Impact of Microcredit Training on Capital Creation in Bangladesh

1. The Influence of Microcredit Training on Capital Creation in Bangladesh By Sheikh Ashiqurrahman Prince Dean, Faculty of Business Studies BSMRSTU, Bangladesh Professor Hafiz T.A. KhanProfessor of Public Health & Statistics  The Graduate School, University of West London St Mary's Road, London W5 5RF, United Kingdom TanmayBorman Lecturer, Department of Finance BSMRSTU, Bangladesh

2. The Influence of Microcredit Training on Capital Creation in Bangladesh Outline • Introduction • Literature Review • Conceptual model • Methodology • Conclusion

3. The Influence of Microcredit Training on Capital Creation in Bangladesh 1. Introduction • 1/2 of the population live below the poverty line with 80% in the rural areas • Poverty alleviation and creation of rural employment are top most national priorities (Ahmed, 2004) • The study attempts to investigate how microcredit training directly affect borrowers’ capital creation. • It also examines how microcredit training drive borrowers’ motivation and skill and how borrowers’ demographic features strengthen their capital creation using the theory of planned action and reasoned behaviour.

4. The Influence of Microcredit Training on Capital Creation in Bangladesh 2. Literature review • Definition of terms and theories • The role of microcredit on borrowers’ performance • The link between Micro credit training and borrowers’ skill and performance • The link between micro credit training and borrowers’ motivation and performance • Mediating role of borrowers’ skill and motivation • Moderating role of borrowers’ demography

5. The Influence of Microcredit Training on Capital Creation in Bangladesh 2.1 Definition of terms and theories Microcredit Small loan provided by the micro financial institutions (MFIs) to poor on the basis of trust and personal relationships between staff and borrowers so that they become self-sufficient (Rahman and Khan 2013). Microcredit training training provided by micro financial Institutions (MFIs) to their borrowers in order to enhance their skills, knowledge, motivation and efficiency so that they can become self-sufficient and repay their loan to the MFIs.

6. The Influence of Microcredit Training on Capital Creation in Bangladesh Skill and motivation Skill is “the ability to do something well; expertise” and motivation is a the “desire or willingness to do something; enthusiasm” (Hornbyand and Wehmeier, 2015). Demographic features Demographic features are the “socioeconomic characteristics of a population expressed statistically, such as age, sex, education level, income level, marital status, occupation, religion, spousal cooperation, age at marriage, number of children” (Friedman, J.P., (2012).

7. The Influence of Microcredit Training on Capital Creation in Bangladesh 2.2 The Role of microcredit on borrowers’ capital creation • Studies confirmed that microcredit improves borrowers’ performance (Rahman et. al 2017; Rokhim et. al, 2015; Christensen et. al, 2010). • Several studies also demonstrated that microcredit does not always improves borrowers’ performance (Fiala, 2018; Ziaul, 2004; Atmadja et. al, 2016) unless borrowers are given proper training on how to utilize the loan (Kassim and Rahman, 2018; Rahman and Khan, 2013). • Our study argues that if micro credit training is given to the borrowers, their loan performance will improve. .

8. The Influence of Microcredit Training on Capital Creation in Bangladesh 2.3 The link between Micro credit training and borrowers’ skill and performance • Skill has shown contradictory results by two different streams of studies. • Bai et. al, 2019 Nkundabanyanga et. al, 2017 found that microcredit training positively influences borrowers’ skill and performance • On the other hand, Bodnaruk and Simonov, 2015; Sigalla and Carney, 2012 found no evidence that microcredit training positively influences borrowers’ skill and performance. • Our study has considered the variable to see if it has any significant impact on capital creation in the context of Bangladesh.

9. The Influence of Microcredit Training on Capital Creation in Bangladesh 2.4 The link between micro credit training and borrowers’ motivation and performance Previous studies suggested that not only skill but also motivation has positive impact towards the capital creation by microcredit borrowers (Raven and Le, 2015; Jebarajakirthy and Lobo, 2014). Hence, our study concludes that micro credit training improves borrowers’ motivation and performance towards their capital creation

10. The Influence of Microcredit Training on Capital Creation in Bangladesh 2.5 Moderating role of borrowers’ demography Coelho et. al, 2018; Khan and Rahman 2016; Bai et. al, 2019; Atmadja et. al, 2016 found borrowers’ demographic features significant, Sigalla and Carny (2012) found this feature significant for some respondents while not significant for others. Limited studies have considered this feature as a moderating role between microcredit training and their capital creation. The current study has considered demographic features as a major moderating attribute of this study to see if this feature moderates the relationship between microcredit training and borrowers’ capital creation in Bangladesh

11. The Influence of Microcredit Training on Capital Creation in Bangladesh 2.6 Knowledge gap Studies in the current literature confirmed that • microcredit training does/does not improves borrowers’ performance • micro credit improves skill, motivation and performance • technological adaptation skill indirectly impact • motivation mediates the relationship between microcredit training and borrowers’ capital creation • borrowers’ demographic features do/do not significant for capital creation. • Therefore, the current study investigates how microcredit training directly affect borrowers’ capital creation. It also examines how microcredit training drive borrowers’ motivation and skill and how borrowers’ demographic features strengthen their capital creation.

12. The Influence of Microcredit Training on Capital Creation in Bangladesh 2.7 Research Questions • how microcredit training influence borrowers’ creation of capital? • how microcredit training affect borrowers’ skill and motivation which in turn affect their creation of capital? • how borrowers’ demographic features affect the relationship between microcredit training and their capital creation?

13. The Influence of Microcredit Training on Capital Creation in Bangladesh Hypotheses H1: Microcredit training is positively related with the creation of capital. H2: The relationship between microcredit training and creation of capital is moderated by borrowers’ socio/demographic features 3. Conceptual model Figure 4: The conceptual model H3: The relationship between microcredit training and creation of capital is mediated by borrowers’ capability factors H4: Microcredit training building confidence level to the capability factors of borrowers. H5: The capability factors of borrowers statistically and positively affect their creation of capital

14. The Influence of Microcredit Training on Capital Creation in Bangladesh Main theories used Ability-Motivation-Opportunity (AMO) Theory When the micro credit borrowers receive training, they can increase their capability factors such as ability, motivation and opportunities (AMO). In other words, because of training the trainees’ can increase their required skill and abilities (ability) to perform their jobs, are enthusiastic to do the job (motivation) and can explore the opportunities (opportunity) to make their work successful.

15. The Influence of Microcredit Training on Capital Creation in Bangladesh Theory of planned behaviour (TPB) and reasoned action This study assumes that borrowers’ capital creation is guided by the microcredit training (individual attitude), borrowers’ driving forces skill and motivation: others’ (normative expectations) and demographic features (perceived control over the action). The more the microcredit training, borrowers’ driving forces and demographic features the more is the creation of capital

16. The Influence of Microcredit Training on Capital Creation in Bangladesh 3.2 Contribution For academics • Incorporates new dimensions, i.e., motivation and skill mediate and borrowers’ demography moderate the relationship between micro credit training and capital creation • Limited studies have considered the AMO and TPB theories in microcredit research. Hence our study has extended the theories by examining the effect that has been the unexplored previously. • The conceptual model contributes significantly • Fulfills the knowledge gap in Asian context For practitioners • What attributes and practices (e.g. such as training, motivation, skill and demographic features) will influence the microcredit borrowers towards their capital creation. • Guide the government, organization and decision makers to improve the policies and programmes for the development of microcredit sector in Bangladesh.

17. The Influence of Microcredit Training on Capital Creation in Bangladesh 4. Methodology 5. Conclusion • Clarification whether microcredit training has noticeable influence • Potential platform

18. The Influence of Microcredit Training on Capital Creation in Bangladesh Questions & Answers

19. The Influence of Microcredit Training on Capital Creation in Bangladesh Appendices Theory of planned behaviour (TPB) and reasoned action The study applied the theory of reasoned action of planned bahavior given by Ajzen (1991) which states that an individual behavior is guided by three kinds of application: individual attitude, others’ normative expectations and perceived control over the action. The theory explains that more positive attitude towards behaviour, higher subjective norms and greater control over the action together strengthens the intention to perform the action (Ajzen, 1991).

20. The Influence of Microcredit Training on Capital Creation in Bangladesh Ability-Motivation-Opportunity (AMO) Theory The AMO theory suggests that trainees’ performance is a function of employee ability, motivation and opportunity. The theory explains that trainers can enhance trainees’ performance by positively focusing on their ability (A) to perform the job, motivating (M) them to perform and help the trainees to nurture opportunities (O) for their profit (Boxall et al., 2007; Fu et al., 2015; Bos-Nehles et al., 2013). Per the AMO theory, there are three interrelated components. Frist is the trainees’ skill and abilities which is essential to improve performance. Second is the trainees’ motivation which is necessary to improve their work. Third is the opportunity which is also vital to make the proper use of human potentials (Hyde et al., 2009).