Advanced Journal of Management, Humanity and Social Science

Microfinance Impact on SME Performance In Mazar-e-Sharif, Afghanistan

Document Type : Original Article

Authors

Abdul Kabir Azizi 1
Mohammad Samim Rasooli 2

1 Balkh University, Faculty of Economics, Department of Finance and Banking

2 Balkh University, Faculty of Economics, Department of Statistics and Econometrics

10.5281/zenodo.20616136
Abstract
This study examines the impact of microfinance services on the financial sustainability and performance of medium-sized enterprises (SMEs) in Mazar-e-Sharif, Afghanistan, using data from 100 firms selected through systematic random sampling. The primary objective is to assess how microcredit access, savings services, and entrepreneurial development training affect return on assets (ROA) and financial sustainability (FS), while controlling for firm age and size. Data were collected via structured questionnaires administered to SME owners/managers, with reliability confirmed by Cronbach's alpha of 0.780 (N=100 items) and content validity established through review by 10 Afghan microfinance experts. Analysis employed descriptive statistics, Pearson correlation matrices, and multiple linear regression models following established SME research methodologies. The first regression model revealed that internal finance (β=0.012, t=10.78, p<0.001) and trade credit (β=0.008, t=7.23, p<0.001) significantly enhance ROA (R²=0.61, F=24.37, p<0.001), while non-institutional finance shows a negative effect (β=-0.130, p=0.017). The second model demonstrated strong positive impacts of microcredit (β=0.287, t=5.02, p<0.001), savings services (β=0.214, t=3.67, p=0.01), and entrepreneurial training (β=0.176, t=3.11, p=0.002) on financial sustainability (R²=0.65, Adj. R²=0.62, F=28.45, p<0.001), with larger/younger firms benefiting most. Nine of ten hypotheses were supported, underscoring microfinance's comprehensive role (financial + non-financial services) in fragile economies. Policy recommendations include government investment in energy infrastructure, transportation networks, and SME training programs to enhance competitiveness. These findings offer actionable insights for post-conflict development strategies.

Graphical Abstract

Microfinance Impact on SME Performance In Mazar-e-Sharif, Afghanistan

Keywords

Microfinance
SMEs
financial sustainability
Mazar-e-Sharif
multiple regression
Subjects
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Advanced Journal of Management, Humanity and Social Science
Volume 2, Issue 2
2026
Pages 105-113

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