TITLE:
Factors Influencing Credit Demand among Household Non-Agriculture Enterprises in Malawi
AUTHORS:
Meya Mkandawire, Xiaohong Duan
KEYWORDS:
Microfinance, Credit, Micro-Enterprise, Poverty
JOURNAL NAME:
Open Journal of Business and Management,
Vol.4 No.2,
April
27,
2016
ABSTRACT: This study examined factors that influenced households with non-agriculture enterprises to borrow
funds as capital for their enterprises in Malawi. Additionally, the study aimed at classifying
households as borrowers and non-borrowers, but also classified these households according to
their liquidity status in which credit could be a component. The primary data for this study was
sourced from the Integrated Household Panel Survey (IHPS) conducted in 2013 by the National
Statistics Office of Malawi. Out of 4000 households that formed the sample, 1249 households were
reported to own an enterprise; representing 31.23% of the overall sample. The logit model was
used in this study and results showed that borrowing was influenced by age of household head,
size of household, poverty status of household and enterprise sector. Furthermore, liquidity status
was influenced by education attained by household head and poverty status of household. Poverty
status of the households was found to influence both borrowing and liquidity non-constraint of
households in Malawi. The paper shows the need to focus on poor households that are unable to
support their enterprises with personal savings. In addition, policy makers must design programs
that will provide credit to poor households operating manufacturing type of enterprises.