Credit Characteristics and Business Performance: A Survey of Women owned Microenterprises in Tanzania

Abstract

This article provides assessment of the effects of four credit characteristics including size, interest rate, repayment period and borrowing experience on business performance. The article makes use of survey data collected from 217 women microcredit clients from Arusha, Dar es Salaam and Mwanza regions in Tanzania. Bivariate correlation analysis was used to find out specific effect of each of those four credit characteristics on three business performance measures namely total sales revenue, net profit and business net worth. The combined effect of all four credit characteristics on business performance was estimated by a multiple linear regression model. The findings revealed that size of credit was positively correlated with total sales revenue and business net worth at significant level. Interest rate was negatively correlated with all three measures of business performance at significant level. It was also found out that repayment period was positively correlated with all three business performance indicators at significant level. Furthermore, the study established that borrowing experience was positively correlated with total sales revenue at significant level but not with other two indicators. The model accounted for 25% of sales revenue, 9% of net profit and 28% of business net worth.

Demographic Characteristics and Business Performance: Evidence in Women Entrepreneurs

“…According to [16], with age, a person's skills and qualifications will increase. [17] argues that the age of women entrepreneurs has a positive and significant effect on the business performance of women entrepreneurs. This is in line with [18] and [19] and contradicts [20] which states that the age of women entrepreneurs has no relationship with business performance.…”

Performance drivers of women-owned microcredit funded enterprises in Tanzania

“…In a study that examined the empowering effect of microfinance in Tanzania, Kato and Kratzer (2013) report that the members experienced more decision making powers in their households, including control over savings and proceeds from their businesses, improved self-esteem and efficacy. In a different study, Salia and Mbwambo (2014) report significant positive effects on total sales, net profit and ownership of household assets than non-borrowers. Using three measures of enterprise performance, Cooper (2014) noted that women clients experienced increases in average monthly net incomes, increased duration of business operation and creation of jobs for members outside the household.…”

Mobile Devices in supporting members’ participation to Village Community Banks: The Design Thinking Approach

“…However, other researchers have pointed out different approaches on dealing with challenges affecting microfinance institution based on their types. As indicated that some microfinance institutions are business based and some are members oriented (community) based kind of financial institution, some are formal and others and informal [16,39,40,41].…”

“…In Tanzania, VICOBA and other informal financial institution have reached 27.9% of resources limited societies who have no access to formal bank services [4]. These institutes has almost 19 years of operation since their initiation in year 2000 by CARE Tanzania in Zanzibar and later on Orgut, SEDIT, World Vision and Women in Action (WiA) [40].…”