A Study on Impact of Microfinance Funding on MSME Performance: An Analysis of Growth, Profitability, Employment, and Sustainability

Abstract

Micro, Small, and Medium Enterprises (MSMEs) play an essential role in economic development by supporting employment generation and income creation. However, limited access to formal finance often restricts their ability to grow and remain sustainable. Microfinance Institutions (MFIs) provide financial support to MSMEs that are unable to access traditional banking services. This study aims to analyze the effect of MFI funding on MSME performance with respect to business growth, profitability, employment creation, financial stability, and sustainability. The research is based on both primary and secondary data collected from MSME owners who have received microfinance support. The study seeks to understand whether microfinance funding contributes positively to business performance and long-term stability. The findings of this research are expected to be useful for policymakers, financial institutions, and entrepreneurs in improving financial inclusion and strengthening MSME development.