Iqbal, Zahid; Mah ooz, Fa ukh; Ahmad, Maqsood
A icle
Small loans, big d eams: Unpacking he c i ical ole o
lending o ices in mic o inance con ac s
Asian Jou nal o Economics and Banking (AJEB)
P o ided in Coope a ion wi h:
Ho Chi Minh Uni e si y o Banking (HUB), Ho Chi Minh Ci y
Sugges ed Ci a ion: Iqbal, Zahid; Mah ooz, Fa ukh; Ahmad, Maqsood (2025) : Small loans, big
d eams: Unpacking he c i ical ole o lending o ices in mic o inance con ac s, Asian Jou nal o
Economics and Banking (AJEB), ISSN 2633-7991, Eme ald, Leeds, Vol. 9, Iss. 3, pp. 338-363,
h ps://doi.o g/10.1108/AJEB-04-2025-0035
This Ve sion is a ailable a :
h ps://hdl.handle.ne /10419/334150
S anda d-Nu zungsbedingungen:
Die Dokumen e au EconS o dü en zu eigenen wissenscha lichen
Zwecken und zum P i a geb auch gespeiche und kopie we den.
Sie dü en die Dokumen e nich ü ö en liche ode komme zielle
Zwecke e iel äl igen, ö en lich auss ellen, ö en lich zugänglich
machen, e eiben ode ande wei ig nu zen.
So e n die Ve asse die Dokumen e un e Open-Con en -Lizenzen
(insbesonde e CC-Lizenzen) zu Ve ügung ges ell haben soll en,
gel en abweichend on diesen Nu zungsbedingungen die in de do
genann en Lizenz gewäh en Nu zungs ech e.
Te ms o use:
Documen s in EconS o may be sa ed and copied o you pe sonal
and schola ly pu poses.
You a e no o copy documen s o public o comme cial pu poses, o
exhibi he documen s publicly, o make hem publicly a ailable on he
in e ne , o o dis ibu e o o he wise use he documen s in public.
I he documen s ha e been made a ailable unde an Open Con en
Licence (especially C ea i e Commons Licences), you may exe cise
u he usage igh s as speci ied in he indica ed licence.
h ps://c ea i ecommons.o g/licenses/by/4.0/
Small loans, big d eams: unpacking
he c i ical ole o lending o ices
in mic o inance con ac s
Zahid Iqbal
O ice o he Regis a , Uni e si y o Oka a, Oka a, Pakis an
Fa ukh Mah ooz
Depa men o Managemen Sciences, Bah ia Uni e si y, Islamabad, Pakis an, and
Maqsood Ahmad
Depa men o S a is ics, Uni e si y o Oka a, Oka a, Pakis an
Abs ac
Pu pose – To imp o e he loan- epaymen pe o mance o mic o inance ins i u ions (MFIs), his s udy
conside s he ole o he lending o ice in he con ex o p ocedu al de iciencies (PD), malp ac ices in c edi
assessmen (MPCA), clien –business pe o mance (CBP) and loan- epaymen p oblems (LRP).
Design/me hodology/app oach – In his s udy, a ques ionnai e was used o he collec ion o da a om 316
middle-le el employees o MFIs. Addi ionally, his s udy used a wo-s age s uc u al equa ion modeling
echnique. A he i s s age, he ou e -model (measu emen -model) was applied o ensu e he eliabili y and
alidi y o he da a collec ion ins umen . Second, he inne -model (s uc u al-model) was used h ough he PLS-
SEM boo s apping o es he hypo hesis o he s udy.
Findings – This s udy ound ha PD and MPCA no only enhance he LRP bu also nega i ely a ec he CBP.
This s udy also alida es he media ing ole o CBP pe o mance be ween he MPCA and LRP, bu i ailed o
play a media ing ole be ween he PD and LRP. In addi ion, his s udy ound a mode a ing ole o p o essional
expe ience o lending o ice s on he ela ionship o PD and LRP bu ailed o p o e he mode a ing ole o
p o essional expe ise o lending o ice s on he ela ionship o MPCA and LRP.
O iginali y/ alue – In ligh o he s udy’s indings, MFIs migh al e hei c edi ules and lending me hods o
imp o e hei loan- epaymen pe o mance. The indings o his s udy may be used by MFIs o design a a ie y
o ope a ional assis ance and aining p og ams o hei s a and consume s o imp o e loan payback
pe o mance.
Keywo ds P ocedu al de iciencies, Malp ac ices-in c edi -assessmen , Clien –business pe o mance,
P o essional expe ience, Loan- epaymen p oblems
Pape ype Resea ch a icle
1. In oduc ion
A leas 20 yea s ago, c edi acili ies we e no accessible o Pakis an’s poo wi hou asse s o
colla e al. To ob ain c edi acili ies, hose who a e less o una e mus ge in ouch wi h
espec able moneylende s. In con as , poo people can now ge c edi acili ies om
mic o inance ins i u ions (MFIs) in he o m o small loans wi hou any asse s o colla e al,
hanks o he de elopmen o mic o inance o ganiza ions. One o Pakis an’s mos po en ools
o comba ing he ising le els o po e y is MFIs. The Pakis ani MFIs hen apidly s a ed o
compe e wi h one ano he . As a esul , he opic o loan payback pe o mance is o in e es o
many inancial au ho i ies and academics. Howe e , cu en ly, Pakis an has h ee di e en
ypes o banks o e ing c edi : comme cial banks, specialized banks and mic o inance banks.
AJEB
9,3
338
JEL Classi ica ion — G01, G20, G21, G29, G33
© Zahid Iqbal, Fa ukh Mah ooz and Maqsood Ahmad. Published in Asian Jou nal o Economics and
Banking. Published by Eme ald Publishing Limi ed. This a icle is published unde he C ea i e
Commons A ibu ion (CC BY 4.0) licence. Anyone may ep oduce, dis ibu e, ansla e and c ea e
de i a i e wo ks o his a icle ( o bo h comme cial and non-comme cial pu poses), subjec o ull
a ibu ion o he o iginal publica ion and au ho s. The ull e ms o his licence may be seen a Link o he
e ms o he CC BY 4.0 licence.
Recei ed 6 Ap il 2025
Re ised 3 Augus 2025
14 Augus 2025
Accep ed 3 Sep embe 2025
Asian Jou nal o Economics and Banking
Vol. 9 No. 3, 2025
pp. 338-363
Eme ald Publishing Limi ed
e-ISSN: 2633-7991
p-ISSN: 2615-9821
DOI 10.1108/AJEB-04-2025-0035
Downloaded om h p://www.eme ald.com/ajeb/a icle-pd /9/3/338/10332672/ajeb-04-2025-0035en.pd by ZBW Ge man Na ional Lib a y o Economics use on 16 Decembe 2025
All kinds o banks expe ience loan payback issues, bu MFIs expe ience he p oblem o a
conside ably g ea e ex en . Acco ding o he S a e Bank o Pakis an, non-pe o ming loans
om comme cial banks climbed by 63.08% o e he las i e yea s (2017–2021). Simila o
his, specialized banks’ non-pe o ming loans inc eased by 0.67% o e he p e ious i e yea s.
Addi ionally, du ing he pas i e yea s (2017–2021), non-pe o ming loans om
mic o inance banks ha e inc eased by 436.39% (S a e Bank o Pakis an). The igu es on
non-pe o ming loans ci ed abo e show ha mic o inance banks ha e much mo e se ious
p oblems wi h loan epaymen han comme cial banks and specialized banks.
The la ges numbe o non-pe o ming loans is endange ing Pakis an’s banking indus y.
Al hough cash is a pa o he asse s, when cash o loans canno be co e ed, i a ec s liquidi y
isk and c edi g ow h, which pu s he bank in o ouble. P oblems wi h loan epaymen a e
equally impo an o MFIs and bo owe s. In si ua ions whe e loan de aul and g owing loan
delinquency a e p esen , bo owe s a e unable o ecei e u he c edi a a ma ginal in e es
a e. When loan payback a es a e lowe , MFIs expe ience clien losses in addi ion o inancial
losses as a esul o declining p o i abili y and liquidi y. In e ms o ou each, he ising end o
loan de aul and delinquency has had a de imen al e ec on he iabili y o MFIs and banks.
The weak loan epaymen po olio has also unde mined he us o he ex e nal dono . As
hei capaci y o exis , g ow and main ain s abili y depends on hei abili y o epay hei loans,
MFIs mus be able o do so. The pe o mance o loan epaymen s is a c ucial conce n o he
banking sec o , especially o MFIs.
A g owing numbe o egula o y agencies and he schola ly communi y in Pakis an a e
paying a en ion o he issue o loan epaymen pe o mance. Redzuan e al. (2023) ecen ly
did a s udy o de e mine he e ec s o in e nal (HR capaci y, ope a ional cos and inno a ion)
and ex e nal (compe i ion, language and awa eness) ac o s on loan epaymen pe o mance
in he se ing o Pakis ani MFIs. Meanwhile, Iqbal and Rao (2023) ound signi ican impac o
bo owe cha ac e is ics (gende , age, g oup o indi idual loan and sa ing o bo owe ), loan
cha ac e is ics (in e es a e, pu pose o loan, equency o in e es a e and equency o
p incipal paymen o loan) and lende cha ac e is ics (lag ime be ween loan applied and loan
app o ed, di e ence be ween amoun o loan applied and app o ed, di e ence be ween ime
o loan applied and app o ed, isi ing equency o lending o ice , p o ision o aining and
ope a ional assis ance) on loan epaymen pe o mance in he con ex o S i Lankan economy.
Simila ly, Nkundabanyanga e al. (2017) alida e he posi i e and signi ican impac o
inancial managemen and compe i i e ad an ages on loan epaymen pe o mance. Likewise,
Shah e al. (2023) ound a signi ican e ec o mul iple a iables (age, educa ion le el, gende ,
size o amily, pu pose o loan, loan size, loan p ocessing and disbu semen ime and loca ion
o bo owe business p emises) on loan epaymen pe o mance.
In ligh o his, Cha les and Mo i (2017) con i m he impo ance o he link be ween
mul iple bo owing, p og ess lending and loan epaymen e iciency. I is in e es ing o no e
ha Uma and Sun (2018) demons a ed how mac oeconomic a iables like in e es a es,
discoun a es, cu ency a es, in la ion a es and unemploymen a es ha e a big impac on
how well MFI bo owe s epay hei loans. Addi ionally, Singh and Kapoo ’s (2019) esea ch
suppo he de imen al e ec s o oppo uni y cos ( a elling ime, mee ings, aining sessions
and ime spen isi ing bank o ices), eal cos ( a elling expenses, pho ocopying ees, e enue
s amp cos s and s a ione y cos s) and eal cos ( a el expenses) on loan epaymen
pe o mance in he con ex o Indian MFIs. The e o e, in he con ex o Pakis ani MFIs, Iqbal,
Rao and S udies (2023) also disco e ed a la ge and a o able e ec o social capi al and loan
c edi e ms on clien –business pe o mance (CBP) as well as on clien loan epaymen
pe o mance. Fu he mo e, Iqbal e al. (2021) quan i ied he conside able and ad an ageous
e ec s o se ial bo owing on le els o o e -indeb edness and loan epaymen success. In
addi ion o he mode a ing e ec o mo al haza d on he associa ion be ween o e -
indeb edness and loan epaymen pe o mance, he epo ed he media ing ole o o e -
indeb edness be ween mul iple bo owing and loan epaymen pe o mance.
Asian Jou nal o
Economics and
Banking
339
Downloaded om h p://www.eme ald.com/ajeb/a icle-pd /9/3/338/10332672/ajeb-04-2025-0035en.pd by ZBW Ge man Na ional Lib a y o Economics use on 16 Decembe 2025
As he e is a signi ican di e ence be ween he lending p ocedu es o comme cial banks,
specialized inancial ins i u ions and MFIs. The e is no ques ion ha loans a e a common se ice
p o ided by all di e en so s o banks, bu each bank’s lending me hods a e unique. To compa e
he ope a ional p ocedu es o banks and MFIs abou managing he loan po olio, which includes
loan app o al, dis ibu ion and collec ion ope a ions. The main di e ence be ween comme cial
banks and MFIs is he equi emen o colla e al as secu i y. The e is no equi emen o loan
colla e al o MFI loans, unlike comme cial banks and specialized banks. In-dep h examina ion,
se e al p ocedu es, including he bo owe ’s epu a ion, inancial backg ound and en o cemen
o colla e al, a e all hings ha comme cial/specialized banks do. S ong in e nal applica ions
ha weed ou dange ous concep s a e used o accomplish his. I a loan is app o ed, he unds a e
disbu sed by he banks in one o mo e ins almen s (Iqbal e al., 2020).
MFI loans, on he o he hand, a e o en issued o indi iduals o o ganiza ions om a ious
geog aphical loca ions wi hou much inspec ion. The pee g oup pa icipan s ca y ou he
o e sigh and examina ion and “pee p essu e” se es as colla e al because i educes he isk
o de aul (Iqbal e al., 2020). The comme cial/specialized bank has a s ic collec ion
mechanism. Banks can collec he loan amoun in he e en o nonpaymen by o ei ing he
colla e al, bu MFIs a e no co e ed by his clause. As a esul , he a io o loan delinquency
and loan de aul has inc eased signi ican ly. Addi ionally, lending o ice s play a minimal ole
in app o ing o ejec ing loan applica ions because comme cial banks and specialized banks
ollow a uni o m p ocess. The loan will be app o ed based on he ad ice o he lending
o ice ’s c edi e alua ion, in con as o MFIs, whe e he lending o ice plays a subs an ial
ole in accep ing o ejec ing he loan applica ion. The e o e, in he case o MFIs, loan
epaymen success is la gely dependen on he lending o ice ’s unc ion, which includes he
accu acy o he c edi e alua ion, in eg i y and expe ience in he ield o banking. Howe e ,
p e ious esea ch a ely looked a he impac o p ocedu al de iciencies (PD) and Malp ac ices
in c edi assessmen on loan epaymen p oblems and clien i m success in he con ex o
Pakis ani MFIs.
Pakis an’s mic o inance indus y is buil on e hics and us , wi h a ocus on he
accoun abili y o lending o icials and bo owe s alike (Adusei, 2021). Lending s a
ho oughly assess each bo owe ’s c edi wo hiness be o e ex ending a loan based on us (Ali
e al., 2023). The s ic e hical guidelines es ablished by mic o inance o ganiza ions se e as
he basis o his a ing (Be ns e al., 2021). As a esul , i is he majo du y o bo owe s o
uphold he same mo al p inciples and openly e eal hei inancial si ua ion and business
posi ion (Be ns e al., 2021). Lending o ice s mus simul aneously main ain he highes
e hical s anda ds in hei e alua ions o gua an ee impa ial and accu a e assessmen s o
bo owe s’ c edi wo hiness. This mu ual adhe ence o e hics os e s a eliable and sus ainable
mic o inance ecosys em (Tadele e al., 2022).
Thus, loan epaymen p oblems emain a c i ical conce n o MFIs, pa icula ly in
de eloping economies whe e c edi access is expanding apidly bu ins i u ional con ols a e
o en weak. While exis ing li e a u e has explo ed a ious inancial and beha io al
de e minan s o epaymen pe o mance, limi ed a en ion has been gi en o how in e nal
ins i u ional p ac ices – speci ically PD and malp ac ices in c edi assessmen – shape
bo owe ou comes. This s udy add esses his c ucial gap by examining no only he di ec
e ec s o hese in e nal ine iciencies on loan epaymen p oblems bu also he media ing ole
o CBP and he mode a ing e ec o lending o ice expe ience. Unlike p io s udies ha end o
ocus on bo owe - ela ed ac o s o mac oeconomic in luences, his esea ch emphasizes he
ope a ional eali ies wi hin MFIs and hei downs eam consequences. The no el y o his
wo k lies in i s in eg a ed app oach: combining p ocedu al and e hical dimensions o lending
wi h pe o mance-based and beha io al media o s/mode a o s o p oduce a mo e
comp ehensi e model o loan epaymen dynamics. By iden i ying how ins i u ional
ailu es and human ac o s join ly a ec c edi ou comes, his s udy o e s esh heo e ical
insigh s and p ac ical ele ance, con ibu ing new knowledge o bo h academic li e a u e and
inancial p ac ice.
AJEB
9,3
340
Downloaded om h p://www.eme ald.com/ajeb/a icle-pd /9/3/338/10332672/ajeb-04-2025-0035en.pd by ZBW Ge man Na ional Lib a y o Economics use on 16 Decembe 2025
As a esul , his s udy add esses he ollowing eigh impo an ques ions: (1) Does
p ocedu al de iciency made by he lending o ice du ing c edi assessmen ha e a signi ican
impac on MFIs’ CBP? (2) Do malp ac ices in c edi assessmen signi ican ly a ec he clien ’s
business pe o mance o MFIs ins i u ions? (3) Does he loan epaymen p oblem signi ican ly
a ec he p ocedu al de iciency made by he lending o ice du ing c edi assessmen ? (4) Does
he loan epaymen p oblem signi ican ly a ec he malp ac ices in c edi assessmen made by
he c edi o ice ? (5) How do p ocedu al sho comings and issues wi h loan epaymen ela e o
CBP? (6) How does he clien ’s business pe o mance play a balancing ac be ween
malp ac ices in c edi assessmen and loan- epaymen p oblems (LRP)? (7) Does he lending
o ice ’s p o essional expe ise play a mi iga ing in luence in he ela ionship be ween PD and
LRP? (8) Does he lending o ice ’s p o essional-expe ience (PE) ha e a mode a ing impac on
he ela ionship be ween malp ac ice in c edi assessmen and LRP?
The emainde o he esea ch pape is s uc u ed as ollows: Sec ion 2 p esen s a e iew o
he li e a u e, a hypo hesis and nume ous heo ies ha ha e been u ilized o suppo his s udy.
The esea ch echnique is desc ibed in Sec ion 3 o his a icle. The s udy’s indings will be
p esen ed in Sec ion 4 in ligh o he li e a u e and heo y, whe eas discussion, conclusion,
limi a ion, implica ion and he esea ch’s u u e di ec ion a e gi en in Sec ion 5 o his a icle.
2. Li e a u e e iew and hypo hesis
The quan i a i e a iables unde inqui y a e suppo ed by a a ie y o heo ies in his s udy.
The in o ma ion on he heo ies used o suppo his in es iga ion is p o ided in he ollowing
pa s, along wi h pe inen li e a u e on he a iables ha a e being conside ed in his s udy.
2.1 Theo e ical backg ound
The agency heo y is he i s heo y ha is applied in his s udy. Acco ding o agency heo y,
bo h he p incipal (highe -le el managemen o MFIs) and he agen (lending o ice ) ha e
aims ha a e ou o sync. As a esul , nei he pa y has adhe ed o he le e o he spi i o he
con ac (Adusei, 2021). The highe -le el managemen o MFIs and he agen (lending
o ice s), bo h pa ies o he con ac , a e no wo king oge he and pu suing hei in e es s as a
esul o he MFIs’ con inuously alling loan- epaymen pe o mance in Pakis an (Ali e al.,
2023). By his idea, he p incipal (highe le el managemen o MFIs) and agen (lending
o ice ) ha e dis inc goals, which causes mo i a ion le els o di e in a ious ways. As was
said in he in oduc ion sec ion, he lending o ice ’s c edi e alua ion is a key ac o in he
choice o lend in he case o MFIs (Moya-D�
a ila and Rajagopal, 2020). Acco dingly, he
lending o ice has a big impac on he lending p ac ices o MFIs. In Pakis an, a la ge numbe
o lending o ice s made c edi assessmen s o he clien s based on a o i ism and nepo ism
(Be ns e al., 2021). Addi ionally, i was disco e ed ha some lending o ice s b oke
undamen al MFI c edi assessmen ules o hei own gain and caused issues wi h agency
cos s by accep ing b ibes o commissions (Be ns e al., 2021).
The Asymme ic In o ma ion Theo y is he second heo y applied in his in es iga ion.
Asymme ic in o ma ion desc ibes ins ances whe e one pa y has g ea e knowledge han he
o he s, bu he o he pa ies in ol ed do no . In o ma ion asymme y occu s when he highe -
le el managemen o MFIs has access o a mo e in o ma ion abou lending p ac ices han he
newly hi ed lending o ice who pe o med c edi assessmen s in he con ex o lending
decisions (Be ns e al., 2021). This heo y con ends ha when lending o ice s and uppe -le el
managemen disag ee abou he ac s a hand, a poo c edi e alua ion esul s, which in u n
causes MFIs in Pakis an o pe o m wo se in e ms o loan epaymen (Tadele e al., 2022). The
F aud Risk is he hi d heo y ha was used in his s udy. Acco ding o he aud isk heo y,
phan om loans, kickback schemes, b ibe y and he lending o ice ’s ailu e o eco d clien
epaymen s a e he main sou ces o aud in mic oc edi ope a ions. In Pakis an, a sizable
po ion o lending o ice s engaged in co up ac i i ies, which had he e ec o lowe ing MFI
loan- epaymen pe o mance (Blanco-Oli e e al., 2023).
Asian Jou nal o
Economics and
Banking
341
Downloaded om h p://www.eme ald.com/ajeb/a icle-pd /9/3/338/10332672/ajeb-04-2025-0035en.pd by ZBW Ge man Na ional Lib a y o Economics use on 16 Decembe 2025
2.2 P ocedu al de iciencies (PD), malp ac ices in c edi -assessmen (MPCA) and clien –
business pe o mance (CBP)
Acco ding o Chichaibelu and Waibel (2017), a sizable po ion o MFI lending o ice s we e
disco e ed o be engaging in co up p ac ices and had app o ed loan applica ions om
bo owe s who, based on MFI s anda d ope a ing p ocedu es, we e no eligible o loans and
la e p o ed unable o ul il hei con ac ual obliga ions. As pe indings o Sh eya (2021), an
excessi ely indeb ed bo owe o clien “consis en ly ails o ul il payback da es and
s uc u ally needs o make disp opo iona ely la ge sac i ices due o his/he loan
commi men s,” and he p ima y causes o hese ailu es we e he lending o ice ’s poo
c edi assessmen made o commission o b ibe y. Acco ding o Rehman e al. (2024), he
lending o ice ’s bad clien selec ion inc eases o e -indeb edness, which esul s in subpa
business success and subpa loan payback pe o mance. Wahab e al. (2024) p oclaimed ha
PD and malp ac ices in c edi assessmen did no ma e in he con ex o CBP. They
addi ionally s a ed ha he clien ’s e ec i eness and hei capaci y o manage he i m ma e ed
mos when i came o loan- epaymen pe o mance. Acco ding o Cha les and Mo i (2017),
lending money o a success ul business uni has an impac on how well a company pe o ms.
E en when such a company uni o e ed b ibes o commissions o mee needs, i had li le o no
e ec on hei abili y o ope a e p o i ably and e u n loans.
Meanwhile, Riz i Ja ee e al. (2023) disco e ed a simila dispa i y be ween bo owe s
who ob ained loans based on me i and hose who ecei ed loans in exchange o paying a
commission o he lending o ice . Simila o his, he business success o bo owe s who
ob ained loans on he basis o me i ou pe o med bo owe s who ecei ed loans as a esul o
a o i ism and nepo ism. Acco ding o Ma zanke (2014), he majo i y o mic oen e p ises
s uggled o manage hei business ope a ions because he lending o ice kep a sizable
amoun o he deb s as commission o b ibes. Acco ding o Cha les and Mo i (2017),
bo owe s who ob ain loans by b eaking he ules and egula ions o inancial ins i u ions
e en ually s uggle o un hei businesses because a sizeable po ion o he loan amoun is
used o manage hei c edi assessmen epo by paying a commission o he c edi o ice .
Addi ionally, some bo owe s ecei ed la ge loans based on inaccu a e c edi assessmen s; as
a esul , hese bo owe s we e unable o gene a e a su icien e u n on hei in es men and
we e hi wi h non-pe o ming loan no ices (A onso e al., 2017). Acco ding o Cha les and
Mo i’s (2017) esea ch, bo owe s who managed hei c edi assessmen epo h ough he
lending o ice we e unable o un hei businesses success ully due o capi al a ioning
because hey we e equi ed o pay he lending o ice a sizable amoun o he loan as
commission o a b ibe. In addi ion, PD in c edi assessmen , such as weak isk e alua ion and
poo documen a ion, hinde imely and accu a e lending, nega i ely a ec ing CBP by limi ing
access o necessa y unds (Raza e al., 2024). Addi ionally, malp ac ices like a o i ism and
b ibe y dis o c edi alloca ion, leading o inancial s ess and educed ope a ional e iciency
o dese ing businesses (Negi, 2025). Thus, based on hese jus i ica ions and ea lie empi ical
da a, he ollowing hypo heses we e de eloped:
H1. PD ha e a posi i e impac on CBP.
H2. Malp ac ices in c edi -Assessmen ha e a posi i e impac on CBP.
2.3 P ocedu al-de iciencies (PD), malp ac ices in c edi -assessmen (MPCA) and loan-
epaymen p oblems (LRP)
The main easons o p oblema ic loans in MFIs, acco ding o his s udy, we e lax c edi
e alua ion, imp ope app aisal and a lack o c edi managemen policy (Ja ee and Mus a a,
2023). Addi ionally, many MFI pe sonnel accep ed commissions o b ibes om clien s as a
esul o hei poo sala ies and e en ually los he mo al eason o ecei ing loan epaymen s
om consume s (Azim e al., 2017). Howe e , because o he di icul c edi e alua ion
p ocess, mos bo owe s ga e he lending o ice addi ional unds and u ilized a sizable
AJEB
9,3
342
Downloaded om h p://www.eme ald.com/ajeb/a icle-pd /9/3/338/10332672/ajeb-04-2025-0035en.pd by ZBW Ge man Na ional Lib a y o Economics use on 16 Decembe 2025
pe cen age o hei loans o comply wi h he lending o ice ’s illegal demands (Mia e al.,
2019). Simila o his, i bo owe s exp essed esis ance o he illici paymen as b ibes, lending
o ice s h ea ened and placed p essu e on hem (Kassim and Rahman, 2018). Addi ionally,
inside lending is a subs an ial con ibu o o loan de aul and delinquency in he con ex o
mic o inance. Inside lending was iden i ied as he p ima y cause o subp ime loans, which
con ibu ed o he demise o MFIs and he bo owe s (Naz e al., 2024). Ano he signi ican
obs acle o he MFIs in Pakis an’s loan payback pe o mance is he ex emely poo knowledge
le el o he a ailable human esou ces, which is insu icien o un his p ocess smoo hly
(Omidiji e al., 2025). MFIs a e subs an ially impac ed by loan payback issues due o poo
supe ision and iola ions o he undamen als o mic o inance du ing he c edi assessmen .
While his was going on, lending o ice s’ insu icien c edi assessmen s o he bo owe s’
exposed holes ha ul ima ely led o loan de aul and delinquency (Iqbal e al., 2021). O ice s,
none heless, a e ypically in cha ge o he poo clien loan selec ion. When e alua ing a
bo owe ’s c edi , lending pe sonnel equen ly ac agains he undamen al ules o lending in
o de o u he hei in e es s. The lending o ice migh ha e, o example, coe ced lending o
mee a a ge o g an ed he loan based on pa iali y and nepo ism a e ecei ing a commission
o b ibe om he cus ome . As a esul o he a o emen ioned ac o s, he lending o ice los
mo al jus i ica ion o accep ing a loan om he bo owe s a i s ma u i y and ul ima ely an
in o loan payback issues (Cha les and Mo i, 2017).
Addi ionally, he a io o bo owe s o lending o ice s signi ican ly and a o ably a ec s
loan de aul and delinquency. P io o now, MFIs ha e le p o i abili y ake p ecedence o e
hei p ima y goal o e adica ing po e y. As a esul , e e y MFI s i es o educe cos s o
inc ease p o i abili y by placing an inc eased bu den on lending o ice s om clien s and he
a io o bo owe s o lending o ice s s eadily ises, leading o quick decision-making and
subpa c edi e alua ion (Iqbal e al., 2021). The majo i y o c edi depa men wo ke s,
especially b anch manage s, ope a ions manage s and lending o ice s, iola e he undamen al
guidelines o loan app o al and disbu semen a e ecei ing a commission om he bo owe s
in he o m o a p ede e mined pe cen age. In his ins ance, bo owe s ailed o pu he loan’s
p oceeds o hei in ended use. The lending o ice may lack he mo al au ho i y o demand ull
epaymen o he loan. Addi ionally, some lending o ice s who engage in inside lending ob ain
loans o hei businesses be o e la e decla ing such loans o be bad deb s (Sinha and Ghosh,
2022). Howe e , he indings o his s udy did demons a e ha he beha io and ope a ional
p ocedu es o he lending o ice also in luence he issue o loan eco e y. I he lending o ice
and o he mic o inance bank managemen a e no op imal and ca e ul, he non-pe o ming
loans (NPL) a io will ise and ice e sa (O i i e al., 2022). C edi is gi en based on o de s
om abo e, sac ed le e s o ka abolic (c edi command), and his is seen as he ou come o a
conspi acy, implying ha he NPL issues a e b ough on by any o e sigh o odo o collusion,
whe e mo e han 90% o c imes a e commi ed in he bank’s collabo a ion wi h he people in he
a ea (Kebede e al., 2023). As a esul o he lending o ice ’s sanc ion o alse c edi and
commission o b ibe y ob ained by he lending o ice , his in es iga ion concluded ha he
lending o ice ’s au ho i y o collec he loan was comp omised (Ghosh e al., 2020). Du ing he
assessmen o bo owe s’ c edi wo hiness, lending o ice s should adhe e s ic ly o he e hical
s anda ds o he mic o inance economic sys em (Ali e al., 2023). By a oiding PD and
malp ac ices, hey ensu e a ai and accu a e e alua ion p ocess (Be ns e al., 2021). This e hical
app oach no only upholds he in eg i y o he mic o inance sys em bu also enhances loan-
epaymen pe o mance by os e ing us and accoun abili y be ween bo owe s and lende s.
Consequen ly, i suppo s a mo e obus and sus ainable inancial en i onmen o all
s akeholde s in ol ed (Iqbal e al., 2021). Howe e , PD in c edi assessmen , such as weak
bo owe e alua ion and poo documen a ion, o en lead o LRP by allowing high- isk clien s o
ecei e c edi (Behe a and Mohini, 2025). Malp ac ices like b ibe y and a o i ism u he
wo sen he issue by enabling unquali ied bo owe s o access loans, inc easing de aul a es and
non-pe o ming loans (Iqbal and Rao, 2023). Howe e , he ollowing hypo hesis has been pu
ou in his ega d based on pas esea ch and he accessible li e a u e.
Asian Jou nal o
Economics and
Banking
343
Downloaded om h p://www.eme ald.com/ajeb/a icle-pd /9/3/338/10332672/ajeb-04-2025-0035en.pd by ZBW Ge man Na ional Lib a y o Economics use on 16 Decembe 2025
H3. PD ha e a posi i e impac on LRP.
H4. Malp ac ices in c edi -assessmen ha e a posi i e impac on LRP.
2.4 Media ing e ec o clien –business pe o mance be ween p ocedu al de iciencies (PD),
malp ac ices in c edi -assessmen (MPCA) and loan- epaymen p oblems (LRP)
C edi e alua ion played a c ucial ole in MFI lending p ocedu es, and app o ing loans based
on subpa business pe o mance esul s in bad loans (Blanco-Oli e e al., 2023). On he o he
hand, mos lending o ice s neglec ed o assess he bo owe s’ company pe o mance as a
esul o hei has y decisions, and hese loans led o p oblems wi h epaymen (Joseph and
Quayes, 2024). Simila o his, lending o icials’ co up ion a he expense o MFIs h ough
b ibes, commissions, poo c edi e alua ion, inside lending and he sanc ioning o loans based
on nepo ism has signi ican ly hampe ed MFIs’ capaci y o ecoup hei loans (Azim e al.,
2017). I is no ewo hy o obse e ha he lending o ice was no always s ic ly complian
wi h he lending p ocess. Be o e app o ing a loan, he lending o ice ypically did no isi he
clien ’s place o business bu ins ead made he choice based on he clien ’s poo c edi , an
inaccu a e c edi e alua ion o in opposi ion o a dispu ed business uni (Adusei and Adeleye,
2024). A pe cen age o he loan amoun was aken as “sule,” o b ibe y, by lowe -middle-le el
and middle-le el employees, which had a nega i e e ec on loan payback pe o mance.
Owing o a lack o mo al au ho i y ollowing his inciden , bank managemen was unable o
en o ce he loan ag eemen ’s e ms and condi ions on he clien s. Addi ionally, some lending
o ice s app o ed phan om bank loans o hei clien s’ i ms e en hough hey had no business
plan. Addi ionally, some bank s a app o ed phan om loans o pay o exis ing deb o
demons a e ques ionable loan payback pe o mance (Bo e e al., 2024). Addi ionally, i was
no ed ha some MFIs ha e di e ed om hei social objec i e o e adica ing po e y and
swi ched hei a en ion o mo e comme cial lending, which has a highe epaymen a e han
he s anda d lending p ac ices (Redzuan e al., 2023). Fu he mo e, when compa ed o he
lending o ice ’s dishones ac ions, p ocedu al laws and mino documen a ion p oblems ha e
li le impac on he epaymen a e. Howe e , due o inadequa e manage ial abili y, MFIs/
Mic o inance Banks (MFBs) we e unable o c ea e inno a i e, compe i i e p oduc s ha
could mee he speci ic needs o mic o inance cus ome s (Bedaiwy and Pe e , 2022). I is
in e es ing o no e ha his analysis held banking sys ems accoun able o non-pe o ming
loans when applied o MFIs. He con inued by saying ha mic o inance bank lending o ice s
lack adequa e inancial li e acy, making i impossible o hem o accu a ely assess a clien ’s
c edi in ligh o banking p ocedu es and, ul ima ely, p e en ing hem om o e ing he
bo owe s any ope a ional assis ance ha would imp o e hei business pe o mance (Pa in
and Bi ne , 2022).
This s udy did poin ou a ew p ocedu al laws ha inc ease loan de aul and delinquency.
These ac o s p ima ily include a lack o agg essi e c edi collec ion ac ics, a quick decision
o g an loans and inside lending, all o which ha e a signi ican impac on how well
bo owe s epay hei loans i he lending o ice ails o assess he bo owe ’s business
capaci y in e ms o p o i abili y and sales (Kassim and Rahman, 2018). In he case o he MFIs
indus y, he p oblem o loan de aul and delinquency was o en explained by ad e se selec ion
b ough on by in o ma ion asymme y. In he con ex o he MFIs con ac , simila ly, he
bo owe lacks knowledge o he lende s, while he lende lacks knowledge o he bo owe s
(Ja ee and Mus a a, 2023). Occasionally, bo owe s who ga e b ibes o loans had be e loan
payback eco ds han hose who did no because hey ecei ed hei loans on ime and
bene i ed om possibili ies o small businesses (Lamichhane, 2021). Mino documen a ion
e o s can cause issues o he bo owe s i hey a e no emedied p omp ly. On he o he hand,
loan o icials occasionally used delay s a egies while au ho izing loans and hen a e wa ds
demanded commission om he bo owe s. Bo owe s occasionally missed small business
oppo uni ies as a esul o he lending o ice ’s pi i ul app oach, which hu bo h hei business
AJEB
9,3
344
Downloaded om h p://www.eme ald.com/ajeb/a icle-pd /9/3/338/10332672/ajeb-04-2025-0035en.pd by ZBW Ge man Na ional Lib a y o Economics use on 16 Decembe 2025
pe o mance and loan- epaymen pe o mance (Iqbal e al., 2021). In a ew ins ances, i was
also shown ha he bo owe s handled addi ional unds om hei comme cial ac i i ies o pay
he lending o ice ’s illegal demands o paymen s, which we e made o him as b ibes. Simila
o his, bo owe s keep a posi i e connec ion wi h he lending o ice h ough b ibe y, allowing
hem o ecei e addi ional concessions om he lending o ice , such as imely loans,
eadjus men s, concessions and g ace pe iods, among o he hings (Cha les and Mo i, 2017).
Addi ionally, he addi ional unds gi en as b ibes o he lending o ice led o a dec ease in he
amoun o capi al needed o conduc he business a ai s, which ul ima ely had an impac on he
pe o mance o he en e p ise in e ms o sales and p o i abili y (Iqbal e al., 2020). The esul s
o his s udy in iguingly e ealed ha b ibes gi en o lending o ice s migh p omo e clien
epaymen , p o ided he lending o ice p omp ly p o ides a loan acili y and he bo owe
gene a es su icien cash om be e business pe o mance o pay o he a ious deb
obliga ions. Addi ionally, in some ins ances, clien s enhance he ope a ion o hei businesses
by p omp ly u ilizing a c edi acili y and by coo dina ing he epaymen schedules o all o
hei obliga ions wi h hei cash in lows and ou lows (Sakyi-Yeboah e al., 2025). Thus, he
CBP media es he link be ween PD and LRP, as weak assessmen p ocesses educe business
e iciency, leading o highe de aul isks (Blanco-Oli e and I imia-Di�
eguez, 2021).
Simila ly, malp ac ices in c edi assessmen ha m business ou comes, which in u n
con ibu e o epaymen ailu es (Al a e al., 2024).
H5. CBP has a media ing ole be ween he PD and LRP.
H6. CBP has a media ing ole be ween he Malp ac ices in C edi -Assessmen (MPCA)
and LRP.
2.5 Mode a ing ole o P o essional-Expe ience (PE) o MFIs employees on he
ela ionship o p ocedu al-de iciencies (PD), malp ac ices in c edi -assessmen (MPCA)
and loan- epaymen -p oblems (LRP)
Ano he impo an componen ha signi ican ly a ec s loan epaymen issues is he lending
o ice ’s pe o mance and e ec i eness. This s udy ound ha a mo e seasoned lending o ice
imp o ed c edi e alua ions by minimizing documen a ion e o s, which imp o ed loan
epaymen pe o mance (Okpukpa a e al., 2023). Howe e , a less quali ied and expe ienced
lending o ice was unable o e alua e he bo owe s’ c edi wo hiness by he lending policy
and le gaps in he pape wo k p ocess ha made i di icul o eclaim he loan when i was due
(Kassim and Rahman, 2018). Addi ionally, an expe ienced lending o ice aids in he con ol
o p oblems ela ed o poo loans by elimina ing p ocedu al e o s and delays (Mia e al.,
2025). Howe e , a no ice lending o ice was unable o comp ehend he mindse o bo owe s
and he undamen al elemen s o lending p oduc s and du ing he p oduc de elopmen phase,
he o she did no o e use ul sugges ions o c ea e a compa ible p oduc ha e ec i ely me he
needs and desi es o bo owe s. Las bu no leas , he lending o ice in e ac s di ec ly wi h
bo owe s and has a g ea e awa eness o he p ocedu al laws and dishones beha io ha
ul ima ely esul in di icul ies wi h loan epaymen (Kebede e al., 2023). The o ice has also
no ed he link be ween e o s in c edi e alua ion and issues wi h loan epaymen in his s udy
on he mode a ing unc ion o lending. The esul s o his s udy did, howe e , show ha he
younge and less expe ienced indi idual is ini ially mo e mind ul abou he ca ee and did no
ecei e b ibe y om his clien s. The e o e, he link be ween malp ac ices and loan epaymen
pe o mance was una ec ed by you h ul and less expe ienced employees. On he o he side, an
expe may be mo e awa e o he sys em’s laws and demand b ibes om bo owe s o app o e
loans (Iqbal e al., 2021). In iguingly, his s udy disco e ed ha younge and less expe ienced
lending o ice s who a e mo e conce ned wi h hei ca ee de elopmen comple ed all
o mali ies and p ocedu es du ing he c edi assessmen and made e e y e o o educe loan
epaymen issues by ca ying ou all esponsibili ies and policies se o h by he MFIs o
c edi assessmen and loan sanc ioning (Riz i Ja ee e al., 2023).
Asian Jou nal o
Economics and
Banking
345
Downloaded om h p://www.eme ald.com/ajeb/a icle-pd /9/3/338/10332672/ajeb-04-2025-0035en.pd by ZBW Ge man Na ional Lib a y o Economics use on 16 Decembe 2025
ma gins and an o e all weakening o pe o mance ela i e o hei compe i o s, who ace ewe
p ocedu al obs acles. The e o e, indings pe aining o hypo hesis (H1) is consis en wi h
se e al pas s udies (Wahab e al., 2024; Riz i Ja ee e al., 2023; Negi, 2025; Raza e al., 2024;
Raza e al., 2024).
Meanwhile, he second hypo hesis (H2), which sugges s ha malp ac ices in C edi
Assessmen ha e a posi i e impac on CBP was accep ed (β 5 0.302; 5 3.831; p < 0.000).
Thus, when loans a e g an ed based on lawed assessmen s a he han me i and business
iabili y, dese ing clien s may ei he be denied access o needed capi al o ecei e insu icien
unds. On he o he hand, poo ly e ed clien s may ob ain inancing bu ail o u ilize i
p oduc i ely. Fo legi ima e businesses, his leads o educed compe i i eness, as hey may
ace capi al sho ages, delayed expansion and dis up ed ope a ions. Ul ima ely, such
malp ac ices ha m CBP by unde mining p o i abili y, lowe ing sales and weakening hei
s anding compa ed o compe i o s who ope a e unde mo e anspa en and equi able inancial
sys ems. The inding ela ed o (H2) is u he jus i ied by a ious empi ical s udies ha
epo ed simila esul s (Wahab e al., 2024; Riz i Ja ee e al., 2023; Negi, 2025; Raza e al.,
2024; Raza e al., 2024).
Table 7. Coe icien o de e mina ion (R
2
)
Cons uc s R squa e
R squa e
adjus ed
Clien Business Pe o mance 0.162 0.157
Loan Repaymen P oblem 0.498 0.488
Sou ce(s): Table by au ho s
Table 8. Hypo hesis es ing esul s (boo s apping a 5,000 subsamples)
Hypo hesis Coe icien SD T-s a p- alues Decision
Di ec E ec s
H1: P ocedu al De iciencies → Clien Business
Pe o mance
0.167 0.088 1.892 0.059* Accep ed
H2: Malp ac ice in C edi Assessmen → Clien
Business Pe o mance
0.302 0.079 3.831 0.000*** Accep ed
H3: P ocedu al De iciencies → Loan Repaymen
P oblem
0.242 0.050 4.838 0.000*** Accep ed
H4: Malp ac ice in C edi Assessmen → Loan
Repaymen P oblem
0.214 0.065 3.312 0.001*** Accep ed
Media ing E ec s
H5: P ocedu al De iciencies → Clien Business
Pe o mance → Loan Repaymen P oblem
0.028 0.019 1.480 0.139 Rejec ed
H6: Malp ac ice in C edi Assessmen → Clien
Business Pe o mance → Loan Repaymen P oblem
0.051 0.022 2.294 0.022** Accep ed
Mode a ing E ec s
H7: Mode a ing E ec 1 → Loan Repaymen
P oblem �0.116 0.061 1.910 0.056* Accep ed
H8: Mode a ing E ec 2 → Loan Repaymen
P oblem �0.003 0.067 0.039 0.969 Rejec ed
No e(s): ***, ** and * Deno es signi icance le el a 1%, 5% and 10%
Sou ce(s): Table by au ho s
AJEB
9,3
352
Downloaded om h p://www.eme ald.com/ajeb/a icle-pd /9/3/338/10332672/ajeb-04-2025-0035en.pd by ZBW Ge man Na ional Lib a y o Economics use on 16 Decembe 2025
Simila ly, he hi d hypo hesis (H3), which ecommended ha “P ocedu al- De iciencies
(PD) ha e a posi i e impac on Loan-Repaymen -P oblems (LRP)” was accep ed (β 5 0.242;
5 4.838; p < 0.000). PD – such as delays in disbu semen , unclea epaymen e ms,
inconsis en loan moni o ing and poo communica ion – can di ec ly con ibu e o epaymen
challenges. When clien s ace unce ain y in loan p ocessing o encoun e adminis a i e
hu dles, hei abili y o plan and alloca e bo owed unds e ec i ely is comp omised. Such
ine iciencies may lead o cash low mismanagemen , missed in es men windows and ising
ope a ional cos s. These condi ions educe a bo owe ’s inancial capaci y o mee epaymen
schedules on ime. As a esul , p ocedu al weaknesses wi hin lending ins i u ions no only
unde mine he bo owe ’s inancial planning bu also ele a e he isk o de aul , leading o
mo e equen and se e e LRP. The inding ela ed o (H3) is u he jus i ied by a ious
empi ical s udies ha epo ed simila esul s (Ja ee and Mus a a, 2023; Mia e al., 2019; Naz
e al., 2024; Omidiji e al., 2025).
Al hough, he ou h hypo hesis (H4), which quan i ied ha “Malp ac ices in C edi
Assessmen ha e a posi i e impac on Loan Repaymen P oblems (LRP),” has also been
suppo ed by he boo s apping esul s o he s uc u e model (β 5 0.214; 5 3.312; p < 0.001).
I means, when loans a e issued wi hou ca e ul sc u iny o he clien ’s epaymen capaci y,
inancial heal h o business iabili y, he chances o a misma ch be ween loan size and
epaymen abili y inc ease signi ican ly. This can esul in clien s ecei ing mo e c edi han
hey can handle o loans s uc u ed wi h e ms ha don’ align wi h hei ac ual cash low
pa e ns. Consequen ly, such lawed assessmen s con ibu e o poo loan pe o mance, delayed
paymen s and highe de aul a es, he eby di ec ly inc easing LRP o bo h bo owe s and
Figu e 3. Inne -model (s uc u al-model). Figu e by au ho s
Asian Jou nal o
Economics and
Banking
353
Downloaded om h p://www.eme ald.com/ajeb/a icle-pd /9/3/338/10332672/ajeb-04-2025-0035en.pd by ZBW Ge man Na ional Lib a y o Economics use on 16 Decembe 2025
lending ins i u ions. The ou come o his hypo hesis (H4) is consis en wi h se e al pas s udies
(Sinha and Ghosh, 2022; O i i e al., 2022; Kebede e al., 2023; Be ns e al., 2021; Behe a and
Mohini, 2025).
Co espondingly, he i h hypo hesis (H5), which speci ies ha he “Clien -Business
Pe o mance (CBP) has a media ing ole be ween he P ocedu al-De iciencies (PD) and
Loan-Repaymen -P oblems (LRP)” is ejec ed (β 5 0.028; 5 1.480; p < 0.139). This inding
sugges s ha while PD di ec ly a ec LRP, hei impac is no channeled h ough CBP. One
possible explana ion is ha PD may in luence epaymen beha io in ways ha bypass
business pe o mance me ics – such as h ough adminis a i e delays, lack o cla i y in e ms
o ine icien suppo s uc u es. Addi ionally, clien s expe iencing low p o i abili y, poo sales
and educed pe o mance ela i e o compe i o s may al eady be unde inancial s ess, making
hem ulne able o epaymen issues ega dless o p ocedu al e iciency. In such cases, he
di ec bu den o ins i u ional ine iciencies o e whelms he po en ial bu e ing e ec o
business pe o mance, ende ing CBP an ine ec i e media o in he PD–LRP link. The
inding ela ed o (H5) is in line wi h many pas s udies ha epo ed simila esul s (Joseph and
Quayes, 2024; Adusei and Adeleye, 2024; Bo e e al., 2024; Pa in and Bi ne , 2022).
Likewise, he six h hypo hesis (H6), which indica ed ha he “CBP has a media ing ole
be ween he MPCA and Loan-Repaymen P oblems (LRP)” is accep ed (β 5 0.051; 5 2.294;
p < 0.022). This esul indica es ha malp ac ices in c edi assessmen con ibu e o LRP
indi ec ly by weakening CBP. When c edi o ice s engage in une hical o negligen p ac ices –
such as o e looking accu a e inancial analysis, igno ing isk p o iles o showing a o i ism –
bo owe s may ei he ecei e inapp op ia e loan amoun s o ace e ms unsui able o hei
ac ual business needs. As a esul , clien businesses may su e om misalloca ed esou ces,
inancial s ain and an inabili y o capi alize on g ow h oppo uni ies, ul ima ely leading o
educed p o i abili y, lowe sales and weakened compe i i e pe o mance. This de e io a ion
in business pe o mance, in u n, inc eases he likelihood o epaymen delays o de aul s.
Thus, poo c edi assessmen p ac ices unde mine bo owe pe o mance, which hen uels
LRP h ough a clea media ing pa hway. The e o e, indings pe aining o hypo hesis (H6) a e
consis en wi h se e al pas s udies (Ja ee and Mus a a, 2023; Sakyi-Yeboah e al., 2025; Al a
e al., 2024).
Al hough he se en h hypo hesis (H7), which quan i ied ha “P o essional-Expe ience
(PE) o MFIs employees mode a e he ela ionship o P ocedu al-De iciencies (PD) and
Loan-Repaymen -P oblems (LRP)” has also been suppo ed by he boo s apping esul s o he
s uc u e model (β 5 �0.116; 5 1.910; p < 0.056). This inding sugges s ha expe ienced
lending o ice s a e be e equipped o handle o compensa e o p ocedu al ine iciencies
du ing he c edi assessmen p ocess. Th ough hei knowledge, judgmen and amilia i y wi h
clien beha io and c edi isks, expe ienced o ice s can na iga e unclea guidelines, spo
po en ial ed lags and ensu e smoo he loan p ocessing e en when o mal sys ems a e lacking.
By educing e o s, delays and miscommunica ion du ing loan assessmen and disbu semen ,
hey help main ain clien us and ensu e be e alignmen be ween loan s uc u es and clien
needs. Consequen ly, hei expe ise educes he likelihood ha p ocedu al laws will escala e
in o se ious LRP, he eby enhancing ins i u ional e ec i eness and c edi po olio quali y.
The ou come o his hypo hesis (H7) is consis en wi h se e al pas s udies (Okpukpa a e al.,
2023; Mia e al., 2025; Kebede e al., 2023; Riz i Ja ee e al., 2023).
On he o he hand, he eigh hypo heses (H8), which quan i ied ha “P o essional
-Expe ience (PE) o MFIs employees mode a e he ela ionship o MPCA and Loan
Repaymen P oblems (LRP)” has also been ejec ed by he boo s apping esul s o he
s uc u e model (β 5 �0.003; 5 0.039; p < 0.969). While one migh expec expe ienced
lending o ice s o educe he nega i e impac s o malp ac ices, he esul s sugges a mo e
complex eali y. In p ac ice, expe ienced o ice s o en possess deepe knowledge o
ins i u ional p ocedu es and sys em loopholes, which may inad e en ly con ibu e o agency
p oblems. Ra he han mi iga ing malp ac ices, hei amilia i y wi h in e nal p ocesses could
allow hem o bypass con ols o manipula e c edi assessmen s in a o o ce ain clien s o o
AJEB
9,3
354
Downloaded om h p://www.eme ald.com/ajeb/a icle-pd /9/3/338/10332672/ajeb-04-2025-0035en.pd by ZBW Ge man Na ional Lib a y o Economics use on 16 Decembe 2025
pe sonal gain. As a esul , al hough he di ec ion o he e ec is nega i e, he ela ionship is
s a is ically insigni ican , indica ing ha PE does no play a meaning ul ole in educing LRP
when malp ac ices a e p esen in he c edi assessmen p ocess. The inding ela ed o (H8), is
in line wi h many pas s udies ha epo ed simila esul s (Rehman e al., 2024; Iqbal and Rao,
2023; Wahab e al., 2024; Gi haiga, 2024; Raza e al., 2024).
5. Discussion and conclusion
The lending p ac ices o MFIs in Pakis an a e comple ely di e en om hose o o he banks.
When i comes o MFI inancing, he lending o ice ’s c edi assessmen epo is hea ily
weigh ed in he decision-making p ocess. The e o e, his s udy conside s he di ec impac o
independen a iables (PD and malp ac ices-in-c edi -assessmen ) on he dependen a iable
(LRP) and media ing a iable (CBP). This s udy also inds he media ing ole o CBP be ween
he independen a iables (PD and malp ac ices-in-c edi -assessmen ) and he dependen
a iable (LRP). The mode a ing impac o he lending o ice ’s PE on he ela ionships
be ween p ocedu al e o s and loan- epaymen issues, as well as be ween Malp ac ices in
c edi assessmen and loan- epaymen issues, is also conside ed in his s udy, which also
conside s he lending o ice ’s in luence on he lending decision. Howe e , his s udy ound
ha une hical lending p ac ices and dishones y on he pa o lending o ice s du ing he c edi
e alua ion conside ably aised he a e o subp ime loans (Kassim and Rahman, 2018).
Addi ionally, MFI bo owe s expe ienced issues managing hei businesses as a esul o he
lending o ice ’s un a o able posi ion in he con ex o p ocedu al e o s and aud in he c edi
assessmen (Iqbal e al., 2021). The esea ch’s indings also showed ha p ocedu al laws and
mino documen a ion mis akes had no e ec on CBP, and as a esul , clien s’ loan- epaymen
issues did no wo sen a all (Baka e al., 2020). Howe e , his s udy disco e ed ha MFI
bo owe s mus pay he p ice o he lending o ice ’s misconduc in he o m o subpa
company pe o mance, which also a ec s loan- epaymen pe o mance (Blanco-Oli e e al.,
2023). Addi ionally, his s udy disco e ed ha he lending o ice ’s p o essional compe ence
lessened he in luence o p ocedu al e o s and malp ac ices on loan- epaymen issues. I
implies ha a lending o ice wi h expe ise would be amilia wi h he clien s’ lending policies
and mindse . The e o e, by ca ying ou he lending policies o he MFIs in le e and spi i , he
lending o ice may con ibu e o dec easing he a io o bad loans (Blanco-Oli e and I imia-
Di�
eguez, 2021).
As was p e iously men ioned, he lending me hods o MFIs a e comple ely dis inc om
hose o o he ins i u ions in he banking indus y. In he case o MFIs, he lending decision is
mos ly dependen on he c edi e alua ion epo c ea ed by he lending o ice . The ole o he
lending o ice in he con ex o p ocedu al e o s, aud in he c edi e alua ion p ocess,
subpa CBP and p oblems wi h loan epaymen was a ely examined in p io s udies (Hiena,
2020). Howe e , he ole ha CBP plays in he con ex o p ocedu al laws, aud in he c edi
assessmen p ocess and issues wi h loan epaymen was also sca cely explo ed in he con ex
o MFIs in Pakis an (Sh eya, 2021). Addi ionally, his s udy conside ed he mode a ing e ec
o MFI employees’ expe iences on he link be ween he independen a iables (PD and
Malp ac ices in c edi -e alua ion) and he dependen a iable, keeping in mind he
signi icance o he lending o ice (LRP) (Ali e al., 2023). The MFIs in Pakis an can lea n
a lo om he s udy’s conclusions. The e o e, in ligh o he esul s o his s udy, MFIs migh
al e hei lending p ac ices and ules. The indings o his s udy may be used by MFIs o design
a a ie y o ope a ional assis ance and aining p og ams o hei s a and consume s o
imp o e loan payback pe o mance (Ali e al., 2023).
The e a e ob iously some d awbacks o his s udy. Fi s o all, in his s udy, da a we e
collec ed om he middle-le el managemen o he MFIs (ope a ions manage s, ela ionship
o ice s, c edi o ice s and p oduc manage s) and inpu o o he s akeholde s (lowe -le el
managemen , op-le el managemen and bo owe s) was no conside ed due o he ime and
o he esou ce cons ain s (Iqbal e al., 2021). This s udy used a sel -adminis e ed
Asian Jou nal o
Economics and
Banking
355
Downloaded om h p://www.eme ald.com/ajeb/a icle-pd /9/3/338/10332672/ajeb-04-2025-0035en.pd by ZBW Ge man Na ional Lib a y o Economics use on 16 Decembe 2025
ques ionnai e, simila o o he esea ch, and no ollow-up in e iews wi h esponden s we e
conduc ed o accoun o changes in he a ge popula ion’s beha io o e ime (Tadele e al.,
2022). Likewise, econome ics ypes o s udy could no be conduc ed due o he seconda y da a
cons ain s. Howe e , o he signi ican in luencing ac o s ha ha e a signi ican impac on
loan- epaymen pe o mance we e no conside ed in his s udy. These elemen s include he
equency o loan epaymen , en al income, ag icul u al e enue, inhe i ed asse s and
he numbe o bo owe s’ dependen s (Ghosh e al., 2020). Howe e , his s udy is based on he
o mal MFIs ha a e wo king in Pakis an. Whe eas, someone may u he expand he scope o
his s udy o he in o mal MFIs and adi ional money lende s. In addi ion, someone may
conside he compa ison o in e es - ee mic o inance ins i u ions in he con ex o Sou h
Asian coun ies. Fu he mo e, i seconda y da a a e accessible, econome ics model ypes
migh be conside ed o addi ional esea ch. Las bu no leas , a longi udinal s udy is also
ad ised o in-dep h in es iga ion o he subjec o loan- epaymen issues in he con ex o
MFIs in Pakis an (Iqbal e al., 2020). Howe e , he summa y ega ding he key indings is
gi en below in Table 9.
5.1 Theo e ical implica ions
Agency heo y discusses con lic s o in e es and p oblems ha a ise when one pe son ( he
agen ) makes decisions on behal o ano he ( he p incipal). In he amewo k o MFIs, when
de e mining c edi wo hiness and alloca ing loans, he ins i u ion (agen ) wo ks on behal o i s
clien s (p incipals). Fu he mo e, imp ope c edi e alua ion p ocedu es and p ac ices can
esul in mo al haza d, as MFIs ake ad an age o oppo uni ies and pu hei in e es s ahead o
hose o hei clien s. Fo example, MFIs may g an loans wi hou conduc ing he necessa y
due diligence ul ill pe sonal incen i es o mee disbu semen a ge s, which would aise he
de aul a e (Blanco-Oli e e al., 2023). Asymme ic In o ma ion Theo y also d aws a en ion
o he issues ha can occu when one pa y has access o mo e o supe io in o ma ion han he
o he . This hypo hesis can explain why in o ma ion asymme ies make i di icul o MFIs o
app op ia ely e alua e a clien ’s c edi wo hiness (Baka e al., 2020). Howe e , in he con ex
o agency heo y and asymme ic in o ma ion heo y, PD in c edi assessmen c ea e a gap
be ween lending o ice s (agen s) and lending ins i u ions (p incipals), leading o misaligned
incen i es and poo sc eening o bo owe s, which inc eases he likelihood o loan de aul s in
Table 9. Summa y o hypo hesis and indings
Accep ed Rejec ed
H1: P ocedu al-De iciencies (PD) ha e a posi i e impac on Clien -Business-
Pe o mance (CBP)
✔
H2: Malp ac ices in C edi -Assessmen ha e a posi i e impac on Clien -Business-
Pe o mance (CBP)
✔
H3: P ocedu al-De iciencies (PD) ha e a posi i e impac on Loan-Repaymen -
P oblems (LRP).
✔
H4: Malp ac ices in C edi -Assessmen ha e a posi i e impac on Loan-Repaymen -
P oblems (LRP)
✔
H5: Clien -Business-Pe o mance (CBP) has a media ing ole be ween he P ocedu al-
De iciencies (PD) and Loan-Repaymen -P oblems (LRP)
✔
H6: Clien -Business-Pe o mance (CBP) has a media ing ole be ween he
Malp ac ices in C edi -Assessmen (MPCA) and Loan-Repaymen -P oblems (LRP)
✔
H7: P o essional-Expe ience (PE) o MFIs employees mode a e he ela ionship o
P ocedu al-De iciencies (PD) and Loan-Repaymen -P oblems (LRP)
✔
H8: P o essional-Expe ience (PE) o MFIs employees mode a e he ela ionship o
Malp ac ice in C edi -Assessmen (MPCA) and Loan-Repaymen -P oblems (LRP)
✔
Sou ce(s): Table by au ho s
AJEB
9,3
356
Downloaded om h p://www.eme ald.com/ajeb/a icle-pd /9/3/338/10332672/ajeb-04-2025-0035en.pd by ZBW Ge man Na ional Lib a y o Economics use on 16 Decembe 2025
Pakis an’s mic o inance sec o (Ahmad, 2012). Mo eo e , malp ac ices such as a o i ism and
b ibe y exace ba e in o ma ion asymme y by concealing bo owe s’ ue isk p o iles,
esul ing in ad e se selec ion and mo al haza d, which di ec ly con ibu e o LRP (Ko e e al.,
2024). These issues unde mine he us and e iciency o mic o inance ope a ions, e lec ing
he agency con lic and incomple e in o ma ion ypical in such inancial ela ionships (No din
e al., 2019).
Simila o his, when agency issues and in o ma ion asymme ies combine, he assessmen
o c edi is no ideal, leading o he app o al o loans o high- isk clien s. Owing o hei
po en ial inabili y o make good use o he loans, hese clien s a e mo e likely o expe ience
p oblems wi h business pe o mance and inancial ha dship (Kendo and Tchakoun e, 2022).
Simila ly, MFIs expe ience inc eased de aul a es as clien s wi h subpa company
pe o mance ind i di icul o epay hei loans. This se s up a icious cycle in which he
ins i u ion’s inancial s abili y is jeopa dized, which can esul in igh e lending guidelines o
highe in e es a es, which would make i e en ha de o bo owe s o make hei epaymen s
(Blanco-Oli e and I imia-Di�
eguez, 2021). In a simila ein, ecu en p ocedu al e o s and
misconduc can unde mine clien con idence in MFIs. Cus ome s migh s op in e ac ing wi h
MFIs, which would make i ha de o he o ganiza ion o assis egional economic g ow h and
ul ill i s goal o inancial inclusion. In summa y, esol ing p ocedu al laws and malp ac ices
in c edi e alua ion is essen ial o balancing he in e es s o MFIs and hei clien s, minimizing
in o ma ion asymme y and enhancing o e all business pe o mance and loan payback esul s
(Blanco-Oli e and I imia-Di�
eguez, 2021). The sus ainabili y and e icacy o mic o inance
o ganiza ions in os e ing economic g ow h may be imp o ed by his alignmen (Ali
e al., 2023).
5.2 P ac ical/manage ial implica ions
The s udy looks a how c edi e alua ion e o s and p ocedu al de ec s a ec CBP and loan-
epaymen conce ns, wi h a ocus on he mode a ing ole o lending o ice expe ience in MFIs
in Pakis an (Ali e al., 2023). Howe e , based on hese s udy ou comes, MFIs should de elop
and implemen s anda dized c edi assessmen p o ocols o minimize PD. This includes
ho ough e ing o clien in o ma ion, s anda dized isk assessmen ools and egula upda es
o he c edi assessmen c i e ia based on ma ke condi ions and clien eedback (Baka e al.,
2020). Likewise, in ligh o he indings o his s udy, lending o ice s should ha e access o
ongoing aining p og ams ha p o ide hem wi h he mos ecen in o ma ion on c edi
assessmen me hods and esou ces. This lowe s he likelihood o malp ac ices and gua an ees
ha all o ice s ollow bes p ocedu es (Lassoued, 2022). Fu he mo e, his s udy can assis in
iden i ying gaps and oppo uni ies o de elopmen by enabling he MIFs o es ablish me hods
o clien inpu on he c edi e alua ion p ocess. To imp o e e alua ion p ocesses and make
su e hey a e clien -cen ic, clien insigh s can be help ul (Be ns e al., 2021).
This s udy p oposed ways o imp o e he o e all e icacy o he c edi assessmen p ocess,
such as es ablishing men o ship p og ams whe ein mo e seasoned lending o ice s coach less
seasoned employees. This in o ma ion sha ing can aid in c ea ing a mo e capable eam ha can
lowe malp ac ice a es (Adusei, 2021). Acco ding o his s udy, businesses can pe o m be e
by o e ing suppo o hei clien s bo h be o e and a e loans a e disbu sed. To make su e ha
clien s can success ully use he loan o business g ow h, his includes con inuous ad ising
se ices, inancial li e acy aining and help wi h business planning (Iqbal e al., 2021).
Addi ionally, p oac i e in e en ion can be aided by he de elopmen o ea ly wa ning sys ems
o iden i y clien indica o s o inancial ha dship. Then, in o de o a oid de aul s, lending
o ice s migh collabo a e wi h clien s o modi y loans o o e ex a assis ance (Kassim and
Rahman, 2018). I is also ad ised o s eng hen he egula o y amewo k o impose s ic
c edi assessmen c i e ia on all MFIs in o de o lessen p ocedu al laws and malp ac ices.
Regula o y agencies may also be in ol ed in keeping an eye on compliance and, i equi ed,
implemen ing co ec i e measu es (Hiena, 2020). In conclusion, u ilizing he expe ise o
Asian Jou nal o
Economics and
Banking
357
Downloaded om h p://www.eme ald.com/ajeb/a icle-pd /9/3/338/10332672/ajeb-04-2025-0035en.pd by ZBW Ge man Na ional Lib a y o Economics use on 16 Decembe 2025
lending o ice s o emedy p ocedu al laws and malp ac ices in c edi assessmen will g ea ly
enhance CBP and lessen loan payback issues. These manage ial and p ac ical ami ica ions o
mic o inance ins i u ions in Pakis an may esul in be e cus ome ou comes, mo e sus ainable
lending p ac ices and sec o g ow h o e all.
To gua an ee ha mic o inance con ac s a e success ully ul illed, mic o inance
ins i u ions migh c ea e ho ough e hical s anda ds o guidelines o lending o ice s as
well as bo owe s based on he s udy’s indings (Iqbal e al., 2020). These guidelines should
emphasize anspa ency, ai ness and accoun abili y in he lending p ocess. Fo bo owe s, he
s anda ds would include clea expec a ions o inancial disclosu e and esponsible epaymen
beha io (Ghosh e al., 2020). Fo lending o ice s, he guidelines would s ess impa iali y,
ho ough e alua ion o c edi wo hiness and adhe ence o ins i u ional e hics o e pe sonal
in e es s. Mic o inance o ganiza ions may p omo e a cul u e o us and dependabili y by
pu ing hese mo al p inciples in o p ac ice. This will inc ease loan payback a es and ensu e
he long- e m iabili y o hei p og ams (Hiena, 2020).
Besides all hese, his s udy o e s c i ical insigh s o lending ins i u ions aiming o educe
LRP by add essing in e nal sho comings. The indings sugges ha PD and malp ac ices in
c edi assessmen con ibu e signi ican ly o epaymen issues, pa icula ly when hey
unde mine CBP. The e o e, imp o ing p ocedu al anspa ency, ensu ing compliance wi h
s anda d c edi p o ocols and minimizing subjec i e o une hical lending p ac ices can di ec ly
enhance bo owe pe o mance and epaymen beha io . Mo eo e , he mode a ing ole o
lending o ice expe ience highligh s he alue o in es ing in aining and e aining
expe ienced s a . Expe ienced o ice s may be be e equipped o na iga e p ocedu al gaps o
de ec malp ac ice, he eby mi iga ing hei nega i e e ec s on clien ou comes. Financial
ins i u ions should conside in eg a ing con inuous p o essional de elopmen p og ams and
s ic e o e sigh mechanisms o ein o ce e hical conduc . These p ac ical s eps help c ea e a
mo e obus , clien -o ien ed lending en i onmen ha p omo es long- e m inancial s abili y
and educes de aul isk.
5.3 Limi a ions o he s udy
Despi e o e ing aluable insigh s in o he ins i u ional ac o s a ec ing LRP in mic o inance
se ings, his s udy is no wi hou limi a ions. Fi s , he da a we e collec ed solely om middle-
le el employees o mic o inance ins i u ions, which may limi he gene alizabili y o he
indings. F on line loan o ice s and senio managemen may hold di e en pe spec i es on PD,
c edi assessmen p ac ices and clien in e ac ions ha we e no cap u ed in his analysis.
Second, he eliance on sel - epo ed da a h ough s uc u ed ques ionnai es in oduces he
po en ial o esponse bias, pa icula ly conce ning sensi i e opics such as malp ac ices in
c edi assessmen . Addi ionally, while he wo-s age SEM app oach p o ides obus analy ical
powe , i is s ill subjec o assump ions o linea i y and model speci ica ion, which may no ully
cap u e he complex dynamics o eal-wo ld lending p ac ices. Fu u e esea ch should conside
inco po a ing mul i-le el da a sou ces, longi udinal designs o quali a i e me hods o en ich
unde s anding and alida e hese indings ac oss b oade con ex s and s akeholde g oups.
5.4 A enues o u he s udy
Fu u e esea ch could use a longi udinal design o expand on he esul s o his s udy and be e
unde s and he causal linkages ha exis o e ime be ween p ocedu al laws, malp ac ices,
business pe o mance and loan- epaymen issues. This would enable a mo e dynamic
examina ion o he in e ac ions and a ia ions be ween hese a iables, o e ing mo e
p o ound unde s anding o he long- e m consequences o c edi e alua ion p ocedu es. Mo e
s udies should use objec i e measu es o loan payback and business pe o mance, such as
inancial eco ds and epaymen his o ies, o complemen sel - epo ed da a and educe biases.
Mo e speci ic insigh s may also be ob ained by closely examining he e ec s o a ious
p ocedu al laws and malp ac ices, such as poo clien sc eening, incomple e eco dkeeping o
AJEB
9,3
358
Downloaded om h p://www.eme ald.com/ajeb/a icle-pd /9/3/338/10332672/ajeb-04-2025-0035en.pd by ZBW Ge man Na ional Lib a y o Economics use on 16 Decembe 2025
biased decision-making. Con ex ualizing he esul s and iden i ying la ge ends may also be
aided by looking in o he impac o nume ous ex e nal ac o s, such as changes in egula ions,
echnology imp o emen s and economic si ua ions, on c edi assessmen p ocedu es. Las ly,
b oadening he s udy’s ocus o include a compa a i e examina ion o MFIs in a ious na ions
o a eas may o e insigh ul in o ma ion on how en i onmen al a iables a ec he
connec ion be ween p ocedu al laws, co po a e success and loan payback. In o de o imp o e
c edi e alua ion p ocesses in a a ie y o con ex s, his could assis in iden i ying bes
p ac ices and p o ide guidance o policy ecommenda ions.
Re e ences
Adusei, M. (2021), “In e es a e and he social pe o mance o mic o inance ins i u ions”, The
Qua e ly Re iew o Economics and Finance, Vol. 80, pp. 21-30, doi: 10.1016/
j.q e .2021.01.009.
Adusei, M. and Adeleye, N. (2024), “S a -up mic oen e p ise inancing and inancial pe o mance o
mic o inance ins i u ions”, Jou nal o Small Business and En ep eneu ship, Vol. 36 No. 2,
pp. 183-206, doi: 10.1080/08276331.2020.1842047.
A onso, J.S., Mo an -Roux, S., Gu�
e in, I. and Fo cella, D. (2017), “Doing good by doing well?
Mic o inance, sel - egula ion and bo owe s’ o e -indeb edness in he Dominican Republic”,
Jou nal o In e na ional De elopmen , Vol. 29 No. 7, pp. 919-935, doi: 10.1002/jid.3244.
Ahmad, S.Z. (2012), “Mic o inance o women mic o and small-scale en ep eneu s in Yemen:
achie emen s and challenges”, In e na ional Jou nal o En ep eneu ship and Small Business,
Vol. 16 No. 1, pp. 102-120, doi: 10.1504/ijesb.2012.046920.
Ahmadini, A.A.H., Va shney, R. and Ali, I. (2021), “On mul i a ia e-mul iobjec i e s a i ied sampling
design unde p obabilis ic en i onmen : a uzzy p og amming echnique”, Jou nal o King Saud
Uni e si y Science, Vol. 33 No. 5, 101448, doi: 10.1016/j.jksus.2021.101448.
Ahmed, I. and Ish iaq, S. (2021), “Reliabili y and alidi y: impo ance in medical esea ch”, Jou nal o
he Pakis an Medical Associa ion, Vol. 71 No. 10, pp. 2401-2406, doi: 10.47391/jpma.06-861.
Akinwande, M.O., Dikko, H.G. and Samson, A. (2015), “Va iance in la ion ac o : as a condi ion o
he inclusion o supp esso a iable (s) in eg ession analysis”, Open Jou nal o S a is ics, Vol. 5
No. 07, pp. 754-767, doi: 10.4236/ojs.2015.57075.
Al a, H., Aliyu, M.S. and Muhammad, I.G. (2024), “Mode a ing e ec o us on he ela ionship
be ween loan epaymen p ac ices and small and medium ENTERPRISE’S pe o mance in
No h-wes Nige ia”, In e na ional Jou nal o Managemen Science and Business Analysis
Resea ch, Vol. 4 No. 7, pp. 668-695.
Ali, H., Gueyie, J.-P. and Ch ysos ome, E.V. (2023), “Gende , c edi isk and pe o mance in sub-
Saha an A ican mic o inance ins i u ions”, Jou nal o A ican Business, Vol. 24 No. 2,
pp. 235-259, doi: 10.1080/15228916.2022.2079275.
Amoako, K.A. (2016), “The e ec o bad loans on he p o i abili y and lending po en ial o u al
banks”, A Case S udy o Some Selec ed Ru al Banks in he Ashan i Region.
Azim, M.I., Sheng, K. and Ba u , M. (2017), “Comba ing co up ion in a mic o inance ins i u ion”,
Manage ial Audi ing Jou nal, Vol. 32 No. 4/5, pp. 445-462.
Baka , N.M., Abdul Rahman, R. and Ib ahim, Z. (2020), “Clien p o ec ion and sus ainable
pe o mance in mic o inance ins i u ion”, In e na ional Jou nal o P oduc i i y and
Pe o mance Managemen , Vol. 69 No. 4, pp. 651-665, doi: 10.1108/ijppm-03-2019-0127.
Bedaiwy, S. and Pe e , D. (2022), “An e alua ion o Egyp ian mic o inance laws and egula ions
p e en ing o e indeb edness o women”, Jou nal o In e na ional De elopmen , Vol. 34 No. 7,
pp. 1318-1333, doi: 10.1002/jid.3633.
Behe a, G.K. and Mohini, M.S. (2025), “Does se ice quali y in luence loan epaymen beha iou o
mic o inance ins i u ion clien s? An in eg a ed model app oach o access beha iou al
dimensions”, IIMT Jou nal o Managemen , Vol. 12 No. 1, pp. 34-56, doi: 10.1108/iim jm-08-
2024-0079.
Asian Jou nal o
Economics and
Banking
359
Downloaded om h p://www.eme ald.com/ajeb/a icle-pd /9/3/338/10332672/ajeb-04-2025-0035en.pd by ZBW Ge man Na ional Lib a y o Economics use on 16 Decembe 2025
Be ns, J.P., Shah ia , A.Z.M. and Unda, L.A. (2021), “Delega ed moni o ing in c owd unded
mic o inance: e idence om Ki a”, Jou nal o Co po a e Finance, Vol. 66, 101864, doi:
10.1016/j.jco p in.2020.101864.
Blanco-Oli e , A. and I imia-Di�
eguez, A. (2021), “Impac o ou each on inancial pe o mance o
mic o inance ins i u ions: a mode a ed media ion model o p oduc i i y, loan po olio quali y,
and p o i s a us”, Re iew o Manage ial Science, Vol. 15 No. 3, pp. 633-668, doi: 10.1007/
s11846-019-00353-4.
Blanco-Oli e , A.J., I imia-Di�
eguez, A.I. and V�
azquez-Cue o, M.J. (2023), “Is he e an op imal
mic oc edi size o maximize he social and inancial e iciencies o mic o inance ins i u ions?”,
Resea ch in In e na ional Business and Finance, Vol. 65, 101980, doi: 10.1016/
j. iba .2023.101980.
Bo e, R., Wang, T. and Gene , C. (2024), “You say social agenda, I say my job: na iga ing mo al
ambigui ies by on line wo ke s in a social en e p ise”, Jou nal o Business E hics, Vol. 192
No. 2, pp. 225-241, doi: 10.1007/s10551-023-05526-6.
Bu ns, R.B. (2000), In oduc ion o Resea ch Me hods, 4 h ed., SAGE Publica ions, London.
Cha les, G. and Mo i, N. (2017), “Loan epaymen pe o mance o clien s o in o mal lending
ins i u ions: do bo owing his o ies and dynamic incen i es ma e ?”, In e na ional Jou nal o
De elopmen Issues, Vol. 16 No. 3, pp. 260-275.
Chichaibelu, B.B. and Waibel, H. (2017), “Bo owing om ‘pui’ o pay ‘pom’: mul iple bo owing and
o e -indeb edness in u al Thailand”, Wo ld De elopmen , Vol. 98, pp. 338-350, doi: 10.1016/
j.wo ldde .2017.04.032.
Fa oki, O.O. (2011), “The impac o human, social and inancial capi al on he pe o mance o small
and medium-sized en e p ises (SMEs) in Sou h A ica”, Jou nal o Social Sciences, Vol. 29
No. 3, pp. 193-204, doi: 10.1080/09718923.2011.11892970.
Ghosh, R., Sen, K.K. and Ri a, F. (2020), “Beha io al de e minan s o nonpe o ming loans in
Bangladesh”, Asian Jou nal o Accoun ing Resea ch, Vol. 5 No. 2, pp. 327-340, doi: 10.1108/
aja -03-2020-0018.
Gi haiga, P.N. (2024), “Female leade ship and inancial sus ainabili y o MFIs: he mode a ing ole o
emale bo owe s”, Jou nal o Economic S udies, Vol. 51 No. 3, pp. 210-228, doi: 10.1108/jes-
04-2024-0223.
Hai , J.F., Sa s ed , M., Ringle, C.M. and Mena, J.A. (2011), “An assessmen o he use o pa ial leas
squa es s uc u al equa ion modeling in ma ke ing esea ch”, Jou nal o he Academy o
Ma ke ing Science, Vol. 40 No. 3, pp. 414-433, doi: 10.1007/s11747-011-0261-6.
Hai , J.F. J , Ma hews, L.M., Ma hews, R.L. and Sa s ed , M. (2017), “PLS-SEM o CB-SEM:
upda ed guidelines on which me hod o use”, In e na ional Jou nal o Mul i a ia e Da a
Analysis, Vol. 1 No. 2, pp. 107-123, doi: 10.1504/ijmda.2017.087624.
Hai , J.F., Rishe , J.J., Sa s ed , M. and Ringle, C.M. (2019), “When o use and how o epo he esul s
o PLS-SEM”, Eu opean Business Re iew, Vol. 31 No. 1, pp. 2-24, doi: 10.1108/eb -11-
2018-0203.
Hai , J.F., J ., Hul , G.T.M., Ringle, C.M., Sa s ed , M., Danks, N.P. and Ray, S. (2021), Pa ial Leas
Squa es S uc u al Equa ion Modeling (PLS-SEM) Using R: A Wo kbook, Sp inge
Na u e, Cham.
Hensele , J. and Sa s ed , M. (2015), “Goodness-o - i indices o pa ial leas squa es pa h modeling”,
Compu a ional S a is ics, Vol. 28 No. 2, pp. 565-580, doi: 10.1007/s00180-012-0317-1.
Hensele , J., Dijks a, T.K., Sa s ed , M., Ringle, C.M., Diaman opoulos, A., S aub, D.W., Ke chen,
D.J., J , Hai , J.F., Hul , G.T.M. and Calan one, R.J. (2014), “Common belie s and eali y abou
PLS: commen s on R€
onkk€
o and E e mann (2013)”, O ganiza ional Resea ch Me hods, Vol. 17
No. 2, pp. 182-209, doi: 10.1177/1094428114526928.
Hiena, V.D. (2020), “E ec o bo owe ’s cha ac e is ics on bank loan epaymen o household
businesses”, Sus ainable De elopmen in Accoun ing, Audi ing and Finance, Vol. 925.
AJEB
9,3
360
Downloaded om h p://www.eme ald.com/ajeb/a icle-pd /9/3/338/10332672/ajeb-04-2025-0035en.pd by ZBW Ge man Na ional Lib a y o Economics use on 16 Decembe 2025
Iqbal, Z. and Rao, Z.-u.-R. (2023), “Social capi al and loan c edi e ms: does i ma e in mic o inance
con ac ?”, Jou nal o Asian Business and Economic S udies, Vol. 30 No. 3, pp. 187-209, doi:
10.1108/jabes-10-2021-0185.
Iqbal, Z., Rai, I.H., Ali, M., Sohail, H. and Ha iz, F.A. (2020), “A quali a i e app oach o de e mine he
p oblems and challenges aced by mic o inance ins i u ion wi h e e ence o po e y alle ia ion:
a case o dis ic Bahawal Naga , Punjab, Pakis an”, In e na ional Jou nal o Economics and
Financial Issues, Vol. 10 No. 4, pp. 192-197, doi: 10.32479/ije i.10232.
Iqbal, Z., Ak am, M. and Ahmad, H. (2021), “Is mul iple bo owing a bad sign? E idence om
mic o inance ins i u ions in Pakis an”, Humani ies and Social Sciences Re iews, Vol. 9 No. 3,
pp. 776-788, doi: 10.18510/hss .2021.9376.
Ja ee, S.R. and Mus a a, M. (2023), “The iple bu den o disease, des i u ion, and deb : small
business-women’s oices abou heal h challenges a e becoming deb - idden”, Heal h Ca e o
Women In e na ional, Vol. 44 No. 1, pp. 4-27, doi: 10.1080/07399332.2020.1716236.
Joseph, G. and Quayes, S. (2024), “Gende , exogenous ins i u ions and mic o inance ins i u ional
pe o mance”, Qua e ly Jou nal o Finance and Accoun ing, Vol. 62 Nos 1/2, pp. 87-136.
Kassim, S.H.J. and Rahman, M. (2018), “Handling de aul isks in mic o inance: he case o
Bangladesh”, Quali a i e Resea ch in Financial Ma ke s, Vol. 10 No. 4, pp. 363-380, doi:
10.1108/q m-03-2017-0018.
Kebede, J., Tawiah, V. and Gyapong, E. (2023), “The e ec o co up ion on mic o inance loan
po olio: a semipa ame ic analysis”, Economics o T ansi ion and Ins i u ional Change, Vol. 31
No. 1, pp. 241-268, doi: 10.1111/eco .12332.
Kendo, S. and Tchakoun e, J. (2022), “The d i e s o he inancial in eg a ion o mic o inance
Ins i u ions: do inancial de elopmen , agency cos s and mic o inance pe o mance ma e ?”,
The Qua e ly Re iew o Economics and Finance, Vol. 84, pp. 128-142, doi: 10.1016/
j.q e .2022.01.016.
Ko e, M.H.R., Rokhim, R., Rahmawa i, R. and Sudha io, L. (2024), “S a egic alliances and social
pe o mance o mic o inance ins i u ions in Indonesia”, S a egic Change, Vol. 33 No. 3,
pp. 219-232, doi: 10.1002/jsc.2572.
Kuma , S., Dinesh, N. and Pe iasamy, P. (2021), “Tes ing alidi y and eliabili y o he ques ionnai e in
so skills esea ch: a pe spec i e om b-school alumni”, In e na ional Jou nal o
En ep eneu ship, Vol. 25, pp. 1-10.
Lai, M.H.C. (2021), “Composi e eliabili y o mul ile el da a: i ’s abou obse ed sco es and cons uc
meanings”, Psychological Me hods, Vol. 26 No. 1, pp. 90-102, doi: 10.1037/me 0000287.
Lamichhane, B.D. (2021), “Clien sa is ac ion: key ac o s o sus ainabili y o mic o inance ins i u ions
(MFIs)”, In e disciplina y Jou nal o Managemen and Social Sciences, Vol. 2 No. 1, pp. 32-42,
doi: 10.3126/ijmss. 2i1.36739.
Lassoued, N. (2022), “Capi al s uc u e and ea nings quali y in mic o inance ins i u ions”,
In e na ional Jou nal o Manage ial Finance, Vol. 18 No. 2, pp. 240-260, doi: 10.1108/ijm -08-
2020-0454.
Masood, O. (2004), “Non-pe o ming bank loans and banking c isis in he Pakis ani banking sys em”.
Ma zanke, M. (2014), “C oss-bo owing and i s impac on mic oen ep eneu s’ epaymen pe o mance
and well-being in Pe u”.
Mia, M.A., Lee, H.-A., Chand an, V.G.R., Rasiah, R. and Rahman, M. (2019), “His o y o
mic o inance in Bangladesh: a li e cycle heo y app oach”, Business His o y, Vol. 61 No. 4,
pp. 703-733, doi: 10.1080/00076791.2017.1413096.
Mia, M.A., Abdu, M., Sangwan, S., Jibi , A., Ahmad, N.H., Handoyo, R.D. and Alam, A.F. (2025),
“Nonp o i and o -p o i mic o inance ins i u ions: go e nance, ou each and sus ainabili y”,
Nonp o i Managemen and Leade ship, Vol. 36 No. 2, pp. 145-167, doi: 10.1002/nml.21666.
Moya-D�
a ila, F.A. and Rajagopal, A. (2020), “Managing mic o inance ins i u ions: analyzing how
ela ionships in luence en ep eneu ial beha io ”, in Inno a ion, Technology, and Ma ke
Ecosys ems: Managing Indus ial G ow h in Eme ging Ma ke s, pp. 85-107, doi: 10.1007/978-3-
030-23010-4_5.
Asian Jou nal o
Economics and
Banking
361
Downloaded om h p://www.eme ald.com/ajeb/a icle-pd /9/3/338/10332672/ajeb-04-2025-0035en.pd by ZBW Ge man Na ional Lib a y o Economics use on 16 Decembe 2025
