Exploring the Influence of Microfinance on Entrepreneurship using machine learning techniques

Document Type : Research Paper

Authors

1 Department of commerce and Business Studies, Jamia Millia Islamia, New Delhi, India.

2 Department of Computer Engineering, Jamia Millia Islamia, New Delhi, India.

10.22059/jitm.2023.95250

Abstract

Microfinance institutions in India provide a set of financial services to the economically weaker sections. Recently, a large number of microfinance institutions have emerged in India and they have favorable impact for poverty reduction. The impact of these institutions on entrepreneurship and society, needs to be explored in greater depth. The objective of this study is to apply machine learning techniques to explore this impact. The research uses a MIX dataset for three successive years, namely 2017, 2018, and 2019. This dataset comprises eight variables centered on gross loan portfolio. Principal Component Analysis (PCM) has been applied on the sample dataset for dimensionality reduction, resulting in two main components and each component consist of fraction from eight variables. Then, the sample dataset has been labelled with the help of clustering using K-means clustering technique. Further, classification models based on K-Nearest Neighbors (KNN) algorithm and Support Vector Machine (SVM) are applied to predict the appropriate category of entrepreneurship. The experiment result shows that the machine learning techniques have been found effective and useful tools for estimating the impact of microfinance on entrepreneurship in India.

Keywords

References

Ahmed, W., Sufyan Beg, M. M., & Ahmad, T. (2018). Entropy based feature selection for fuzzy set-valued information systems. 3D Research, 9, 1-17.
Ahmed, W., Beg, M. S., & Ahmad, T. (2020). A fuzzy rough set based fitting approach for fuzzy set-valued information system. International Journal of Information Technology, 12, 1355-1364.
Al-Mamun, A., Malarvizhi, C. A., Hossain, S., & Tan, S. H. (2012). Examining the effect of microcredit on poverty in Malaysia. ASEAN Economic Bulletin, 15-28.
Ambarkhane, D., Singh, A. S., & Venkataramani, B. (2018). Measuring total factor productivity change of microfinance institutions in India using Malmquist productivity index. Indian Growth and Development Review.
Banerjee, A., Karlan, D., & Zinman, J. (2015). Six randomized evaluations of microcredit: Introduction and further steps. American Economic Journal: Applied Economics, 7(1), 1-21.
Banerjee, A. V., Breza, E., Duflo, E., & Kinnan, C. (2017). Do credit constraints limit entrepreneurship? Heterogeneity in the returns to microfinance. Heterogeneity in the Returns to Microfinance (September 1, 2017).
Bateman, M. (2012). Let's not kid ourselves that financial inclusion will help the poor. The Guardian, 8.
Bhattacharya, R., & Santra, S. (2018). Financial Inclusion-Microfinance-Current Scenario, It's Crisis and Aftermath. BULMIM Journal of Management and Research, 3(2), 46-54.
Bruton, G., Khavul, S., Siegel, D., & Wright, M. (2015). New financial alternatives in seeding entrepreneurship: Microfinance, crowdfunding, and peer–to–peer innovations. Entrepreneurship theory and practice, 39(1), 9-26.
Dasgupta, R. (2005). Microfinance in India: Empirical evidence, alternative models and policy imperatives. Economic and Political weekly, 1229-1237.
Dzingirai, M., & Baporikar, N. (2023). Role of microfinance for entrepreneurial success. In Research Anthology on Microfinance Services and Roles in Social Progress (pp. 193-210). IGI Global.
Islam, J., Mohajan, H., & Datta, R. (2012). Aspects of microfinance system of Grameen Bank of Bangladesh.
Karmakar, K. G. (Ed.). (2008). Microfinance in India. SAGE Publications India.
Kiiru, J. M. M. (2007). Microfinance: getting money to the poor or making money out of the poor?. Finance ET Bien Commun, (2), 64-73.
Kiiru, J. M. M., & Machakos, K. (2007). The impact of microfinance on rural poor households’ income and vulnerability to poverty: case study of makueni district, kenya.
Lahimer, N., Dash, S., & Zaiter, M. (2013). Does microfinance promote entrepreneurship and innovation? A macro analysis. African Journal of Science, Technology, Innovation and Development, 5(1), 19-29.
Mader, P. (2013). Rise and fall of microfinance in India: The Andhra Pradesh crisis in perspective. Strategic Change, 22(1-2), 47-66.
Mader, P., & Morvant-Roux, S. (2019). Financial inclusion and microfinance. In Handbook of Social Policy and Development (411-430). Edward Elgar Publishing.
Manzoor, A. (2021). The Quest for Financial Inclusion and Microfinance Institutions in India. In Research Anthology on Personal Finance and Improving Financial Literacy (358-372). IGI Global.
Mengstie, B. (2023). Entrepreneurship Development through Microfinance: Evidence from Amhara Regional State of Ethiopia. Journal of the Knowledge Economy, 1-19.
Morduch, J. (2016), Microfinance and financial inclusion, International Monetary Fund, November.
Nega, B., & Schneider, G. (2014). Social entrepreneurship, microfinance, and economic development in Africa. Journal of Economic Issues, 48(2), 367-376.
Ranabahu, N., & Tanima, F. A. (2022). Disabled women entrepreneurs and microfinance: a road less travelled (for a reason)?. Research Handbook on Disability and Entrepreneurship, 196-207.
Ribeiro, J. P. C., Duarte, F., & Gama, A. P. M. (2022). Does microfinance foster the development of its clients? A bibliometric analysis and systematic literature review. Financial Innovation, 8(1), 34.
Roy, M. (2018). MUDRA: The transformation of microfinance in India: Review, experiences and future prospect. Advances in Finance & Applied Economics, 93-104.
Singh, J., Dutt, P., & Adbi, A. (2022). Microfinance and entrepreneurship at the base of the pyramid. Strategic Entrepreneurship Journal, 16(1), 3-31.
Tarozzi, A., Desai, J., & Johnson, K. (2015). The impacts of microcredit: Evidence from Ethiopia. American Economic Journal: Applied Economics, 7(1), 54-89.
Wold, S., Esbensen, K., & Geladi, P. (1987). Principal component analysis. Chemometrics and intelligent laboratory systems, 2(1-3), 37-52.
 
 

Files

Share

How to cite

Statistics