E., MorduchJ., & HashemiS. (2003). Is microfinance an effective strategy to reach the millennium development goals? (Focus Note 24). CGAP.
39.
MahmoodR., & RosliM. M. (2013). Microcredit position in micro and small enterprise performance: The Malaysian case. Management Research Review, 36(5), 436–453.
40.
MesconT. S. (1987). The entrepreneurial institute: Education and training for minority small business owners. Journal of Small Business Management, 25(1), 61–66.
41.
MugendaO., & MugendaG. (2003). Research methods: Quantitative and qualitative approaches. Nairobi Act Press.
42.
NBE (2016). National Bank of Ethiopia annual report. Addis Ababa.
43.
NdifeC. F. (2013). The impact of micro credit institutions on the development of small and medium enterprises in Anambra State. Journal of Business and Management, 14(5), 75–81.
44.
NG’ANAJ. J. (2013). The contribution of microfinance institution in development of small enterprises. Mzumbe University.
45.
OlekaC. D., MaduagwuE. N., & IgwenaguC. M. (2016). Analysis of the impact of micro-finance banks on the performance of small and medium scale enterprises in Nigeria. IJSAR Journal of Management and Social Sciences, 1(2), 45–63.
46.
OloweF., MoradeyoO., & BabalolaO. (2013). Empirical study of the impact of microfinance bank on small and medium growth in Nigeria. International Journal of Academic Research in Economics and Management Sciences, 2(6), 116–124.
47.
SampongS. (2011). The impact of micro credit on small businesses: Evidence from Microfinance and Small Loans Center (MASLOC).
48.
SimpsonM., TuckN., & BellamyS. (2004). Small business success factors: The role of education and training. Education + Training, 46, 481–491.
49.
SinghG., & BelwalR. (2008). Entrepreneurship and SMEs in Ethiopia. Gender in Management: An International Journal, 23(2), 120–136.
50.
TambunanT. T. H. (2011). Development of small and medium enterprises in a developing country. Journal of Enterprising Communities: People and Places in the Global Economy, 5(1), 68–82.
51.
TendaiC. (2014). Entrepreneurship education in South Africa. Mediterranean Journal of Social Sciences, 5(2), 403–416.
52.
WaliulaR. (2013). Relationship between microcredit and the growth of small and medium enterprises in Kenya (vol. 2). University of Nairobi.
53.
WanambisiA. N. (2013). Effects of microfinance lending on business performance: A survey of micro and small enterprises in Kitale Municipality, Kenya. International Journal of Academic Research in Business and Social Sciences, 3(7), 56–67.
54.
WasihunR., & PaulI. (2010). Growth determinants of women-operated micro and small enterprises in Addis Ababa. Journal of Sustainable Development in Africa, 12(6), 1–14.
55.
WatsonJ., & EverettJ. (1996). Small business failure rates: Choice of definition and the size effect. Journal of Entrepreneurial Finance, 5(3), 271–285.
56.
WebsterB., WalkerE., & BrownA. (2005). Australian small business participation in training activities. Education and Training, 47(8–9), 552–561.
57.
WoldayA. (2002). Product development in Ethiopia microfinance industry: Challenges and prospects. Micro Finance Theory Policy and Experience Proceedings of the International Workshop on The Dimension of Micro Finance Institutions in Sub Saharan Africa: Relevance of International Experience. Mekelle University.
58.
WoldayA. (2003). Microfinance in Ethiopia: Performance, challenges and role in poverty reduction (Occasional Paper No.7). Association of Ethiopian Microfinance Institutions (AEMFI).
59.
XavierS. R., KelleyD., KewJ., HerringtonM., & VorderwülbeckeA. (2012). Global Entrepreneurship Monitor GEM 2012 global report, Massachusetts.
60.
ZahraS. A., & GarvisD. M. (2000). International corporate entrepreneurship and firm performance: The moderating effect of international environmental hostility. Journal of Business Venturing, 15(5–6), 469–492.
