| Abstract: | The purpose of microcredit is provision of financial service to the poorest section of the society;
which are not the favorite target for provision of credit in the formal banking sector, to alleviate
them from the position they existed on. Currently in Ethiopia Microcredit institutions are getting
much emphasis based on their benefit in addressing the broad range of society with low income
and no job, through provision of credit to finance small business for creation jobs and
employment opportunities. And this study intends to test if microcredit’s with the service they are
giving are effective in creating impact on enterprise capital accumulation and employment
opportunity that leads the country to sustainable economic growth. Thus it is worth studying the
impact so it’s possible to see how microcredit’s institutions foster economic growth through
creation of capital and employment opportunities. The underlying reason for this study is there is
a lot of articles and studies conducted on the impact microfinance has on poverty alleviation and
on related issues with the social status of the clients, yet as the microfinance sector continues to
expand and gives except for the few institutions, a focus on enterprise credit (as opposed to
multiple financial services), (Helms, 2006), some have asked whether this phenomenon could in
fact be associated with economic growth. Access to finance can promote new-firm entry, growth,
innovation, whereas limited access stunts firms’ growth,
The target population which is selected for this study is was two sided, control and treated
groups. On one side was the microfinance institutions credit service as the independent variable
and the dependent variable is amount of capital formed by beneficiaries of this service after
receiving the credit and employment opportunity it has created. Data Analysis Model Used to
assess the data is PSM (Propensity score matching). And the total impact based on PSM Design
method was positive ON the impact of microcredit’s has on capital accumulation and
employment. The Credit Which Is Dispersed For The Enterprises Has Positive Impact On
Capital Accumulation Of The Enterprises And The Impact It Has Created Was More Or Less
Varies Among Economic Sectors However It Has Positive Impact Overall. |
