REPAYMENT BEHAVIOR IN MICROFINANCE, THE ROLE OF ACCOUNTABILITY AS MEDIATOR AND CUSTOMER SERVICE AS MODERATOR: A CONCEPTUAL PAPER

Abstract

The aim of this study is to develop a conceptual research framework to identify the factors that influence Non-Performance Loans (NPLs) in microfinance schemes under the individual lending approach in Malaysia. The main objective of microfinance is to reduce poverty. Previous researchers have reported mixed results on the effectiveness of microfinance on poverty alleviation. Therefore, numerous factors have been investigated to explain the phenomenon, such as risk management, collaterals, repayment performance, delinquent payments, and challenges. Consequently, high non-performing loans incurred by the micro finance institutions is one of the factors that contributes to the failure in achieving the goal of reducing poverty. In addition, loan repayment issues will worsen due to weak global growth and economic reforms in domestic economy such as the rationalization of subsidies as well as the implementation of minimum wage and goods and services tax. Based on an extensive literature review, we have used the theory of reinforcement to conceptualize the relationships among all variables. This research work is intended to add to existing knowledge and give further information, guidance, and tools to lenders and borrowers about the factors that influence repayment behavior under the microfinance facilities.