Can Microfinance Help to Reduce Poverty? A Review of Evidence for Developing Countries

Can Microfinance Help to Reduce Poverty? A Review of Evidence for Developing Countries The main objective of this paper is to study the effects of microfinance on poverty reduction in developing countries, using cross-sectional and panel data. We show that a country with higher microfinance institution (MFI) gross loan portfolio per capita tends to have lower levels of poverty headcount ratio and higher level of expenditure of consumption per capita, confirming the role of microfinance in poverty reduction at the macro level. We show also that microfinance loans per capita are negatively associated with poverty gap (which measures the depth of poverty) and squared poverty gap (which measures the severity of poverty), implying that MFIs benefit not just the poor but also the poorest. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of the Knowledge Economy Springer Journals

Can Microfinance Help to Reduce Poverty? A Review of Evidence for Developing Countries

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Publisher
Springer Journals
Copyright
Copyright © 2016 by Springer Science+Business Media New York
Subject
Economics; Political Economy/Economic Policy; R & D/Technology Policy; Entrepreneurship
ISSN
1868-7865
eISSN
1868-7873
D.O.I.
10.1007/s13132-015-0348-2
Publisher site
See Article on Publisher Site

Abstract

The main objective of this paper is to study the effects of microfinance on poverty reduction in developing countries, using cross-sectional and panel data. We show that a country with higher microfinance institution (MFI) gross loan portfolio per capita tends to have lower levels of poverty headcount ratio and higher level of expenditure of consumption per capita, confirming the role of microfinance in poverty reduction at the macro level. We show also that microfinance loans per capita are negatively associated with poverty gap (which measures the depth of poverty) and squared poverty gap (which measures the severity of poverty), implying that MFIs benefit not just the poor but also the poorest.

Journal

Journal of the Knowledge EconomySpringer Journals

Published: Jan 25, 2016

References

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