Impact of Microfinance on Entrepreneurship and Small Business Growth in China

Abstract

Purpose: The aim of the study was to assess the impact of microfinance on entrepreneurship and small business growth in China.

Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.

Findings: The study indicated that access to microfinance services, such as small loans, savings, and insurance, can empower entrepreneurs, especially those in developing economies, by providing them with the necessary capital to start or expand their businesses. This access to financial resources enables entrepreneurs to invest in equipment, inventory, and marketing, leading to increased productivity and profitability. Moreover, microfinance programs often offer training and mentorship, equipping entrepreneurs with essential business skills and knowledge. As a result, microfinance has been associated with job creation, poverty alleviation, and overall economic development, particularly in underserved communities.

Implications to Theory, Practice and Policy: Resource-based view (RBV) theory, agency theory and social capital theory may be used to anchor future studies on assessing the impact of microfinance on entrepreneurship and small business growth in China. In terms of practice, enhancing the design and delivery of microfinance programs is essential. This can be achieved by incorporating tailored financial products that meet the diverse needs of entrepreneurs, along with providing entrepreneurship training, mentorship, and networking opportunities. On the policy front, advocating for an enabling environment for microfinance is crucial.