Measuring the Impact of Microfinance and “Plus” Services on Psychological Aspects of Entrepreneurial Potential Development: An Empirical Study on Rural Women Entrepreneurs

This study examines the impact of microfinance and “plus” services on the entrepreneurial potential development (EPD) of rural women entrepreneurs. It particularly investigates how access to financial services and complementary nonfinancial services, such as financial literacy, skill development, business trainings, and social services, affect five key EPD dimensions: risk-propensity, entrepreneurial motivation, management competencies psychological competencies, and social competencies. A quantitative research design was adopted, using survey data from women clients of microfinance institutions (MFIs) and self-help groups. Structural equation modeling through SmartPLS 4.0 software was used to test the hypothesis. Results indicate that while microfinance services significantly influence EPD, business development services (BDS) were also found to have a significant impact. These findings highlight the need for more emphasis on designing capacity-building programs that are better aligned with the particular needs and realities of rural women entrepreneurs, offering actionable guidance for MFIs and policymakers to enhance their entrepreneurial capacity not just through finance but also through holistic capacity development in the rural context. Moreover, the study contributes to the extant literature by offering an integrated psychological and functional perspective on women’s entrepreneurship development through microfinance.