Impact of Microfinance Lending on SMEs

The assignment is divided into two hypotheses: one examining the relationship between gross lending flow and turnover of SMEs, and another looking at the impact of microfinance lending on employment levels in SMEs. Regression analysis is used to evaluate these relationships, with significant positive correlations found between gross lending flow and both turnover and employment level. The results suggest that microfinance lending has a substantial impact on SMEs.

Topic: To ascertain the role of microfinance
in developing small medium enterprise
(SME) businesses: A study on the UK

TABLE OF CONTENTS
CHAPTER 3: RESEARCH METHODOLOGY.......................................................................3
Research type.........................................................................................................................3
Research approach.................................................................................................................3
Research philosophy..............................................................................................................4
Data collection.......................................................................................................................4
Sampling................................................................................................................................5
Data analysis..........................................................................................................................5
Reliability and validity...........................................................................................................5
Research limitations...............................................................................................................6
Ethical considerations............................................................................................................6
CHAPTER 4: DATA ANALYSIS AND FINDINGS...............................................................7
Descriptive statistics...............................................................................................................7
Hypothesis 1: Regression analysis.........................................................................................7
Hypothesis 2: Regression analysis.........................................................................................9
REFERENCES.........................................................................................................................11

CHAPTER 3: RESEARCH METHODOLOGY
Research methodology implies for the process and tool which has been employed by
the researcher to carry out investigation in the best possible way. In this, tools that have been
used by the researcher for analysing the role of microfinance’s in the development of small
and medium sized businesses are enumerated below:
Research type
In research, selection of appropriate research type is highly required as other
techniques such as approach, philosophy, data collection and analysis affected from the same.
Qualitative and quantitative are the main two research types that scholar can select for the
study. Hence, in research, qualitative research type comes under the category of exploratory
investigation which is used to gain deeper understanding about the problem. Such research
type is highly significant which helps in developing or formulating hypothesis for potential
quantitative investigation. Qualitative research type is used to assess uncover trends take
place in the thoughts and opinions. Under, qualitative research methods which are used for
the purpose of data collection vary from structured to semi-structured techniques. This kind
of research is suitable when sample size is short and is selected to fulfil a given quota
(Difference between qualitative and quantitative research, 2018). In contrast to this,
quantitative research focuses on quantifying problem through the means of numeric data set.
It presents suitable solution only when sample population is large. Hence, in this, to evaluate
the role of microfinance in the context of UK SME’s development quantitative research type
has been selected. Hence, by making evaluation of quantitative figures related to
employment, turnover etc scholar would become able to assess or evaluate underlying
reasons and opinions associated with the concerned issue.
Research approach
Approaches of research can be distinguished into two types such as inductive and
deductive. Selection of research approach is highly influenced from the type of investigation
undertaken. Inductive approach of research places emphasis on the generation of new
theoretical framework on the basis of data set. Hence, such approach of research gives
suitable outcome when type of investigation is qualitative (Flick, 2015). On the other side,
deductive approach of research is used under quantitative investigation which focuses on
testing hypothesis considering existing theoretical framework. Thus, deductive approach of
research starts with existing theory and ends with the observation and confirmation of

hypothesis formulated earlier (Gast and Ledford, 2014). For deductive approach, emphasis is
usually placed on causality, whereas inductive approach usually considers research questions
for narrowing the scope of study. In this, to ascertain the significance of microfinance in the
development of SME’s deductive research approach has been selected. The main motive
behind considering deductive approach is that it highly suits to the quantitative research type.
In accordance with such research approach researcher has started with an existing theoretical
framework and thereby makes evaluation of or test hypothesis framed.
Research philosophy
Philosophy of the research may be served as a belief which presents the manner in
which data should be gathered, analysed and used. Research philosophies can be
distinguished into two aspects as interpretivism and positivism. While making selection of
research philosophies scholar should keep in mind the type and nature of investigation.
Interpretivism philosophy is suitable for qualitative research type (Neuman and Robson,
2012). In this, emphasis is placed on assessing solution by interpreting qualitative data. On
the contrary to this, positivism philosophy is employed where solution of the issue is based
on numeric and actual facts or figures. Thus, for evaluating the role of microfinance’s in the
growth and development of UK SME’s positivism philosophy has been chosen. On the basis
of such philosophy, by making assessment of actual or realistic quantitative data set solution
of the concerned issue has been assessed.
Data collection
In research, data is considered as the main input which provides high level of
assistance in resolving the concerned issue. Hence, specifically there are mainly two sources
which can be used for data collection such as primary and secondary. When researcher
gathers data specifically for meeting investigation goals through the means of survey,
observation, focus group etc., considered as primary (Hunleth, 2011). On the other side, data
that has already been gathered and analysed by other researcher termed as secondary. Books,
journals and research articles come under the category of secondary sources (Mackey and
Gass, 2015). In this, to assess the impact of microfinance on the development of small and
medium sized business units operating in UK data has been gathered from only secondary
sources. Hence, for assessing the contribution of micro-finance in the growth and
development of SME’s statistical information has been gathered regarding employment,
turnover as well as gross lending flow pertaining to the period of 6 years. In addition to this,

books, journals as well as scholarly articles related to microfinance and SME’s development
have also been evaluated by the scholar for the preparation of brief thesis.
Sampling
Sample implies for the subset of individuals derived or assessed from a statistical
population. In survey, appropriate sample selection is highly required for making estimation
about the characteristics of whole population. Probabilistic and non-probabilistic are the main
two sampling techniques that can be used by the researcher for sample selection. Simple
random, cluster, strata and systematic are considered as probabilistic technique in which each
individual of population gets equal chance to be selected as sample. On the other side, non-
probabilistic techniques include convenience, purposive, snow-ball etc. Hence, in the present
study, secondary research has been carried out by the scholar. Thus, there was no need of
sample selection but for presenting the fair view of study data related to SME’s for the period
of 6 years have been considered.
Data analysis
Data analysis refers to the process which is undertaken by the researcher for
evaluating and analysing gathered data set to discover suitable findings as well as drawing
conclusion. In research, technique considered for data analysis is highly significant as it
closely influences overall findings and solution. Techniques selected for data analysis are
highly influenced from the type of investigation undertaken (Panneerselvam, 2014). In
quantitative research, scholars usually undertake SPSS tools such as regression, independent
sample t test etc., for analysing data set in the best possible way. In contrast to this, thematic
perception test technique has been used by the researcher to evaluate qualitative data set. In
this, data gathered from managers, regarding the role of microfinance in the development of
SME data has been analysed using quantitative tools. Descriptive statistic tool has been used
by the researcher for presenting gathered responses in a structured manner. This statistical
tool clearly indicates mean, mode as well as median value from data set and thereby helps in
understanding the pattern of responses. In addition to this, regression analysis has been done
by the scholar or assessing the extent to which employment as well as sales level influences
from gross lending flow.
Reliability and validity
In order to enhance the effectiveness of the study and its solution emphasis is placed
by the scholar on ensuring the aspect of reliability as well as reliability. Hence, for meeting

research objectives and addressing questions articles related to microfinance and its
relationship with SME’s development has been identified and evaluated. This aspect shows
that suitable secondary data sources have been used in line with the research aim and issue. In
addition to this, for increasing the level of reliability and validity sources that published after
the period of 2008 have been considered. Hence, latest or recently published data sources
have been used for presenting the suitable view of study. In addition to this, secondary data
has been gathered by the scholar from authentic data sources that protected through the
means of copyright. Moreover, websites protected via copyright serves highly suitable and
reliable information. Further, no modifications have been done by the scholar in the statistical
information gathered regarding employment, sales and gross lending flow. It reflects that
aspects pertaining to biasness have not been considered by the researcher. Hence, all the
possible efforts have been made by the researcher for increasing reliability and validity of
investigation.
Research limitations
In the context of present study time and resource unavailability is considered as the
main limitation. Due to having limited time frame and resources qualitative investigation has
been undertaken. No SPSS tools have been used in such investigation due to the limited time
period. Research and its findings are useful when the same presented within the suitable span.
Hence, to respond the issue of time and conducting investigation in an appropriate manner
descriptive statistic tool has been applied. Along with this, for presenting study graphs or
charts have been included which in turn facilitates better understanding about the topic. In
addition to this, nature of issue is qualitative so thematic perception test technique assists in
analysing data set prominently over quantitative methods or SPSS tools. Further, time
constraint has also placed impact on sample selection and survey. In other words, due to not
having more tine survey was not conducted by the researcher. Hence, to mitigate the impact
of such issue historical figures related to sales, employment and lending flow was used which
in turn presents suitable view of concerned issue being investigated. Along with this, Gantt
chart or schedules of research activities have been prepared to manage research activities
according to the time. Hence, several strategies have been framed and adopted for dealing
with research limitations that negatively affects the significance of study.

Ethical considerations
Ethics are the main aspects with which scholar should comply while carry out study
(Miller and et.al., 2012). Further, reference list has been added by the researcher which shows
the sources from which data has been gathered for the present study.

CHAPTER 4: DATA ANALYSIS AND FINDINGS
Descriptive statistics
N Range Minim
um
Maxim
um
Mean Std.
Deviatio
n
Skewne
ss
Kurtosi
s
Sta
tisti
c
Statist
ic
Statisti
c
Statisti
c
Statistic Std.
Error
Statistic Sta
tisti
c
St
d.
Er
ro
r
Sta
tisti
c
St
d.
Er
ro
r
smesales 6
46397
7456.0
0
169411
8763.0
0
215809
6219.0
0
1961842
935.6667
7396919
8.72256
1811867
93.55281
-.44
3
.8
45
-
1.3
88
1.
74
1
grosslen
dingflow 6 25000
000.00
380000
00.00
630000
00.00
5100000
0.0000
3696845
.50214
9055385.
13814
-.33
9
.8
45
-.62
3
1.
74
1
employ
ment 6 19624
11.00
120021
36.00
139645
47.00
1301727
8.6667
320398.
39642
784812.5
8564
-.17
1
.8
45
-
1.9
82
1.
74
1
Valid N
(listwise
)
6
Hypothesis 1: Regression analysis
H0 (Null hypothesis): There is no significant difference in the mean values of gross lending
flow and sales revenue of small & medium enterprises.
H1 (Alternative hypothesis): There is a significant difference in the mean values of gross
lending flow and sales revenue of small & medium enterprises.
Variables Entered/Removeda
Model Variables
Entered
Variables
Removed
Method

1 grosslendingflo
wb . Enter
a. Dependent Variable: smesales
b. All requested variables entered.
Model Summary
Model R R Square Adjusted R
Square
Std. Error of the
Estimate
1 .838a .701 .627 110691263.4490
3
a. Predictors: (Constant), grosslendingflow
ANOVAa
Model Sum of Squares df Mean Square F Sig.
1
Regression 1151330475739
65920.000 1 1151330475739
65920.000 9.397 .037b
Residual 4901022321577
0144.000 4 1225255580394
2536.000
Total 1641432707897
36064.000 5
a. Dependent Variable: smesales
b. Predictors: (Constant), grosslendingflow
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
B Std. Error Beta
1 (Constant) 1107212710.764 282437800.733 3.920 .017
grosslendingflow 16.757 5.467 .838 3.065 .037
a. Dependent Variable: smesales
Interpretation: The above depicted table shows that value of R and R square accounts
for .84 & .70 respectively. This aspect shows that high and positive relationship takes place
between gross lending flow and turnover of small & medium enterprises. Along with this,
value of R square presents that model best fits to the data set. Further, it indicates that

changes which take place in one variable have significant impact on another. ANOVA table
shows that significance value accounts for 0.04 respectively. Hence, referring outcome
p<0.05, it can be presented that alternative hypothesis is true and other one false. Thus,
statistical evaluation presents that lending strategies and policies of microfinance institutions
have an impact on sales revenue of SME’s.
Hypothesis 2: Regression analysis
H0 (Null hypothesis): There is no significant difference in the mean values of gross lending
flow and employment level in the context of small & medium enterprises.
H1 (Alternative hypothesis): There is a significant difference in the mean values of gross
lending flow and employment level in the context of small & medium enterprises.
Variables Entered/Removeda
Model Variables
Entered
Variables
Removed
Method
1 grosslendingflo
wb . Enter
a. Dependent Variable: employment
b. All requested variables entered.
Model Summary
Model R R Square Adjusted R
Square
Std. Error of the
Estimate
1 .881a .777 .721 414755.48983
a. Predictors: (Constant), grosslendingflow
ANOVAa
Model Sum of Squares df Mean Square F Sig.
1
Regression 2391565507551.
281 1 2391565507551.
281 13.903 .020b
Residual 688088465372.0
54 4 172022116343.0
13
Total 3079653972923.
334 5
a. Dependent Variable: employment

b. Predictors: (Constant), grosslendingflow
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
B Std. Error Beta
1 (Constant) 9122171.703 1058282.512 8.620 .001
grosslendingflow .076 .020 .881 3.729 .020
a. Dependent Variable: employment
Interpretation: Outcome of regression analysis shows that R and R square is .88
and .78 significantly. Such evaluation clearly exhibits that microfinance or lending and
employment level of SME’s are highly as well as positively correlated. By doing evaluation
of ANOVA table it has found that p<0.05 which means null hypothesis is rejected. Hence, it
can be entailed from evaluation that gross lending flow affects SME’s employment level to a
great extent.

REFERENCES
Books and Journals
Flick, U., 2015. Introducing research methodology: A beginner's guide to doing a research
project. Sage.
Gast, D.L. and Ledford, J.R., 2014. Single case research methodology: Applications in
special education and behavioral sciences. Routledge.
Hunleth, J., 2011. Beyond on or with: Questioning power dynamics and knowledge
production in ‘child-oriented’research methodology. Childhood,18(1), pp.81-93.
Mackey, A. and Gass, S.M., 2015. Second language research: Methodology and design.
Routledge.
Miller, T. and et.al., 2012. Ethics in qualitative research. Sage.
Neuman, W.L. and Robson, K., 2012. Basics of social research: Qualitative and quantitative
approaches.
Panneerselvam, R., 2014. Research methodology. PHI Learning Pvt. Ltd.
Online
Difference between qualitative and quantitative research. 2018. [Online]. Available through:
< https://www.snapsurveys.com/blog/qualitative-vs-quantitative-research/>.