Spending Business Microloans on Rural Employment Development; Application of a Logistic Regression Model

Lending microloans for employment creation and prosperity of production is an appropriate way to empower the poor, generate income, reduce poverty and improve food security. Nevertheless, the evidence shows that part of these microloans is faced with moral hazards and spent on non-productive affairs. This study aimed to investigate the spending of business microloans granted by local microcredit funds in the county of Qaleh Ganj in Kerman province and to identify the most important factors affecting their efficient usage. The statistical population consisted of 21,000 rural members of the microcredit funds set up in Qaleh Ganj County. The sample size was calculated using the G*Power software (n = 203) and the sampling was carried out by multistage sampling. The results showed that 46.8% of the members used their production loans in a non-productive way and took it out of the business, 44.3% of the respondents used their loans to maintain their previous business and 8.9% of them used their loans to create new jobs. Logistic regression analysis showed that the variables, namely "times of supervision", "number of group members", "dissatisfaction with high monthly installments", "perceived behavioral control", "perception of job performance", "perceived career advancement prospects" and "level of education" have explained between 46 and 61 percent of the individual membership in both groups of the dependent variable "using business microloans for business development".