Objective
The role that financial innovation and microfinance institutions have played in sustainable entrepreneurship is the focus of this book. Entrepreneurship is defined by Cole (1959) as “purposeful activity to initiate and develop a profit-oriented business”. According to Dollinger (2008) entrepreneurship is the control and deployment of resources to create an innovative economic organization (or network of organizations) for the purpose of gain or growth under conditions of risk and uncertainty. Sustainable entrepreneurship has been defined by Katsikis and Kyrgidou (2007) as “the teleological process aimed at the achievement of sustainable development, by discovering, evaluating and exploiting opportunities and creating value that produces economic prosperity, social cohesion and environmental protection”. Financial innovation on the other hand, refers to the process of creating new financial or investment products, services, or processes. De Haan et al. (2020) defines financial innovation as “the act of creating and then popularising new financial instruments, as well as new financial technologies, institutions, and markets”. However, the question is “how can sustainable entrepreneurship be enhanced using microfinance and financial innovation in the developing world?” Various studies (Abebe and Kegne 2023; Agarwal and Pokhriyal, 2022; Nair and Njolomole, 2020) provide evidence of a positive relationship between provision of microfinance and entrepreneurship. The work of Agarwal and Pokhriyal (2022) for example, suggests that access to microfinance contributed positively to business expansion in India. Similarly, Abebe and Kegne (2023) found a positive and significant association between saving practice, access to credit, skill development training provided by microfinance institutions, and the development of women entrepreneurs in Ethiopia. Babajide, et al. (2022) have also shown that microfinance had a positive and significant influence on female entrepreneurial success in Nigeria. Evidence from Omwanza and Jagongo (2019) suggest that microfinance institutions have used financial innovation to increase their distribution channels to reach more people in rural and urban communities. Some microfinance institutions innovate to minimize transaction costs (Mia, 2023). Duho, et al. (2023) have also shown that microfinance institutions employ financial innovation to manage risks likely to affect their income and assets. However, it remains unclear how microfinance institutions are using financial innovation to foster sustainable entrepreneurship. To this end, this book hopes to examine the role of financial innovation and microfinance in the development of sustainable entrepreneurship.
This book aims to examine and bring on board the various views and perspectives on the role of financial innovation and microfinance in the development of sustainable entrepreneurship through industry experts, experienced researchers, and policymakers. The role of financial innovation and microfinance in fostering sustainable entrepreneurship will be explored by these experts and contributors from different perspectives with the view to forming an opinion on the problems, processes, and prospects of using microfinance as a catalyst for fostering sustainable entrepreneurship. The book will focus on 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.
Theoretical and empirical insight to be provided in this book will be a priceless resource to researchers, students, microfinance institutions, policymakers, state institutions, managers, and non-governmental organisations. This book is envisaged to also benefit financial institutions that are seeking to use recent technological development to expand their product portfolio and outreach. Furthermore, the book will offer great insight into theoretical, policy-oriented, and practical ways to address some of the challenges of using financial innovation and microfinance as a catalyst for fostering sustainable entrepreneurial activities. Given the focus of this book on the nexus between financial innovation, microfinance and sustainable entrepreneurship, there will be a broadening of ideas on how the provision of microfinance can aid sustainable entrepreneurship.