Educational Disparities and the Effectiveness of Microfinance: Evidence from Entrepreneurs in Bangladesh

Abstract

Microfinance has emerged as an important instrument for promoting entrepreneurship, poverty alleviation, and financial inclusion in developing economies. However, disparities in educational attainment among entrepreneurs may significantly influence the effectiveness of microfinance services and business outcomes. This study investigates the impact of microfinance on educated and uneducated entrepreneurs in Bangladesh by examining differences in business performance, financial management capacity, and socio-economic improvement. The study employs a quantitative research approach based on primary data collected from entrepreneurs through structured questionnaires. Multiple regression analysis is used to assess the relationship between microfinance access and entrepreneurial performance while considering the moderating role of educational background. The findings reveal that microfinance positively contributes to income generation, business expansion, and financial independence for both groups of entrepreneurs. However, educated entrepreneurs demonstrate comparatively higher efficiency in utilizing financial resources, managing business risks, and achieving sustainable business growth. The regression results further indicate that education significantly enhances the effectiveness of microfinance by improving financial literacy, decision-making ability, and strategic business planning. Conversely, limited education constrains the productive utilization of credit among uneducated entrepreneurs. The study contributes to the existing literature by providing empirical evidence on the interaction between education and microfinance effectiveness in the context of Bangladesh. The findings suggest that policymakers and microfinance institutions should design differentiated training and support programs, particularly for less-educated entrepreneurs, toensure inclusive and sustainable entrepreneurial development.