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Microfinance and poverty reduction: an empirical evidence from SAARC nations

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  • Samreen FAROOQ

    (Aligarh Muslim University Aligarh, Uttar Pradesh, India)

  • Prof. S.M. Jawed AKHTAR

    (Aligarh Muslim University Aligarh, Uttar Pradesh, India)

Abstract

The article empirically examines the impact of microfinance on poverty alleviation in the SAARC region. The study uses panel data from 2000 to 2019 for five selected SAARC countries. The proxy variable for microfinance is gross loan portfolio per capita, and poverty is measured by household consumption expenditure per capita. The other variables are the percentage of active borrowers to the total population, government expenditure on education as a percentage of GDP, and credit to the private sector by banks as a percentage of GDP. The panel data regression model is used to explain the relationship among the variables. Hausman Test suggests the use of the Fixed Effect Model. The results of the Fixed Effect Model reveal that by controlling other variables, the countries having higher Gross Loan Portfolio per capita have higher household consumption expenditure per capita and thus have lower incidences of poverty. R2 value concludes that the concerned variables explain 94.1% of variations in household consumption expenditure per capita.

Suggested Citation

  • Samreen FAROOQ & Prof. S.M. Jawed AKHTAR, 2024. "Microfinance and poverty reduction: an empirical evidence from SAARC nations," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(638), S), pages 179-186, Spring.
    • Handle: RePEc:agr:journl:v:1(638):y:2024:i:1(638):p:179-186
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    References listed on IDEAS

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    2. Hisako, KAI & Shigeyuki, HAMORI, 2009. "Microfinance and Inequality," MPRA Paper 17537, University Library of Munich, Germany.
    3. Imai, Katsushi S. & Gaiha, Raghav & Thapa, Ganesh & Annim, Samuel Kobina, 2012. "Microfinance and Poverty—A Macro Perspective," World Development, Elsevier, vol. 40(8), pages 1675-1689.
    4. Amin, Sajeda & Rai, Ashok S. & Topa, Giorgio, 2003. "Does microcredit reach the poor and vulnerable? Evidence from northern Bangladesh," Journal of Development Economics, Elsevier, vol. 70(1), pages 59-82, February.
    5. Katsushi S. Imai & Raghav Gaiha & Ganesh Thapa & Samuel Kobina Annim, 2010. "Analysis of Poverty Reducing Effects of Microfinance from a Macro Perspective: Evidence from Cross-Country Data," Discussion Paper Series DP2010-25, Research Institute for Economics & Business Administration, Kobe University.
    6. 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.
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