Relationship between Microfinance and Sustainable Women Entrepreneurial Performance: The mediating Role of Social capital

Abstract

This study aims to investigate the impact of microfinance on poverty reduction through women entrepreneurship in Southern Punjab, Pakistan. We also examine if social capital plays any role in microfinance and women entrepreneurship growth that leads towards poverty reduction. This study uses the data collected through a survey of 210 women entrepreneurs, who secured microfinance loans for their new/established enterprises. By applying correlation and regression analysis techniques, this study finds that access to finance is important for female entrepreneurs and it helps them in realizing their potential as entrepreneurs. A range of entrepreneurial characteristics was found to be critical to the success of women led enterprises in general and to poverty reduction among their families, in particular. Our results reveal that microfinance plays a positive role in women's entrepreneurial performance. We also find that Islamic microfinance contributes more to sustainable women's entrepreneurial performance than non-Islamic microfinance. Although this study used a limited sample of Pakistani female entrepreneurs, yet the results can be relevant to women entrepreneurs in other developing countries with contextual cautions. Future researchers may incorporate more relevant variables and increase the sample size to enhance the understanding of our investigated phenomena.