Abstract

The use of microfinance as a strategy for improving the socio-economic wellbeing of beneficiaries in developing countries has been extensively reported (Trokic, et al, 2020; Hassan and Saleem, 2017). The provision of microfinance has also been shown to be a viable strategy for women empowerment in most parts of the developing and emerging world (Samineni and Ramesh, 2023; Alhassan, et al., 2022). In this regard, various books on the role of microfinance in reducing poverty and facilitating women empowerment in developing and emerging world have been written to aid our understanding (Alhassan and Nwagbara, 2023; Adjei, et al, 2009, Christabell, 2009). Evidence of financial innovation by microfinance institutions has also been reported (Mia, 2023; Omwanza and Jagongo, 2019; Elle, 2018). However, how microfinance institutions have used financial innovation to promote sustainable entrepreneurship, particularly in developing and emerging economies is not well understood.

As indicated in relevant, extant literature and empirical findings (see Hoang and Antoncic, 2003; Bradley, Artz, and Hulett, 2012; Teece, 1987), most microfinance related research is limited to either one or two main microfinance institutions or to the general effect on poverty reduction, enhancement of women entrepreneurship, improvement in health and social status of people and overall empowerment, amongst others (Bradley et al., 2012; Dichter and Harper, 2007). To the best of our knowledge and research experience, the available studies within the remit of emerging and developing economies on this phenomenon – microfinance and sustainable entrepreneurship – through the prism of financial innovation is sparse, under-theorised and under-researched. Current research foci have been overlaid by empowerment, poverty reduction, sustainable development and inclusion thereby downplaying the significance of micro-financial innovation and sustainable entrepreneurship development for regional transformation, innovation and sustainable enterprise development, which are crucially important in the Global South’s renaissance and prosperity.

Financial innovation comprises a set of procedures and mechanisms of generating new investment or financial services and products, or methods including risk management/transfer and modern technology, as well as credit and equity generation, amongst others (Chen, 2018). For instance, Ahmed et al.’s (2011) study using the context of Bangladesh leveraging the Grameen Bank borrowers (with credit) and non-borrowers (without credit) concluded that the microcredit programmes facilitate women’s poverty reduction. Similarly, the study by Alhassan and Nwagbara (2023) found that microfinance is implicated in women empowerment, economic prosperity and sustainable development. These findings are supported by comparable research (see Nawaz, 2010; Matin, Hulme, and Rutherford. 2002). Given this research hiatus, this intended volume espouses that lack of capital/finance (in the context of financial innovation) frustrates and sometimes inhibits the poor from increasing their income through entrepreneurship. Also, financial innovation allows time and resources for creating and adopting new business models to develop products/services and finding a niche market as well as enhance a learning organisation (Senge, 1990), ‘entrepreneurial resilient’ venturing (Corner and Singh, 2017) and sustainable entrepreneurship (Chen, 2018; Matin et al., 2002). Motivated to fill this research lacuna, this volume focuses on sustainable entrepreneurship development through innovative, micro-financial services. So, this book asks, what is the influence of microfinance and financial innovation on sustainable entrepreneurship in developing and emerging countries? Responding to this question, the book is driven by the argument that microfinance institutions have used financial innovation to increase their distribution channels to reach more poor people in rural and urban communities, but it remains unclear how these microfinance institutions are using financial innovation to help the poor sustain their businesses. In this spirit, the book investigates: how are microfinance institutions through financial innovation helping the poor to start and sustain their businesses? How are microfinance institutions using financial innovation to foster sustainable entrepreneurship and empowering women? In what manner are microfinance institutions using financial innovation to promote sustainable entrepreneurship and reducing poverty? In what way are microfinance institutions promoting sustainable entrepreneurship and economic growth through financial innovation? Each chapter of the book approaches these questions by analysing the influence of microfinance and financial innovation on sustainable entrepreneurship through a different thematic lens. The result is a diverse reading of the content, contexts, and the nexus between microfinance, financial innovation and sustainable entrepreneurial activities in Asia, Africa, Middle East, Eastern Europe, and South America which have witnessed growing activities of microfinance institutions.