Bridging the Financial Divide: Promoting Microfinance and Financial Inclusion through the Weighted Product Methodology in Developing Countries
Year: 2025
Type: article
Abstract: Financial inclusion is crucial for poverty alleviation and sustainable development, especially in developing countries like India. Despite advances in mobile and digital banking, many people remain excluded from formal financial systems. This paper uses the MCDM technique, Weighted Product Methodology (WPM), to evaluate microfinance strategies using indicators such as credit linkage and cost efficiency. It explores how expanding telecommunications infrastructure and fin tech integration can support inclusion, and address challenges such as digital illiteracy, gender gaps, and cybersecurity. This research addresses financial exclusion through an integrated analysis of telecommunications infrastructure, microfinance institutions (MFIs) and a multi-criteria decision-making tool called the Weighted Product Methodology. By assessing indicators such as loan disbursement, default rates and outreach, it provides insights into MFI performance. Using data from Global Findex, MIX and NSS, along with geospatial data, the study provides a nuanced view of inclusion at the micro level. It also highlights risks such as fraud and digital illiteracy, emphasizing the need for inclusive, user-centric FinTech policies and data-driven resource allocation. Alternatives taken as Global Findex Database, Microfinance Information Exchange, IMF Financial Access Survey, National Sample Survey, similar MFI-level data. Evaluation Parameters taken as Loan Disbursement Rate (%), Client Outreach (thousands), Loan Default Rate (%), Operational Costs (% of budget). The results show that National Sample Survey received the highest ranking, whereas Microfinance Information Exchanger received the lowest ranking. According to the WPM method, National Sample Survey ranks highest in terms of its value for Financial Inclusion and Microfinance applications
DOI: 10.46632/rmc/4/1/7
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: gold
OpenAlex ID: W4410760424