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What Determines Household Participation in Credit Markets in Malawi?

Author

Listed:
  • Wytone Jombo
  • Wook Sohn

    (KDI School of Public Policy and Management, South Korea)

Abstract

This study investigates the determinants of household participation in Malawi's credit markets using merged comprehensive data from the Integrated Household Survey. We find that larger family sizes increase the probability of households' accessing credit from village banks, and that higher educational levels and residing in urban areas reduce the probability that households utilize unchartered sources. In addition, women are more likely to borrow from village banks, while men are more likely to borrow from loan sharks, relatives, and neighbors. Because access to credit has welfare-enhancing effects, it is plausible to have policies that encourage penetration of rural areas.

Suggested Citation

  • Wytone Jombo & Wook Sohn, 2024. "What Determines Household Participation in Credit Markets in Malawi?," The African Finance Journal, Africagrowth Institute, vol. 26(2), pages 27-42.
    • Handle: RePEc:afj:journl:v:26:y:2024:i:2:p:27-42
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    File URL: https://journals.co.za/doi/abs/10.10520/ejc-finj_v26_n2_a2
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    More about this item

    Keywords

    Financial Inclusion; Informal Credit; Village Banks in Malawi; Determinants of Credit Participation;
    All these keywords.

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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