Efficiency Performance of SMEs Firms: A Case study of Islamic Financing Guarantee Scheme of Credit Guarantee Corporation
Husniyati Ali, Badrul Hisham Kamaruddin
Faculty of Business and Management, Universiti Teknologi MARA
Arshad Ayub Graduate Business School, Universiti Teknologi MARA
The objective of this paper is to evaluate performance efficiency of the Small Medium Enterprises (SMEs) of different economic industries that patronize the Islamic financing guarantee scheme of Direct Access Guarantee Schemei (DAGS-i). This scheme was offered by the Credit Guarantee Corporation (CGC). In essence, both Muslim and non-Muslim entrepreneurs have recognised the trend towards Islamic banking and finance and have since used Shari’ah compliant financing and services for their firm needs. Moreover, the spirit towards ethical products and services by Islamic financial institutions has motivated entrepreneurial firms to seek patronage. Against this background, this study attempts to evaluate 42 firms from three industries, namely Services; Engineering and Construction; and Logistics and Transportation, to assess their performance on the aspect of production efficiency over a period of 2006-2014. A total of 378 observations, which involves firms that patronize the Islamic financing guarantee scheme of Direct Access Guarantee Scheme-i (DAGS-i). This study employed the Data Envelopment Analysis (DEA) technique to assess the performance of firms. The results indicate that there are firms that able to achieve efficiency scores of 1. In this regard, the efficient firms will be a benchmark to the other firms to achieve efficiency in terms of using the available resources of inputs. Better coordination and supervision from Corporation will enables the other firms to perform well.
Keywords: Credit guarantee corporation, Data envelopment analysis efficiency, Entrepreneur, Islamic financing guarantee scheme