An Investigation into the Impact of Microfinance in Poverty Reduction in Less Developed Countries (LDCs): A Case of Ghana
Keywords:
Microfinance, Poverty, Ghana, Consumption smoothening, Africa, Micro-savings.Abstract
The paper attempts to provide a critical appraisal of the debate on the effectiveness of microfinance as a universal poverty reduction tool. It argues that while microfinance has developed some innovative management and business strategies, its impact on poverty reduction remains in doubt. The instrument for data collection is structured questionnaire. The study was carried out in Ashanti Region of Ghana. Using a sample size of 380 clients from various microfinance institutions (MFIs) within the research area and a survey with descriptive analysis, the result reveals among others that the clients enjoy opportunities for savings which enable them to increase their income levels by way of using their savings to acquire basic necessities of tools, equipment and materials and are able to create employment and improve their standard of living. Thus, microfinance, however, certainly plays an important role in providing safety-net and consumption smoothening. The study therefore recommends among others an urgent refocus on the promotion of micro-savings, a robust financial sector regulation and improved financial support to the MFIs by government and other stakeholders to help in the world’s effort in respect of poverty eradication agenda.
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[30] Mayoux, L. (1999), Questioning Virtuous Spiral: micro-finance and women empowerment in Africa: Journal of International Development 11:957-984
[31] Rahman, A. (1999), “Micro-credit Initiatives for Equitable and Sustainable Development: Who Pays” World Development 27 (1):67-82
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[36] Copestake, J. (2002), Inequality and the polarizing impact of microcredit: Evidence from Zambia’s Copperbelt, Journal of International Development, 14 (6) (2002), pp. 743–755
[37] Ghana Statistical Service (2012), Population and Housing Census, 2010
[38] Rogaly, B. (1996), “Microfinance evangelism, ‘destitute women’ and the hard selling of a new anti-poverty formula’, Development in Practice, 6(2)
[39] www.ghana.gov.gh (2016)
[40] Ghana Statistical Service, 2012
[41] Yahaya K. A, Osemene O. F., Abdulraheem A., Global Journal of Management and Business Research 11(4) (2011) Version 1.0 March
[42] IPAR (2007). Poverty Reduction through Enhance Access to Financial Service: Case study of Botswana. Kenya and Namibia. Occasional paper No. 010/2007.
[43] Sani; F, (2008), Self-Continuity: Individual and Collective Perspectives. East Sussex: \Psychology Press. ISBN 0-8058-5701-X
[44] Burgess, R. and Pande, R. (2003). “Do Rural Banks Matter? Evidence from the Indian Social Banking Experiment.” Bureau for Research in Economic Analysis of Development, BREAD Working Paper: No. 037
[2] Leikem K. (2012), Microfinance: A Tool for Poverty Reduction? University of Rhode Island DigitalCommons@URI, Senior Honors Projects. Paper 300,
[3] Chowdhury, A. (2009), Microfinance as a Poverty Reduction Tool - A Critical Assessment, Economic & Social Affairs, DESA Working Paper No. 89 ST/ESA/2009/DWP/89
[4] United Nations, Concept Paper: Building Inclusive Financial Sectors to Achieve the Millennium Development Goals (International Year of Microcredit, United Nations, 2005)
[5] United Nations, Microfinance and Poverty Eradication: Strengthening Africa's Microfinance Institutions (New York, United Nations, 2000)
[6] Bakhoum, I. et al. (1989). Banking the Unbankable. London: Panos Publications Limited.
[7] Vanroose, A & D’espallier, B. (2009), Microfinance and Financial Sector Development. Centre Emile Berheim Research Institute in Management Science working paper series No. 09/040. September 2009. Available at: http://www.microfinancegateway.org/gm/document-1.9.40607/09.pdf. Accessed on 06/06/2014.
[8] Asian Development Bank (ADB). (2000). Finance for the Poor: Microfinance Development Strategy. Available at: http://www.adb.org/Documents/Policies/Microfinance/financepolicy.pdf. Accessed on 8/12/2007
[9] Mbat D. O and Eyo I. E (2014), The Perceived Role of Micro-Credit in Poverty Alleviation: The Case of South-South Nigeria, Business & Entrepreneurship Journal, vol.3, no.1, 2014, 45-55 ISSN: 2241-3022 (print version), 2241-312X (online) Scienpress Ltd, 2014
[10] Robinson, M. S. (2001), The Microfinance Revolution, Sustainable Finance for the Poor, International Bank for Reconstruction and Development/The World Bank, 1818 Street, NW, Washington DC, 20433 USA
[11] Morduch, J. (1999), The microfinance promise. Journal of Economic Literature, Vol. 37, pp. 1596-1614.
[12] Diop, A., Hillenkamp, I. & Servet, J.M. (2007), Poverty versus inequality. In B. Balkenhol, Microfinance and Public Policy: Outreach, Performance, and Efficiency (pp. 27-46). New York: International Labor Organization and Palgrave Macmillian.
[13] Armendariz, B. & Modurch, J. (2005), “The Economics of Microfinance”, The Mit Press Cambridge, Massachusetts London, England
[14] Bakhtiari, S. (2011), “Microfinance and Poverty Reduction: Some International Evidence” International Business & Economic Research Journal (IBER), 5(12)
[15] Gibbsons, D. & Meehan, J. W. (2002), Financing Microfinance for poverty Reduction. Draft paper commissioned by the Microcredit Summit Campaign, Malaysia CASHPOR Financial and Technical Services
[16] Johnson, S. & Rogaly, B. (1997), “Microfinance and poverty reduction” Oxfam Publication.
[17] CGAP (2003), Microfinance consensus guidelines, Washington D.C, World Bank
[18] Yunus, M. (2003), Banker to the Poor, Micro-lending and the Battle Against World Poverty. Public Aff airs, New York
[19] Pitt, M. M and Khandker (1999), the Impact of Group-Based Credit on Poor Households in Bangladesh: Does the Gender of Participants Matter? Journal of Political Economy, October 19l98, 958-996
[20] Khandker S. R. (2005), Microfinance and Poverty: Evidence using Panel Data from Bangladesh, Oxford Journal, Social Sciences, World Bank Economic Review, Volume 19, Issue 2, pp 263-286
[21] Kurmanalieva, E. Montgomery H. and Weiss, J. (2005), Micro-finance and poverty reduction in Asia: what is the evidence? ADB Institute, Paper prepared for the 2003 ADB Institute Annual Conference on Micro finance and poverty reduction, Tokyo, Japan
[22] Miled, K. B. H & Rejeb, J. B (2015), Microfinance and Poverty Reduction: A Review and Synthesis of Empirical Evidence, Procedia – Social and Behavioural Sciences 195 (2015) 705-712, Elsevier Ltd
[23] Copestake, J. Bhalotra, S. Johnson S. (2001), Assessing the impact of microcredit: A Zambian case study, Journal of Development Studies, 37 (4) (2001), pp. 81–100
[24] Hulme, D. and Mosley, P. (1996), Finance against the poor (Vols. 1–2), Routledge, London (1996)
[25] Morduch, J. (2000), The Microfinance Schism, World Development Vol. 28, No. 4, pp, 617-629, 2000 Elsevier Science Ltd. www.elsevier.com/locate/worlddev
[26] Hulme, D. and Mosley, P. (1998), Finance Against Poverty, Journal of International Development, Vol. 10, Issue 6
[27] Zaman, H. (2000), Assessing the Poverty as Vulnerability Impact of Micro-Credit in Bangladesh: A Case Study of BRAC, World Bank.
www.worldbank.org/htm/dec/Publications/Workpapers/wpss2000series/wps2145/wps2145.pdf
[28] Rutherford, S. (1997), Informal financial services in Dhaka’s slums. Dhaka University Press
[29] Husain, Z., Mukherjee, D., & Dutta, M. (2010). Self-help groups and empowerment of women: Self-selection or actual benefits? [E-text type]. <http://mpra.ub.uni-muenchen.de/20765/> June 20, 2011.
[30] Mayoux, L. (1999), Questioning Virtuous Spiral: micro-finance and women empowerment in Africa: Journal of International Development 11:957-984
[31] Rahman, A. (1999), “Micro-credit Initiatives for Equitable and Sustainable Development: Who Pays” World Development 27 (1):67-82
[32] Kamani, A. (2007), Microfinance misses its mark. Stanford Social Innovation Review. Retrieved July 8, 2016 from http://www.ssireview.org/site/printed/microfinance_misses_its_mark/
[33] Lipton, M. (1996), Successes in Antipoverty, Geneva: International Institf4utf4e of Labour Studies
[34] Adams, D. Von Pischke, J.D. (1992), Micro-enterprise credit programs: Déjà vu World Development, 20 (10) (1992), pp. 1463–1470
[35] Bateman, M., & Chang, H. (2009). The microfinance illusion [E-text type]. <http://www.econ.cam.ac.uk/faculty/chang/pubs/Microfinance.pdf> Last accessed June 20, 2011.
[36] Copestake, J. (2002), Inequality and the polarizing impact of microcredit: Evidence from Zambia’s Copperbelt, Journal of International Development, 14 (6) (2002), pp. 743–755
[37] Ghana Statistical Service (2012), Population and Housing Census, 2010
[38] Rogaly, B. (1996), “Microfinance evangelism, ‘destitute women’ and the hard selling of a new anti-poverty formula’, Development in Practice, 6(2)
[39] www.ghana.gov.gh (2016)
[40] Ghana Statistical Service, 2012
[41] Yahaya K. A, Osemene O. F., Abdulraheem A., Global Journal of Management and Business Research 11(4) (2011) Version 1.0 March
[42] IPAR (2007). Poverty Reduction through Enhance Access to Financial Service: Case study of Botswana. Kenya and Namibia. Occasional paper No. 010/2007.
[43] Sani; F, (2008), Self-Continuity: Individual and Collective Perspectives. East Sussex: \Psychology Press. ISBN 0-8058-5701-X
[44] Burgess, R. and Pande, R. (2003). “Do Rural Banks Matter? Evidence from the Indian Social Banking Experiment.” Bureau for Research in Economic Analysis of Development, BREAD Working Paper: No. 037
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Published
2016-11-27
How to Cite
Kumah, A., & Boachie, W. K. (2016). An Investigation into the Impact of Microfinance in Poverty Reduction in Less Developed Countries (LDCs): A Case of Ghana. American Scientific Research Journal for Engineering, Technology, and Sciences, 26(3), 188–201. Retrieved from https://asrjetsjournal.org/index.php/American_Scientific_Journal/article/view/2270
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