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The Importance of Microfinance Institutions in the Development of Developing Countries

Author

Listed:
  • Osamah Ahmed AL-Maamari

    (Mangalore University)

  • P Vedava

    (Mangalore University)

  • Noufal Alrefaei

    (Mangalore University)

Abstract

This study intends to provide light on the favourable benefits of microfinance on a variety of social and economic outcomes, such as poverty reduction, job creation, economic independence for women, and long-term societal advancement. By enhancing the availability of financial and non-financial services to MSEs, we can increase their impact on the national economy. Microcredit programmes administered by non-governmental organisations (NGOs) have effectively reduced poverty in developing nations by providing loans with low-interest rates and minimal requirements for collateral. This study's methodology is based on a discussion and a review of prior research. However, the study's primary finding demonstrates that microfinance is critically essential. However, it confronts other obstacles that could restrict its contribution to long-term growth and monetary inclusion.

Suggested Citation

  • Osamah Ahmed AL-Maamari & P Vedava & Noufal Alrefaei, 2022. "The Importance of Microfinance Institutions in the Development of Developing Countries," Shanlax International Journal of Economics, Shanlax Journals, vol. 10(4), pages 28-35, September.
    • Handle: RePEc:acg:journl:v:10:y:2022:i:4:p:28-35
    DOI: 10.34293/economics.v10i4.5147
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    References listed on IDEAS

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    1. Ashim Kumar Kar, 2017. "Income Smoothing, Capital Management and Provisioning Behaviour of Microfinance Institutions: A Study Using Global Panel Data," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 29(1), pages 108-126, January.
    2. Copestake, James & Johnson, Susan & Wright, Katie, 2002. "Impact Assessment of Microfinance: Towards a New Protocol for Collection and Analysis of Qualitative Data," Working Papers 23746, University of Sussex, Imp-Act: Improving the Impact of Microfinance on Poverty: Action Research Program.
    3. Jonathan Morduch, 1999. "The Microfinance Promise," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1569-1614, December.
    4. Shahidur R. Khandker, 2005. "Microfinance and Poverty: Evidence Using Panel Data from Bangladesh," The World Bank Economic Review, World Bank, vol. 19(2), pages 263-286.
    5. Subrata Chakrabarty & A. Erin Bass, 2015. "Comparing Virtue, Consequentialist, and Deontological Ethics-Based Corporate Social Responsibility: Mitigating Microfinance Risk in Institutional Voids," Journal of Business Ethics, Springer, vol. 126(3), pages 487-512, February.
    6. Abraham Garcia & Dominique Foray, 2010. "What is small? Small and medium enterprises facing patenting activities," JRC Working Papers on Corporate R&D and Innovation 2010-09, Joint Research Centre.
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