Abstract:
The impact of micro-finance on the lives of the poor is a hotly debated issue filled with
controversies and inaccuracies. The literature review on the benefits of micro-finance
indicates that early debates were mostly based on heart-warming anecdotes and case
studies, with little empirical study on its actual impact. Thus, despite the heated debate on
micro-finance, there is still little understanding on the true empirical impacts of microfinance,
particularly its psychological impacts on the poor. This study investigated the
relationship and impact of micro-finance on self-esteem and self-efficacy. The study was
conducted using a non-experimental research strategy (within-subjects design) and quasiexperimental
strategy (pre-post-test non-equivalent control group). Two sampling
methods, systematic and convenience sampling were used to select participants. A total of
264 pre-test and 159 post-test participants took part in this study. Data were collected
using the Rosenberg self-esteem scale and General self-efficacy scale. The Pearson
product-moment correlation coefficient was employed to measure the relationship between
micro-finance, self-esteem and self-efficacy. The MANCOVA was used to investigate the
impact of the provision of micro-finance on self-esteem and self-efficacy. The results not
only showed that micro-finance is positively related to self-esteem and self-efficacy, but
also showed that the provision of micro-finance led to an increase in the self-esteem of the
recipients. The study further revealed a decline in the self-esteem of those who were
declined micro-finance and highlighted the covariates that influenced this relationship. In
light of these results, practical and theoretical implications affecting micro-finance
practitioners, researchers and recipients are identified. Suggestions for future research are
made based on the improvement of current methodologies, inclusion and use of valid
control groups, the use of different sampling methods and larger sample sizes.
