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Finance - growth nexus and banking efficiency: The impact of microfinance institutions

Year: 2021

Type: report

Abstract: This paper investigates the relative importance of microfinance institutions (MFIs) at both the macro (financial development, economic growth, income inequality, and poverty) and micro levels (efficiency of traditional commercial banks). We observe a significant impact on most of the fronts. MFIs’ participation increases overall savings (total bank deposits) and credit allocation (loans to private sector) in the economy. Their involvement enhances economic welfare by reducing income inequality and poverty. Additionally, their active presence helps to discipline the traditional commercial banks by subjecting them to more competition triggering higher efficiency.

Source: University of Twente Research Information

Authors: Afsheen Abrar, Iftekhar Hasan, Rezaul Kabir

Institutions: National University of Modern Languages, The University of Sydney, Fordham University, Bank of Finland, University of Twente

Language: English

Topic: Microfinance and Financial Inclusion

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Decent work and economic growth, No poverty, Reduced inequalities

Open Access status: green

OpenAlex ID: W3206531995

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