Impact Of Microcredit Research Articles

Constraints Faced by Rural Women in Changing Livelihoods in Bangladesh: A Study on the Impact of Microcredit through PDBF

The main purpose of the study is to determine the extent of the constraints faced by the women beneficiaries of Palli Daridro Bimochon Foundation (PDBF) on their socio-economic development and to explore the relationship between the socio-economic characteristics of the beneficiaries and their constraints. A total of 3436 women beneficiaries of three upazilas under 55 districts of PDBF constituted the population of the study. A face-to-face interview survey was conducted to collect data from the randomly selected 346 respondents. Among the 13 selected problem items, ‘high rate of interest’ was ranked first (70.81%), ‘more savings have to be deposited while taking the loan’ was ranked second (68.69%) and third (68.40%) was ‘various income generating activities and social development training are inadequate’ The findings revealed a significant relationship between training exposures, decision-making ability, savings deposit, income-generating activities, communication & network, and constraints faced by PDBF beneficiaries. Therefore, the PDBF authorities should consider significant factors in reducing the constraints faced by rural women to change their livelihoods.

Predicting the effects of microcredit on women’s empowerment in rural Bangladesh: using machine learning algorithms

This study aimed to predict the impact of microcredit on women’s empowerment in Bangladesh using machine learning (ML) algorithms. In rural Bangladesh, where microcredit programs are not significantly employed, data for the study was gathered through a survey. The study gathered data on a range of socioeconomic, demographic, and women’s empowerment indicators. The Naive Bayes (NB), sequential minimal optimization (SMO), k-nearest neighbor (k-NN), decision tree (DT), and random forest (RF) ML techniques were used in the investigation. In terms of the prediction of women’s empowerment, the findings indicated that all five algorithms performed well, with the DT having the highest level of accuracy (83.72%). The results of this study have significant consequences for Bangladesh’s microcredit programs and those in nations that are developing. Microcredit programs can focus their efforts on women who, based on their socioeconomic and demographic features, are most likely to benefit from the program by employing ML algorithms. This may result in more successful microcredit projects that support the empowerment of women and general socioeconomic growth.

THE IMPACT OF MICRO FINANCE SERVICES ON WOMEN'S ECONOMIC EMPOWERMENT; EVIDENCE FROM KURUNEGALA DISTRICT IN SRI LANKA

Women's economic empowerment has become one of the most pressing concerns in the world as empowering women economically, can make a significant contribution to the expansion of the economy and their immediate families to maintain a sustainable way of life. The concept of microfinance has developed as a tool to obtain both financial and non-financial support for poor people's self-empowerment. Women who come from low-income families are given the ability to make a valuable contribution to the economy through the use of microfinance. In the Sri Lankan context, female labor force participation is comparatively at a lower level, and thus more women are economically inactive. Therefore, microfinance services are vital to low-income women in both rural and urban areas. Due to the vitality of this aspect, this research aims to examine the impact of microcredit, micro saving, financial training, and advisory services on women's economic empowerment in Sri Lanka. The population used in this research is microfinance women beneficiaries in Kurunegala District, and the researcher selected 380 microfinance women beneficiaries as the sample size of this study using random sampling technique. Data collection was conducted using structured, self-administered, web-based questionnaires and personal interviews, where the data set was analyzed using multiple linear regression analysis. The results of this research show that microcredit, micro savings, financial training, and advisory services significantly and positively impact women's economic empowerment. Accordingly, the researcher recommends microfinance institutions to increase the granting of microcredit facilities to poor women in the Kurunagala district, as these institutions have given less loan amounts than applied. Also, it is recommended to reduce interest rates and increase payback periods, as high interest rates are an additional burden on the customers. Furthermore, the government should pay more attention to these low-income women and conduct some programs to improve their knowledge and careers. Meanwhile, microfinance institutions should improve their management capacity and strive to reach out to women in need to enhance their economic empowerment and improve their contribution to the workforce and economy.

Impact of Microcredit on Poverty Reduction in Bangladesh: a cross-sectional study

Purpose: Usually, microcredit is known as the providing of “small loans” to the poorer group of the population although it differs from country to country. Many poor and hardcore poor people have been taken the microcredit to reduce their poverty. This study aimed to detect the impact of microcredit on poverty reduction among different levels of poor people. Methodology: Primary data were collected using cluster sampling from the 14 different slum areas from Sylhet city in Bangladesh (n= 408) based on a semi-structured questionnaire during October 2023 to December 2023. Descriptive statistical analysis and Generalized Estimating Equations (GEE) were used to analyze the data. Findings: It was observed that among the participants 76% are male and 24% are female. Around 84.1% individuals were taking microcredit from the different NGOs and among them 91.6% got benefit from their loan and their income was increasing 14.6% as well. It was also observed that 54.4% people are anxious about their food and 15.9% people are sleeping with hunger. Results also revealed that after taking microcredit the average percentage of hardcore poor people are significantly decreased compared with non-poor. It may indicate that after taking microcredit hardcore poor people invest their loan more appropriately compare to poor and non-poor groups of people. Conclusions: Taken together, we conclude that microcredit might play better role for hardcore poor people. To get more success of microcredit and hence for sustainable development- government and non-government organizations should pay more attention to reduce the interest rate of loans.

Impact of microcredit on the short-term finances of microentrepreneurs

PurposeThe study focused on the impact of microcredit on the short-term finances of microentrepreneurs at the Galerías Shopping Center in San Juan de Pasto, Colombia, from 2019 to 2023.Design/methodology/approachThe design of the paper is empirical-analytical, focusing on the tangible and unique aspects of reality that can be fragmented for measurement. This approach privileges the use of data from the study population’s experience, which is treated analytically through statistics to establish frequencies and correlations between variables. The research involved a structured questionnaire based on bibliographic references and considering the operational framework of the variables, which underwent expert review, necessary adjustments, a pilot test and subsequent validation in 2019 and 2023. The reliability of the instrument was assessed using Cronbach’s alpha, ensuring a reliable indicator when equal to or greater than 0.7 in each analysis period. This methodology aimed to identify practices and how the financial profile influences short term.FindingsThe findings from the survey conducted with the microentrepreneurs at Galerías Shopping Center reveal several significant connections to the theoretical framework. The study revealed that many microentrepreneurs relied on their personal funds for business financing, indicating a limited understanding of financial principles. Additionally, a significant portion of microentrepreneurs mitigated investment risk by securing loans from financial institutions, yet none utilized government subsidies like entrepreneurship loans, pointing to a lack of advice. The findings underscore the importance of financial education and suitable financial services for business development.Research limitations/implicationsOne limitation of this study is the lack of detailed data on the financial structure of microentrepreneurs' businesses, as well as specific information on interest rates and the terms and conditions of the microcredit used. These limitations may affect the generalization of the results and the comprehensive understanding of the impact of microcredit on the short-term finances of microentrepreneurs. Future research could include a larger sample size and more accurate data on the financial structure of businesses, as well as a detailed investigation of interest rates and terms and conditions of microcredit, to provide a more comprehensive understanding of the financial impacts for microentrepreneurs.Practical implicationsThe findings of this study have practical implications for microentrepreneurs in the Galerías Shopping Center. The research emphasizes the need for improved financial knowledge, accounting practices and debt management among microentrepreneurs. It also highlights the importance of financial education and access to suitable financial services for business development. The study’s insights can guide the development of training programs and initiatives aimed at enhancing financial literacy and financial management among microentrepreneurs, leading to more informed decision-making and improved financial outcomes.Social implicationsFrom a social perspective, this research contributes to promoting economic development and financial inclusion. By addressing the mismanagement of microcredit by microentrepreneurs and providing insights into their short-term finances, the study aims to foster economic empowerment and sustainable development within communities. The findings underscore the significance of microfinance in driving economic growth, reducing poverty and promoting social inclusion. The research emphasizes the importance of equitable access to financial services, which can contribute to narrowing the gap between the financially excluded population and the conventional financial system.Originality/valueThis research adds originality and value to the academic community by addressing the incidence of microcredit on the short-term finances of microentrepreneurs in the specific context of the Galerías Shopping Center in San Juan de Pasto, Colombia. By characterizing the financial profile of microentrepreneurs, establishing the relationship between microcredit characteristics and the financial profile and proposing an action plan, the study provides valuable insights for decision-making in both the academic and microfinance fields. The research contributes to the existing literature on microfinance and financial inclusion, offering a unique perspective and potential solutions for optimizing the use of microcredit-funded resources by microentrepreneurs.

Effectual Insights Of Microcredit Services To Rural Livelihood: A Southern Punjab Perspective

Uncertain economic situation of developing countries like Pakistan is posing threat to marginalized societies and lives in rural areas. Microcredit is considered as most efficient tool in mitigating the vulnerable condition i.e. either due natural calamities or economic policies. This study was fact finder is checking the impact and highlighting the problems associated with microfinancing. For the purpose cross-sectional study was carried out in three randomly selected districts of Punjab province. From each district 200 beneficiaries of microfinancing were selected using lists provided by the regional offices of MFIs. Data obtained through interview schedule from sample of 600 was analyzed using SPSS. Results revealed that respondents received microcredit both for social as well as agricultural purposes. Results showed that percentage share of farm income have been increased after receiving of microcredit. There is a relatively lower impact of microcredit on some indicators such as access to education and health facilities, contribution to family income, and household income level. For tackling the problems like in-time disbursement and repayment, monitoring, business advisory to front man and regular meetings with borrowers can make difference. However, introducing reward system for repayment can be effective.

Impact of Microcredit on Income and Social Status of Rural Women Microentrepreneurs in Southeast Nigeria

This study investigates the impact of microcredit on poverty reduction and social status enhancement among rural women microentrepreneurs in patriarchal Southeast Nigeria. The objective is to assess whether microcredit improves economic conditions and elevates social standing within a traditionally patriarchal society. Employing a quantitative approach, the study surveyed 340 rural women who have accessed microcredit across four states in Southeast Nigeria. Data were collected using a structured questionnaire, and statistical analyses were conducted to evaluate the effects of microcredit on income generation and social status. The findings reveal that while microcredit significantly boosts income generation, its impact on social status is less pronounced, constrained by persistent patriarchal norms and limited supportive measures. To address this limited impact, it is recommended that microcredit programs be complemented with comprehensive social support services. Such initiatives should focus on improving community relationships and addressing gender-specific barriers within the socio-cultural context. By integrating these support mechanisms, microcredit programs can more effectively enhance both the economic and social standing of women, fostering a more supportive environment for their empowerment.

Impact of Punjab Rural Support Program on Poverty Alleviation: A Case Study of District Layyah

The study examined the impact of the microcredit facility under Punjab Rural Support Program in reducing poverty in Layyah. Pakistan Rural Support Program focuses on alleviating poverty and harnessing development initiatives in rural regions. 100 respondents are inquired about family size, nature of work, level of schooling and microcredit facility to understand impacts of microcredit in reducing destitution. Pay differential is determined as pay after micro-credit and pay before micro-credit and pay differential is utilized to know impact of microcredit in reducing poverty. Two econometrics models have been developed, standard econometrics tests are applied on the model. The assessed results show that microcredit money improves the borrowers' pay and consequently reduces neediness in the region of Layyah. Level of training, family size, and nature of business are significant determinants of pay differential and destitution measures. The legitimacy of the evaluations has been checked utilizing different econometric tests. This study has proposed that to make the program more responsive, the easy availability of microcredit must be ensured and complexities in the aspect should be diminished, strategies and vision must be communicated and reached to people. The project scope of the plan can be enhanced and infrastructural techniques can be made exceptionally advantageous.

Microfinance, Microcredit, and Women’s Empowerment: An Exploration of the Grameen Bank Experience for Social Inclusion

Microfinance, originating in the mid-1800s but gaining modern prominence with Muhammad Yunus's Grameen Bank in 1970, has emerged as a potent tool for poverty alleviation. This paper explores the profound impact of microcredit on marginalized communities globally, particularly the empowerment of women, who constitute a majority of borrowers. Microcredit not only provides financial opportunities but also fosters confidence and belief in women's potential, transcending religious and national boundaries. Examining the origins and operations of microfinance, notably Grameen Bank, the paper distinguishes microfinance institutions from traditional banks. It addresses concerns about interest rates and presents compelling evidence linking microfinance access to poverty reduction. The core contribution of this research lies in its exploration of microcredit's dual function as an instrument for socioeconomic development and a catalyst for women's empowerment. We provide insights into how microcredit can contribute to fostering a more equitable world characterized by reduced poverty.

Effect of Microcredit on Welfare of Rural Households in Oyo State, Nigeria

The impact of microcredit on the livelihoods of poor rural households and its contribution to the socioeconomic development of the poor cannot be underestimated. This study investigated the effect of microcredit on rural households irrespective of the enterprises engaged. Primary data was collected through semi-structured questionnaires. A total of one hundred and fifty rural household heads were interviewed using a multi-stage sampling technique to select the respondents and only 134 (89.33%) questionnaires were used for the analysis. The data collected were analyzed using descriptive statistics, Mean Per Capita Household Expenditure (MPCHE), and ordered logistic regression models. The results of findings showed that 57.46% of the respondents were males, 82.84% were married and 67.91% were literate. The mean of age, household size, and years of formal education were 38.9years, 6.22, and 9.59years respectively. The findings further revealed that household size (Pα0.5), years of formal education (Pα0.1), years of experience (Pα0.1), the interest charged on the credit (Pα0.0a 5), the time lag of credit delivery (Pα0.05), payback period (Pα0.01), and distance to credit source (Pα0.1) were significant to microcredit access in the study area. The ordered logit result revealed that distance to credit source and household total expenditure were significant to welfare level at Pα0.1 and Pα0.01 respectively however, household size and amount borrowed are negatively correlated to welfare level and significant at Pα0.01 and Pα0.1 respectively. The Mean Per Capita Household Expenditure (MPCHE) was N7064.14 with a welfare line of N709.36 and the welfare categories are low (18.66%), average (41.04%), and high (40.30%). It is therefore recommended that the payback period should be extended to allow ease of repayment with low-interest rates and the means of accessing credit should be improved so that more households could benefit. Also, the government should intensify efforts toward education beyond the primary level among rural households.

The impact of microcredit on small firms in Brazil: A potential to promote investment, growth and inclusion

Over the past decades, microfinance has become a pillar of economic development policies. However, despite the great popularity of micro-credit programs, the results of empirical studies are mixed. Thus, more research is needed to help us understand how effective microfinance is in achieving poverty reduction, economic development, and financial inclusion. This paper contributes to the literature by relying on a unique dataset from one of the biggest Fintech companies in Brazil to study the impact of microcredit on small firms’ outcomes. Using a difference-in-difference approach, we find that access to credit increases monthly revenues and profits by nearly 4.5%. We show that the effects are stronger for women-led businesses and less experienced entrepreneurs. In addition, we find that credit renewal strengthens the benefits of credit access. We discuss several policy implications from our results. In particular, the permanent availability of credit – as opposed to one-time/short-term interventions -- has greater potential to generate virtuous cycles of ever more reinvestment and growth, indicating larger gains from relaxing borrowing constraints in the long run.

Impact of Microcredit on Household Consumption and Assets In Nepal

This paper intends to assess the impact of microcredit on Household Consumption and Assets in Nepal. The multivariate techniques used to achieve the objectives of the study. The study uses Nepal Living Standard Survey 2011 data, which covers 5,988 households. Considering the endogeneity in the microcredit participation of household, the study uses instrumental variable technique (IV method) for assessing the impact of microcredit on Household Consumption and Assets. After the adjustment of the endogeneity, distance of bank, distance of cooperative from household and holding of land size of household as the instruments, eligible household reduced 475 household from 779 total households of intervention group and similarly 2,953 households from 5,209 total households of control group. CMP (conditional mixed process) estimator used to give flexibility in terms of combining continuous and binary variables together in the same model. Multivariate analysis indicates that it has positive and significant relationship on household consumption and on assets, (household consumption is on Food Consumption, Non-Food Consumption and Total Consumption. And similarly, household assets are, on ownership of livestock such as buffaloes, cows, sheep, etc, Ownership on transportation such as Cycle or Motor cycle, Ownership on appliances, such as Refrigerator, Television, CD player) on intervention group than the control group. The result and finding and review of the literatures in this paper provided a wide range of evidence that microcredit programs can increase incomes and uplift families out of poverty. Microcredit would be a viable and potentially sustainable tool to reduce poverty in Nepal.

A Study on the Impact of Microcredit on Socio-Economic Status of Beneficiaries

The research aims to study outreach of microfinance in Lucknow district of Indian state of Uttar Pradesh. With the objective of studying outreach the study aims to explore how effectively microfinance is reaching to target population. According to the interpretation, microfinance benefits a lot of poor households, but not considerably rural women who are living below the poverty line. It also has a short affiliation with microfinance, few loan cycles, and no connection to poverty. Ex-post facto research design was used for conducting the research. The outreach of microfinance is question and impact and commitments to reduce poverty seems wage when institutions do not reach the actual target population. Population above poverty cannot be a good indicator for the efficiency of microfinance, while it poses greater questions on the positives impacts of microfinance.

The Impact of Micro-Credit on Procreating Income and Alleviating the Menace of Poverty in Quetta City

In developing countries, low income for living standard continuously remains a critical matter to be addressed. Several developing countries like in Pakistan; micro-credit a part of microfinance is always a tool to ameliorate the living standard for poor people. This research focused to explore the impact of Micro-credit on poverty reduction with the prime focus on the amelioration of living standards and income generation for poor people in Quetta city. Structured interviews were carried out for data collection through a convenience sampling of 50 borrowers. Although active borrowers of micro-credit from major microfinance banks i.e., Tameer Bank, First Microfinance Bank and Khushhali Bank Limited operating in Quetta city have been selected as a population. This study was explanatory and data was analyzed through descriptive statistical analysis i.e., frequencies and percentages by using Statistical Package for Social Sciences (SPSS) and Excel for graph presentation. Findings and analysis have unearthed many dimensions, but compendium of the conclusion is that microcredit was found to have a negative impact on income generation and poverty alleviation (living standard).

THE ROLE OF MICROCREDIT AND MICRO SAVINGS FOR RAISING MICROFINANCE SUSTAINABILITY IN SOMALI

The purpose of the study was to examine the impact of microcredit and micro saving on increasing the sustainability of microfinance in Somalia, using Amal bank as a case study. A sample of 120 participants, including bank employees, managers, and customers, were surveyed through questionnaires. The collected data were processed using SPSS and Excel and presented as tables showing frequencies and percentages. The study found a positive correlation between microcredit, micro saving, and microfinance sustainability. The results showed that microcredit is the most influential factor in maintaining the sustainability of microfinance. An increase in microcredit and micro saving for the low-income population leads to an increase in microfinance sustainability and job opportunities. Additionally, the study suggests that micro-saving positively impacts job creation, which implies that micro-saving relies on microcredit and job creation. Hence, microfinance organizations provide small savings accounts to low-income families or individuals as an incentive to save for future needs. Furthermore, a positive relationship exists between microfinance and employment. This means microfinance is in conjunction with microcredit and micro saving in job creation; increasing microcredit and micro saving also increase microfinance in job creation. Finally, regarding the job creation of society, the researchers recommend that the government of Somalia make a plan to maintain the sustainability of microfinance to reduce unemployment in Somalia because this country has one of the highest rates of unemployment in the world.

The Impact of Microcredit on Promoting Female Entrepreneurship: The Case of the Cooperative of Women Merchants in the Municipality of Gao

This work is based on a questionnaire intended for women entrepreneurs in the municipality of Gao. This research therefore aims to measure the effect of microcredit on the development of income-generating activities for these women.It is based on a particular case, namely the impact of credit on the activities of traders in the commune of Gao. The methodology used for this research is the descriptive method which is based on a statistical analysis through graphs, and cross tables, with version 20 of the Statistical Package for the Social Sciences (SPSS) software and the R (4.2.1, our sample was made up of 100 women, all members of the cooperative of women traders in the commune of Gao.Our results indicate that microcredit has a positive effect on the income-generating activities of beneficiaries. Thus, women's access to this credit has enabled them to increase their turnover and their profits, while meeting the conditions for the sustainability of their income-generating activities through the strengthening of organizational capacities. Keywords: female entrepreneurship, micro credit, tradeswoman, multinomial logit. DOI: 10.7176/EJBM/14-24-01 Publication date: December 31 st 2022

Does productive microcredit improve rural children's education? Evidence from rural Vietnam

Whether increasing access to microcredit results in better educational outcomes for children’s education in rural areas remains an important but inconclusive topic in development literature. This paper contributes to this strand of research both theoretically and empirically. We develop a theoretical model where a representative household uses microcredit to fund its family business and maximises its lifetime utility. Based on the outcomes of its business, the parents make an optimal decision on the level of their children’s schooling investment. Solving the maximisation problem, we show that a household’s optimal education for its children is directly related to the level of microcredit. Empirically, we utilise the Vietnam Access to Resources Household Survey (VARHS) dataset from 2008 to 2016 to estimate the impact of microcredit on rural children’s schooling. We find that microcredit borrowing by rural households negatively affects their children’s education, which is more profound for boys than girls. Policymakers need to be aware of such side effects in designing microcredit policy and adopt auxiliary measures, such as incorporating a clause on children's education in the borrowing terms, to alleviate the negative impact on children’s educational outcomes.

Microcredit and the household food security of the fish farmers: evidence from rural Bangladesh

ABSTRACT The credit-constrained poor fish farmers in Bangladesh usually have limited access to formal credit institutions. As a result, NGOs took the effort to provide collateral-free microcredit support for the fish farmers to tide over their credit-related problems. This study empirically assesses the impact of microcredit on the household food expenditure of fish farmers. The empirical results challenge the existing literature that access to credit increases the food expenditure of poor fish farmers. However, household assets played a pivotal role in increasing the food expenditure capacity of the fish farmers.

Does microcredit for water and sanitation improve household welfare? Evidence from Indonesia

AbstractThe water supply and sanitation (WSS) sector requires large household investments and expenditure. Microfinance provides an alternative financing scheme to support in reaching universal access to WSS to improve public health and well-being. Using propensity score matching to Water.org's household survey data, combined with the Village Potential's village statistics, this study aims to evaluate the impact of microcredit devoted to improvements in water and sanitation facilities towards household welfare measured by the WSS Joint Monitoring Programme (JMP) ladder status, income, and the share of health expenditure. Due to data availability limitations, the results indicated an associative relationship, as opposed to a causality relationship, between WSS microcredit participation and the respective outcomes. Participation in WSS microcredit was significantly associated with a higher JMP ladder for sanitation access but not with a JMP ladder for water access. Moreover, borrowers’ participation in WSS microcredit was associated with a significantly higher monthly income and a significantly lower proportion of health expenditure. Future evaluation studies of WSS microcredit should focus on improving data collection or conducting randomized control trials. For ensuring better practices, microfinance institutions (MFIs) should conduct stringent monitoring on fund usage to assure households benefit from the expected outcomes of WSS improvements.

Impact of Microcredit on Micro-Enterprise Development: A Case of Gandaki Province of Nepal

This study examines the impact of microcredit on micro-enterprise development in the Gandaki Province of Nepal. The data is collected through a structured questionnaire from microfinance clients involved in microfinance institutions for five or more years. The explanatory research design is used to find the impact of microfinance intervention on micro-enterprise development. The study finds that microfinance intervention has made significant changes in micro-business and enterprise development with the help of microcredit. The regression results show that microcredit has increased the investment, revenue, and profits of micro-businesses and helped expand them and generate employment. Proper utilization of microcredit is critical to the success and sustainability of microcredit enterprises.