Microcredit and Micro-Entrepreneurial Success in a Fragile Economy: Evidence from Lebanon

Abstract

This study examines the factors associated with micro-entrepreneurial success among microcredit recipients in a fragile economic environment, using Lebanon as the empirical setting. It develops an integrated framework incorporating microfinance institution support, socio-demographic characteristics, economic conditions, political factors, social factors, and infrastructure to explain differences in entrepreneurial success. A quantitative research design was employed using survey data collected from 325 micro-entrepreneurs in Lebanon who had accessed microcredit. Structural Equation Modeling (SEM) using SPSS-AMOS was applied to assess the measurement and structural relationships among the proposed factors and entrepreneurial success, measured through income, business survival, and productivity. The findings indicate that support provided by microfinance institutions and entrepreneurial experience are important factors associated with micro-entrepreneurial success. The results also demonstrate that environmental conditions substantially shape business outcomes: political instability, infrastructure constraints, and market competition significantly affect entrepreneurial performance, whereas social factors do not exhibit a statistically significant effect. These findings suggest that access to microcredit alone does not determine the success of micro-enterprises operating in fragile economies. Rather, successful outcomes are associated with the interaction of institutional support, individual capabilities, and the broader economic and political environment. The study contributes to the microfinance and entrepreneurship literature by providing an integrated assessment of the institutional, individual, and environmental conditions associated with the success of microcredit-supported enterprises in a fragile economy.