A psychological study of the relationship between micro-finance self-esteem and self-efficacy of the poor in South Africa

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.