Abstract:After five decades of rapid expansion of microfinance worldwide, little is known about its aggregate effects and whether the “microfinance promise” of poverty reduction holds at the macro level. Challenging questions have arisen. Here we explore the dynamic response of microfinance on economic growth, financial deepening and income inequality. Countries are grouped into three broad clusters (stable, moderate and poor) based on macro‐institutional variables. Our results show that microfinance has a significant … Show more
“…The following equation represents our baseline model: Microfinance can promote an efficient financial sector and higher economic growth, increase productivity and induce greater investment (Sultan & Masih, 2016). Thus, improved access to finance implicitly captured by microfinance outreach (X it ) would increase economic growth (Alimukhamedova, 2019;Aziz & McConaghy, 2014;Donou-Adonsou & Sylwester, 2017;Raihan et al, 2017). Microfinance outreach can further boost household consumption through profits generated by businesses financed through microfinance loans.…”
Section: Theoretical Framework and Methodologymentioning
This study investigates the impact of microfinance outreach on aggregate economic well‐being. We specifically examine the effect of microfinance outreach on aggregate welfare, as measured by income and household consumption growth, across 108 countries over the period 2005–2015. Our empirical results confirm the aptitude of microfinance outreach to enhance aggregate welfare. Mainly, the average loan balance per borrower and the percentage of women borrowers positively impacted aggregate welfare. Additionally, outreach affects consumption growth strongly. Therefore, this study upholds the incorporation of microfinance into policies targeting aggregate welfare and economic development.
“…The following equation represents our baseline model: Microfinance can promote an efficient financial sector and higher economic growth, increase productivity and induce greater investment (Sultan & Masih, 2016). Thus, improved access to finance implicitly captured by microfinance outreach (X it ) would increase economic growth (Alimukhamedova, 2019;Aziz & McConaghy, 2014;Donou-Adonsou & Sylwester, 2017;Raihan et al, 2017). Microfinance outreach can further boost household consumption through profits generated by businesses financed through microfinance loans.…”
Section: Theoretical Framework and Methodologymentioning
This study investigates the impact of microfinance outreach on aggregate economic well‐being. We specifically examine the effect of microfinance outreach on aggregate welfare, as measured by income and household consumption growth, across 108 countries over the period 2005–2015. Our empirical results confirm the aptitude of microfinance outreach to enhance aggregate welfare. Mainly, the average loan balance per borrower and the percentage of women borrowers positively impacted aggregate welfare. Additionally, outreach affects consumption growth strongly. Therefore, this study upholds the incorporation of microfinance into policies targeting aggregate welfare and economic development.
“…In fact, countries that have implemented policies to support equal access to finance result in greater female business ownership (Islam et al, 2018). However, access to finance alone does not automatically translate into improved entrepreneurial activity (Banerjee et al, 2015) and must be complemented with other socioeconomic support (Alimukhamedova, 2019).…”
Section: Supporting Women's Entrepreneurship In Indiamentioning
Motivation: Governments support women's self-employment as a means to support women's empowerment. While they tend to do this by providing financial assistance, skills development and vocational training, they have not paid enough attention to entrepreneurship-related education in the school curriculum. The article addresses this research and policy gap. Purpose: While education may lead women to take up self-employment, anecdotal evidence also suggests that as women continue towards higher education, they tend to opt for wage employment. We investigate whether secondary school is the ideal time to encourage young women to take up self-employment. Approach and Methods: To test our hypothesis, we used two rounds of the Indian Human Development Survey (IHDS) dataset as it contains granular information about education and self-employment at the individual level. We analysed data in univariate and multivariate settings. Findings: Our results indicate that while education is a key dimension for women's self-employment earnings, its effects peak at moderate levels of secondary education. We find that the increase in business income for each additional year of schooling between classes 9 and 12 (ages 15 to 18) is more than four times that from classes 1-8 and over twice that beyond class 12. We also find that social factors, such as marriage and infrastructure, have implications for the returns of education to women's income from running a business. Policy implications: To improve women's economic and social empowerment, policy-makers should encourage women to attain higher levels of education, since it is a significant predictor of entrepreneurial endeavours. Second, the 9-12 curriculum should focus on making girls and young women more aware of entrepreneurship and encourage them to take up self-employment.
“…Among the work that exists, from both microeconomic and macroeconomic perspectives, a significant number is increasingly devoted to understanding the functioning of the microcredit market, its imperfections, and credit rationing. Also, recent analyses have focused on the microeconomic and macroeconomic impacts of microfinance in an integrated environment (Amendariz & Labie, 2011;Alimukhamedova, 2019). However, studies from a macroeconomic perspective are relatively more recent due to a lack of data (Imai et al, 2012;Kamel & Ben, 2018).…”
This paper aims to analyze the impact of access to a microfinance institution and official banks on households’ small businesses in Togo. The study uses data from the Harmonized Survey of Household Living Conditions conducted in 2019 by the National Institute of Statistics, Economic and Demographic Studies on 27,480 individuals and 6,171 households in Togo. The paper uses propensity score matching. The results show that credit access improves households’ small businesses, particularly in Togo’s agriculture sector.
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