Impact of microfinance on sustainable entrepreneurship development

The proponents of inclusive financial growth believe that giving relatively larger loans to the non-poor or near-poor entrepreneurs is the response of the microfinance institutions (MFIs) toward the demand of a existing and potential clients. But opponents are more likely to consider response such as mission drift by the MFIs. Therefore, this study attempts to measure the effectiveness of such microenterprise loans on increasing entrepreneurs' incomes and innovation. Our findings support the proponents of giving loans to entrepreneurs. Findings suggest that larger loans increase income, but less innovative business practice might threaten such income. Therefore, we recommend that microenterprise loans associated with proper business skills, information, and technologies be provided by MFIs with careful screening and monitoring to ensure the effective utilization of loan capital.