Microcredit and its umbrella term microfinance significantly increased their popularity over the last years. Microfinance as a poverty reduction toola critical assessment. The impact of microfinance banks on economic growth in nigeria. Analysis of the poverty impacts of microfinance is almost exclusively focused on the direct. Microfinance service has more focus on the economic transition to support alleviating poverty through giving financial services to the poor. The new microfinance handbook fills a critical gap in the current literature on financial inclusion. This study examines the impact of microfinance institutions in financing small scale enterprises for economic growth in nigeria. In nigeria, strategies to increase the income of the poor have existed in the form of rotating contributory savings schemes referred to as esusu, itutu, adashi, bambam and ajo in different parts of the country. The main objective of this study was to explore the impact of microfinance service on rural farmers. However, there is still general agreement that microfinance helps improve the lives of the. Microfinance as a poverty reduction tool a critical assessment 3 thus, there is broad agreement about the need for complementary factors for microfinance to have some positive impact on. The impact of microfinance loans on small informal enterprises in madagascar.
Impact of microfinance on entrepreneurial development. A case study of nrsp in bahawalpur of pakistan sunia ayuub department of management sciences, the islamia university bahawalpur, pakistan, email. In chapter 2, i use household level panel data from bangladesh to estimate the economic impact of microfinance by tracing the marginal effect of microcredit on household income. In fact, academic interest that shows the impact of microfinance on entrepreneurial development is evidenced by the fact that some academic journals have devoted special issues to research establishing this linkage.
Pdf i the impact of microfinance bank on small and. Impact of microfinance on living standards, empowerment. What is the evidence of the impact of microfinance on. I am particularly pleased with the explicit focus on consumers and their needsthis, together with the onset of technologybased delivery models, has been the most important. Analysis of the poverty impacts of microfinance is almost exclusively focused on the direct impacts on microfinance clients. The impact of microfinance on the development of small and medium enterprises. Many attempts have been made throughout history to establish institutions for supplying credit to the poor. Traditionally, commercial banks lend to some medium and large enterprises, which are judged to be creditworthy. Towards a sustainable learning process linda mayoux1 september 2001 this paper is summarised in the november 2001 edition of enterpriseimpact news contents list of case studies of micro finance institutions currently on ediais site, or forthcoming summary section 1 introduction section. By fall 2015, for the first time in history, less than 10% of the worlds population was living in extreme poverty down from 37% in 1990 and 44% in 1981. Microfinance is not a panacea for poverty and related development challenges, but rather an important tool in the mission of poverty eradication. Time series data from central bank of nigeria cbn report on the activities of microfinance institutions mfis from 1992 to 2014 were used. Impact of microfinance institutions on small scale. However, although microfinance is an important catalyst for poverty reduction, it is not a magic bullet.
Microfinance is seen as a key development tool, and despite the current deepening crisis within the industry, it continues to grow in subsaharan africa. Introduction to microfinance institutions mfis part i. Impact of microfinance on the schooling of children. D scholar economics 20142017 kalinga university, raipur, c. The current study focused on the impact of microfinance on poverty alleviation in sindh.
Incidentally, this also highlights the effect of not controlling for sample selection bias. The impact of microfinance on financial inclusion in nigeria. Application guidance note, oct 01 impact assessment of microfinance. The results of the econometric estimates show that the availability of microcredit loans had positive and mildly significant impacts. Microfinance is generally seen as a way to fix credit markets and unleash the productive capacities of poor people dependent on selfemployment. Microfinance as a poverty reduction toola critical. The microfinance has evolved due to the efforts of committed individuals and financial agencies to promote selfemployment and contribute to poverty alleviation and provision of social security. Wright1 abstract when examining the income impacts of microfinance programmes, it is important to recognise that there is a significant difference between increasing income and reducing poverty. An empirical study on the impact of microfinance institutions yoursri. International bodies namely cgap, unctad and others, development agencies, academic institutions etc. In the literature, microfinance institutions mfis seem to be understood as financial organiza tions engaged primarily in the business of giving smallscale loans and financial amenities to poor and financially unbankable customers, while also devising the key element of a double bottom. Impact of microfinance on living standards, empowerment and. To date, most impact assessments have focused on microcredit programs rather than looking at a range of financial services. In mexico, 238 geographic clusters that were not served by the partner microfinance institution mfi were randomized to receive.
This paper analyzes the impact of a microfinance institution mfi serving small informal enterprises in antananarivo madagascar. In nigeria, strategies to increase the income of the poor have existed in the form of rotating contributory savings schemes referred to as. The expression ab will give the net effects of unobserved characteristics affecting participation plus the microfinance impact. Household level microcredit leads to an increase in household income. The impact of microfinance on the development of small and. Part of the debate stems from the lack of studies pdf that show microfinance as an effective poverty reduction tool. As control groups are completely missing, it may prove to be difficult to disentangle effects of microfinance itself. They avoid doing business with the poor and the micro enterprises because they believed the associated cost and risks involved are.
Most microfinance studies in bangladesh are limited to either one or two major mfis or to the overall impact on clients poverty reduction, improvement in health and social status, enhancement of women entrepreneurship and empowerment, etc. Controls were applied to address biases known to be associated with microfinance impact assessments. The impact of microfinance loans on small informal. The perils of using new members as a control group, journal of microfinance 3, 7585. The proponents of inclusive financial growth believe that giving relatively larger loans to the nonpoor or nearpoor entrepreneurs is the response of the microfinance institutions mfis toward the demand of a existing and potential clients. The impact of microfinance banks on economic growth in. Thus, we conduct a metaanalysis of the empirical evidence on the impact of microfinance interventions on poverty and microenterprises. From the analysis of data, we found that microfinance has the positive impact on the standard of living of the poor people and on their life style.
I am particularly pleased with the explicit focus on consumers and their needsthis, together with the onset of technologybased delivery models, has been the most important shift in the microfinance field over the past 15 years. Time series data from central bank of nigeria cbn report on the activities of microfinance institutions. According to the united nations, microfinance is a small amount of money, loaned to a client by a bank or other institution, which can be offered to an individual or through group lending, often without collateral. Pdf i the impact of microfinance bank on small and medium. Impact capital micro finance is a services provider incorporated in ghana in february 2012 as a company limited by liability under the companies code, 1963 act 179 and licensed by the bank of ghana to operate with registration number bog lc 000215. This study made use of quantitative secondary data from the central bank of nigeria cbn statistical bulletin 20 to carry out this study. Microfinance was first trumpeted as a way to unleash the productive capacities of poor people dependent on selfemployment e. Full report english pdf 23 kb, 2 pages full report french pdf 1. Policymakers typically conduct impact evaluations of programs to decide how best to allocate scarce resources. Most microfinance impact studies have focused on measuring the causal impact of introducing a new microfinance institution mfi on business and household development indicators. Towards a sustainable learning process linda mayoux1 september 2001 this paper is summarised in the november 2001 edition of enterpriseimpact news contents list of case studies of micro finance institutions currently on ediais site, or forthcoming summary section 1 introduction section 2.
Impact investing can learn from the history of microfinance the provision of debt and other financial services to the poor an industry that was at a similar stage 15 years ago. This paper investigates the impact of microfinance banks on economic growth in nigeria over the period of 199220. Micro finance is growing as a powerful instrument for poverty alleviation in the new economy. Can impact investing avoid the failures of microfinance. We considered impacts on income, savings, expenditure, and the. The use of loans and deposit services can result in a diversification of income sources e. First it is an agricultural dominated, second poverty is high and deep and three, there is considerable number of microfinance institutions. The good news is that impact assessments have demonstrated that financial services for the poor improve peoples lives by increasing their incomes and improving their capacity to pay for social services. Impact considers income growth, asset building, and reduction of vulnerability. A majority of the microfinance programmes has come up with the. Analysis of the effects of microfinance on poverty reduction. The study collected the data related with socioeconomic status of farmers.
Access to financial services enables clients to build and change their mix of assets. There is an ongoing debate over whether the goal of microfinance is poverty reduction or financial inclusion. To date, most impact assessments have focused on microcredit programs. The whole discussion about the social impact of microfinance has just started. The social impact of microfinance and how to measure it. A simple regression equation was fitted to estimate the impact of microfinance. The purpose of this study is to analyze the impact of loan and income on the poverty alleviation among the. In chapter 2, i use household level panel data from bangladesh to estimate the economic impact of microfinance by tracing. As the main focus of the paper is the impact of microfinance, we limit the sample to microfinance only treatment groups and the pure control groups.
Impact is about understanding how financial services affect the lives of poor people. The case of taizhou, china xitian wang 1,2, the johns hopkins university, baltimore, md, usa may 10, 20 abstract this paper studies the impact of microfinance on the development of small and medium enterprises smes. Effect of microfinance operations on poor rural households. Impact of microfinance on rural households in the philippines. Therefore, the accuracy of the analysis heavily relies on the data provided by the people, we interviewed. However, once the relative impact is known, simpler client profile data and targeting analysis could suffice for making comparative statements across microfinance institutions. Microfinance is the newest panacea for alleviating poverty karnani, 2007. Pdf the social impact of microfinance researchgate. Pdf the micro finance program extends small loans to very poor people for selfemployment projects that generate income, allowing them to care for. Focusing on the potential effects of microfinance on childrens educational attainment, holvoet 2004 published an article exploring the influence of the gender of the borrower on the impact of microfinance programs on childrens education. However, in recent years, microfinance has become a veritable. In this paper we seek to provide an overview of impact evaluations of microfinance.
246 668 1009 776 1189 228 669 631 696 336 1028 1071 890 604 667 1532 604 988 296 379 637 610 356 1018 765 569 1388 1069 1198 970 927 621 618 15 1306 217