The impact of micronance to borrowers. business, personal and nancial status and the mediating role of service satisfaction: evidence from the Philippines

The backbone of the economy of a developing country like the Philippines is its small and medium enterprises relying on soft loans provided by micronance institutions. To assess the level of satisfaction of micronance borrowers on the services of micronance institution and their services as well as its impact to the business, personal and nancial status are necessary for the continued operation of this industry. The objective of this study is to measure the customer level of satisfaction of the services of a micronance institution in the Philippines and determine its impacts on the customers’ small scale business. The study used a mixed of qualitative and quantitative research methods to gather data and analyze them. The study found that the micro nance institution is giving its borrowers quality services as manifested by a very satised rating to the four services provided. It was also described that the institution is positively bringing impact on its borrowers’ business, personal & nancial status as manifested by a high and very high impact on the two variables. The study nally revealed that the prole of the customers has signicant relationship with the level of satisfaction and impact to business of its borrowers while some areas of services have to be revisited to prevent customer dissatisfaction as there are signs showing low level of satisfaction.


Introduction
Micro nance is a tool to help people emerged from poverty. It is widely known today as a means for assisting people to escape from poverty. Throughout the past couple of decades, micro nance gained a wide application across the world. It is regarded not only as an important tool in poverty alleviation, but also as an important instrument to empower and bring development to poor people. These are the people that do not have an access to conventional nancial service providers. This instrument is perceived worldwide as a very effective weapon to combat poverty.
Micro nance helps people to improve their living condition. Aside from borrowing money, it also helps them by providing other services that results not limited to gaining productive assets, investment, building new businesses or expanding an existing one and advancing skills through trainings and education. It is for these reasons that micro nance has been widely recognized as an important means to alleviating poverty.
Quality of service as a tool to survive in competitive business world. The core objective of any nancial institution is to maximize revenue and to do so; it is a must to have a big number of clients or borrowers that can remain with them for a long time. In a highly competitive market, competitive edge through quality services is undoubtedly essential for it to survive. By proactively tracing borrowers' satisfaction, micro nance institution can have access to vital information that will provide them better understanding of their areas of weaknesses and improve their existing practices.
In this study, the researcher presented empirical evidence as to the level of satisfaction of micro nance borrowers and how it impacts the business, personal and nancial status of them. In the setting of the speedy growth and progress of the micro nance industry, it is important to give people insights and to respond to the particular needs and challenges the management and practitioners of this particular industry face in determining how their products and services are doing.

Statement of the Problem
The study assessed the level of satisfaction of borrowers to loan services of micro nance institution and how their satisfaction affects the impacts of micro nance institution on their lives.
Speci cally, it addressed the following questions: 1. How may the pro le of the borrowers be described?
2. How may the borrowers' level of satisfaction to the loan services of micro nance be described in terms of: 2.1 loan application; 2.2 loan feature; 2.3 non-nancial service; and 2.4 customer service?
3. How the micro nance impacts its borrowers in terms of: 3.1 business status; and 3.2 personal and nancial status?
4. Is the pro le of the micro nance borrowers signi cantly related with the impacts of micro nance? 5. Is the pro le of the micro nance borrowers signi cantly related with their level of satisfaction to the loan services of micro nance institution?
6. Is there a signi cant relationship between the borrowers' level of satisfaction to the loan services of micro nance institution and the impacts of micro nance to its borrowers? 7. What recommendations can be made to improve the services of micro nance institution to its borrowers?

Theoretical Framework
This study adopts the expectancy discon rmation theory. It can denote in this theory that there are two important variables in the measurement of satisfaction: a) expectations and b) outcomes.
This theory suggests that customers evaluate the performance of a service based on their expectations and the outcome performance. If the product or service met the borrower's expectation, then this will result to positive discon rmation. On the other hand, if the product or service falls short to attain the expectations, then this will result for the borrower to be dissatis ed or negative discon rmation (Amaechi and Awara, 2014).
Expectations, perceived performance, discon rmation and satisfaction comprises the four components of this paradigm. Pre-consumption expectations affect client's level of expectations while performance pertains to the client's perception of service. The third component which is discon rmation happens when there is a discrepancy between client's expectations and product or service performance. Satisfaction can be ascertain by combining the satisfaction outcomes of the different aspects of the product or service (Mill,n.d.).
This study also adopted the theory of change. Theory of change in micro nance posits that an access to credit gives chance to borrowers to make their enterprise grow. Through their additional income, household's access to better health care, education, food, housing and leisure will increase ( Jameel (  2015). Figure 1 below shows the theory for microcredit adopted from their study.
The next gure presents the paradigm of the study. The input box contains the pro le of the respondents and their perception to the services of micro nance. This follows by the process box that contains the methods to be used in processing the data. The output box of the system is decisions or policies to enhanced the delivery of micro nance services to the borrowers. Every part of the system has feedback that affects the function of the whole system.

Research Design
The method of research utilized in this study was descriptive correlational. Survey through questionnaire was utilized in order to gather the pertinent data needed to accomplish the study. The data gathering instruments that the researcher used were adapted from the study of ASKI Group of Companies, Inc.
(ASKI for brevity) during the year 2011 and 2012; however; some modi cations were made on the instruments. Reliability test was employed using test-retest method and results yielded a good reliability. The instruments were consisted of the following parts: a) the respondents' pro le b) the respondents' level of satisfaction and c) impact assessment of micro nance as to business, personal and nancial status of the respondents. Table 1 shows the response given to the respondents and the interpretation of gathered data.  (2013) have found out that micro nance clients receiving service from the central branch are less satis ed than those who receive services in the other branches.
Cabanatuan City is a rst-class city located in Central Luzon. It is considered as a gateway to the Northern part of the Philippines as businessmen must pass through it before they can reach the Northern part of the country. In the year 2018, the City has the "largest number of lending institutions and banks in the Region" (Fronda, Gabriel & Loria, 2018). Because of the large number of lending institutions, banks and micro nance institutions in the locality triggers MFIs to increase their efforts in satisfying their clients. When there are more choices for the customers to choose from, businesses are improving their customer satisfaction through offering of higher-quality goods, better service and lowered prices in order to maintain market share (Mazzeo 2003 as cited by Simon & Gomez, 2005).

Socio-Demographic Data of the Respondents
The respondents of this study were 226 borrowers of ASKI. Most of them are female and within the age bracket of 36 to 43 years old. When it comes to educational attainment, large number of the respondents were high school graduate. Based on the gathered data, majority of them were married belonging to a household with 5 to 6 members. The data illustrates that majority of the participants are in the age of having a family, thus they are exerting efforts to have an income for their expenses like food, educational and health expenses, transportation and leisure.
Generally, ,age and gender have no direct in uence on the attachment to local community and effectiveness of government, But these variables are factors positively correlated to the level of satisfaction of individuals (Brown and Coulter 1983;DeHoog, Lowery, and Lyons 1990;Duffy 2000;Lyons, Lowery, and DeHoog 1992; O ce of the Deputy Prime Minister 2004). Below are the factors related to level of satisfaction of micro nance customers.

Loan Application
The overall weighted mean of 3.85 illustrates that participants were very satis ed to the loan application related aspects. The institution is deliberately making an effort in order to check the capacity to pay of the borrower. This is to ensure that the money they will lend to their borrowers can help them to improve their lives. "A micro nance customer is over-indebted if he/she is continuously struggling to meet repayment deadlines and structurally has to make unduly high sacri ces related to his/her loan obligations" (Schicks, 2010 as cited by Schicks, 2011). Over-indebtedness is considered as a big threat to customer protection in micro nance (Prathap & Khaitan, 2016). In the study of Roch andPoister 2006 2006;Van Ryzin 2004, 2006; the variable of expectation has direct in uence on the level of satisfaction coupled with good services in the private sector but the same relationship has not been established in the public sector until recently when it became a subject of researches. The satisfaction of respondents to the handling of loan application of the institution has something to do with the customers' level of satisfaction.
Transparency is also putting premium as the result implies that forms are easy to understand as well as the interest rate and processing fee were both discussed before the acceptance of the loan (WM=3.96).
The key focus of transparency is to communicate to clients the product information to help them in making an informed decision with regards to taking a loan. Its core component is pricing disclosure. This suggests that micro nance institutions should present interest rates, fees, commissions, insurance, savings and other factors incidental in taking a loan that affect its value in a clear and understandable manner (Barres, Connors, Rhyne, & Rozas, 2011). Further, the Philippine jurisdiction applies Republic Act (RA ) 3765 or an Act requiring the disclosure of nance charges in connection with the extension of credit to customers-borrowers. This intensi es the motivation on the part of the lender to divulge all information related to the money lent. Table 2 presents the distribution of frequency based on loan application and their satisfaction, to wit; Loan feature is an important facet in the design of micro nance service. In the study of Schicks (2011) borrowers share that their repayment di culties are due to product features concerning about high interest rates, small loan amount and short grace period. Moreover, borrowers state that loan disbursement is late, loan maturity is short, installments are too-frequent and unfair rescheduling options for borrowers with di culties. Loan with a long-term maturity, grace period and increasing loan amount for each loan cycle can leverage the satisfaction of micro nance borrowers (Kanyurhi 2013). Table 3 below shows that the overall weighted mean of 3.87 illustrates that participants were very satis ed to the loan feature aspect. This illustrates the concern of the institution to their borrowers while not sacri cing their nancial position. It can be observed on the data that the respondents really appreciated the smooth processing of loan disbursement (WM=3.96) which is re ected as the highest mean across the parameters. It highlights the e ciency of the company in providing quality services needed by the clients which is a major factor in the client's level of satisfaction (Chang et al, 2017).
Although all of the parameters show a Very Satis ed responses, it should be noted that the least weighted mean (WM=3.60) is directed on the company's provision of reasonable penalties for nonpayment. It indicates that the customers still expect further adjustments or leniency of the company when it comes to penalties. .

Non-Financial Service
Non-nancial services can help in strengthening the relationship and trust between MFIs and their clients thereby increasing the MFIs community development impacts (Le, 2017). The provision of loan alone cannot promote full opportunity to the borrowers. A loan lent to borrower needs a reinforcement of training or education to manage his/her business effectively and e ciently. Results of the study of Dikki, Muhammad and Dogarawa (2014) showed that training has a signi cant impact on income, asset acquisition and savings of borrowers. Various aspects such as education, spirituality, environment and health are being considered as variables that can contribute to development. Micro nance can empower its borrowers and their families stretching up to their community. However, institution's linking of their borrowers' business to potential clients is rated only satis ed. It showed that linking of micro businesses like sarisari store (small convenience store) to market is not strong considering the nature of their business. Sarisari store lacks appeal to big manufacturers or distributors because it lacks in inventory management system, transactions are of low volume, high competition, minimal margin and being an unregulated business especially the small ones (Leviste, 2008).

Customer Service
Recent customer satisfaction management has become a strategic imperative for most rms (cf. Anderson, Fornell, and Lehmann 1994;Coyne 1989;Oliver 1997;Rust, Zahorik, and Keiningham 1994) and is a primary concern to private rms extending their services to the clients to achieve a certain level of satisfaction. Table 5 shows that respondents rated the customer service as very satis ed with the weighted mean of 3.89. Micro nance employees and the borrowers have their constant interaction, especially to the eld workers. Therefore, delivering quality customer service is of utmost importance. Through the course of the loan cycle, the importance of making no harm to borrowers is a must. In the study of Garg and Roy (2012), clients in the Philippines and India ranked fair and respectful treatment of clients as the most important in client protection principles. MFI employees' respectful behavior help organization to form good relationship with their clients. This will lead to increased satisfaction with the MFI. The level of satisfaction to customer service is presented below; The data from the table indicates that the respondents are very satis ed of the customer service provided by the MFI and there is still room for further improvement. The staff should be more accommodating in providing information about the company's programs and services. This would be bene cial for the MFI as the clients might become interested and avail of the institution's other programs and services.

Business Status
Lack of nances, nancial management skills, nancial literacy and lack of market for products are the challenges that hamper the growth of enterprises (Kyale, 2013). One way to see the impact of micro nance to its borrowers is to look on its borrowers' microenterprise. This study found out that micro nance has a high impact on business with a weighted mean of 3.20. This can be seen in the rating of very high impact being experienced by the borrowers in terms of their income, products, customers, business tools and business management skills. The impact of micro nance to business status is presented below. Results show that micro nance impacts on business expansion is low. Moreover, competition and improvement in business stall or place did not receive a very high satisfaction. This is parallel to the study of Dumlao et.al. (2020) who studied the business challenges in Cabanatuan City. Their study found out that lack of resources and nancial fund, competition, weather condition, accessibility and indebtedness are the challenges face by entrepreneurs in the City.

Personal and Financial Status
This study found out that micro nance has a very high impact in the personal and nancial status of its borrowers. The nding is parallel to the study by Nguyen et. al. (2011) (as cited by Bui, 2014) which con rmed the positive impact of micro nance, with 89.8% of 971 households surveyed said their income has increased after borrowing. There was also a signi cant increase in their level of assets, spending and savings. As shown below, the customers experienced improving their personal and nancial status uplifted as they avail of the micro nancing. Most of the parameters indicating very high positive impact of micro nance. The impact of micro nance to personal and nancial status The study revealed that among the pro le of the micro nance borrowers, only the sex (-.214) and educational attainment (-.152) have a signi cant negative weak correlation with the impact of micro nance in their business status. This indicates that male clients who have low level of formal education are most likely to perceive that micro nance has greater impact on their business status. This nding does not concur to the study of Owolabi (2015) that older, female, and more educated clients are more likely to experience increased ability to achieve successful business outcomes.

Micro nance
It can be noted in Table 9 that educational attainment has signi cant weak negative correlation to the level of satisfaction to loan feature (r=-.158). Level of education of micro nance borrowers can affect their satisfaction to loan feature aspect of micro nance institution, as the level of education of the client increases, they become less satis ed to the loan feature offered by the MFI. Study of Ugiagbe (2014) also found that there is a little signi cance in the perception of respondents to the interest rate and their level of education. A common nding over the years is that individuals tend to be more satis ed with services that they have had direct experience of using compared to public services in general (Appleby and Alvarez-Rosete 203, Goodsell 1990); Therefore, the level of direct use of services is likely to be an important variable in the context of satisfaction and expectations. Sex has signi cant weak negative correlation to the level of satisfaction to non-nancial service of micro nance (r=-.156). Since women are the usual borrowers of the micro nance institution and the usual manager of the household, they are more active to participate in the activities being launched by their micro nance provider. Through exposure to different non-nancial services of the micro nance institution, they are more likely to experience the service of the MFI and are most likely to express lower level of satisfaction. It just shows that women have higher standards when it comes to non-nance service. Many MFIs target primarily, or exclusively, women. This is because of the belief that they invest loans in productive activities or in improving their family welfare (Bernard, Kevin and Khin, 2017).
Consequently, sex also has signi cant weak positive correlation to the level of satisfaction to customer service of micro nance (r=.137). It means that women clients are more likely to express higher level of satisfaction when it comes to customer service of micro nance, while men clients tend to express lower level of satisfaction. This might be attributed to the fact that there are more women customers transacting in the MFI and most of these women show satisfaction to the MFI's customer accommodation.
Clients, whether they are satis ed or not with the services they received from institution shares their experiences through word-of-mouth (Churchill, 2000 as cited by Kralikova, 2015 Loan application has signi cant weak positive correlation to the impact of micro nance in business status of micro nance borrowers (r=.223). This nding implies that the more the borrowers can access fast the micro nance institution to borrow money for their business, the more the tendency that their business will grow. According to Todaro and Smith (2011) as cited by (Ahmad, Ean & Kasali, 2016), access to microcredit of microentrepreneur can allow them to secure and increase their capital and generate more income. In other words, the faster the borrowers avail of the services of the Micro nance institution, the faster the lent amount create growth in the business of clienteles. Faster loan release also creates the corporate integrity of the rm. Positive feedback from loyal and satis ed customers further lowers the cost of attracting new customers and enhances the rm's overall reputation, whereas word of mouth from dissatis ed customers naturally creates opposite effect to the rm (Danaher and Rust 1996) Loan feature has signi cant weak positive correlation to the impact of micro nance in business status of micro nance borrowers (.250). Results from the study of (Bwisa and Wanambisi, 2013) indicated that there is a "strong positive signi cant relationship between the amount of loan and performance of MSE increase in income/sales". Also, micro savings found to have a positive relationship in the entrepreneurial success since it is useful to fund existing business or creating a new one (Newman et al. (2014 (Bernard, Kevin andKhin, 2017).
Non-nancial service has signi cant weak positive correlation to the impact of micro nance in business status of micro nance borrowers (290). Non-nancial services include nancial education, businessrelated trainings like business development training and socially-orientated services like health, education and environmental programs. These are ways of the institutions to increase the pro ts and resiliency to shocks of their clients (Goubert, n.d.) 3.6.2 The Relation of Satisfaction and Impact to Personal and Financial Status Loan application has signi cant weak positive correlation to the impact of micro nance in personal and nancial status of micro nance borrowers (.300). It is integral during the loan application that the interest rate, processing fees and capacity to pay were checked and discussed well to the borrowers. Micro nance clients are vulnerable because of the socio-economic backgrounds. It is the responsibility of the institutions to protect them through to become transparent and properly communicate with their client (Veena, 2010).
Non-nancial service has signi cant weak positive relationship to impact of micro nance in personal and nancial status of micro nance borrowers (r=.195). Financial literacy trainings provided by micro nance institutions have bene ts both in clients and the institution. It can help improved the repayment rate and savings of clients thereby improving also their nancial status and goals (Crookston et al., 2011).
Customer service has likewise signi cant weak positive correlation to impact of micro nance in personal and nancial status of micro nance borrowers (.153). Customer satisfaction is being affected by service quality (Musoke, Kakundwa and Nyonyintono, 2016). Through proper orientation, updates and communication with the micro nance employees, micro nance borrowers and their household can receive better and positive impacts.

Conclusion And Recommendation
In view of the ndings of the study, the following conclusions are drawn: a. The institution is giving its borrowers a quality service as manifested by a very satis ed rating of its borrowers to loan application, loan feature, non nancial service and customer service.
b. The institution is positively bringing impact on its borrowers' business and personal & nancial status as manifested by a high and very high impact on two status respectively.
c. Interactions were observed between sex and educational attainment relative to the impact of micro nance to participants' business status and no interaction was observed between their pro le relative to the impact of micro nance to their personal and nancial status.
d. Participants pro le are having no signi cant relationships in terms of their level of satisfaction to loan application; an interaction was observed in their educational attainment relative to their level of satisfaction to loan feature; and interactions were observed in their sex relative to their level of satisfaction to non-nancial service and customer service.
e. Interaction was observed between level of satisfaction to loan application, loan feature and non nancial service relative to impact of micro nance to borrower's business status.
f. Interaction was observed between level of satisfaction to loan application, non-nancial service and customer service relative to impact of micro nance to borrower's personal and nancial status.
The following recommendations are proposed: 1. Marketing of loan products to both men and women should be strengthened. This can deliver gender balance in the micro nance institution.
2. Micro nance institution's area scanning of where to put the branches should be taken care of 3. Adjustment of loan size tailored-t to capacity to pay of borrowers.
4. Market linkages of borrowers' business should be strengthened.

5.
Job applicants should be screen well.
6. Launching of not yet existing business-related trainings campaign for savings mobilizations among its borrowers.
7. Efforts should be made to make the borrowers satisfy especially to those items who signaled as having low satisfaction.
8. Conduct of impact assessment survey regularly by the micro nance institution to monitor their borrowers' progress.
9. Revisit of the appropriateness of their existing products and services.

List Of Abbreviations
ASKI Inc. -refers to Alalay Sa Kaunlaran sa Gitnang Luzon Group of Companies, Inc.

MFI-Micro Finance Institution
Sari-Sari store-A community based small scale convenient store selling variety of goods to the community residents Declarations Ethics approval and consent to participate The approval of the data gathering was taken from individual respondents of the MFI

Consent for publication
Approval is taken from the Author who is a member of the team commissioned to do the survey.

Availability of data and materials
Not applicable.