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The Microfinance Promise in Financial Inclusion and Welfare of the Poor: Evidence from Karnataka, India

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  • Naveen K Shetty

    (Institute for Social and Economic Change)

Abstract

Microcredit is a recent addition to India’s poverty-alleviation strategy. Of late, there has been a paradigm shift from microcredit to microfinance. This study examines the promise of microfinance in the inclusion of poor, who have been left outside the gamut of formal financial markets for a long period of time. The study also examines the impact of microfinance-plus services on the household economy of the members. This paper uses primary data on household participants of microfinance programme in the state of Karnataka. We find that a majority of the sample households in the pre-microfinance programme were vulnerable to both access the financial and non-financial services. In the post-microfinance intervention, a large number of the member households are able to access the microfinance-plus services and it has enhanced the income, employment, assets, household expenditure, housing condition and empowerment of the poor. Policy recommendation includes delivery of microfinance-plus services to the marginalized and vulnerable poor at a minimum cost will have wider impact on the socio-economic well-being of the poor.

Suggested Citation

  • Naveen K Shetty, 2008. "The Microfinance Promise in Financial Inclusion and Welfare of the Poor: Evidence from Karnataka, India," Working Papers 205 Keyword : Banking, Mi, Institute for Social and Economic Change, Bangalore.
    • Handle: RePEc:sch:wpaper:205
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    Cited by:

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    2. Xolile Mamba, Tangetile, 2016. "The role of contracts in improving access to credit in the smallholder livestock sector of Swaziland," Research Theses 243472, Collaborative Masters Program in Agricultural and Applied Economics.
    3. Laston Petro Manja & Isatou A. Badjie, 2022. "The Welfare Effects of Formal and Informal Financial Access in the Gambia: A Comparative Assessment," SAGE Open, , vol. 12(1), pages 21582440221, March.
    4. Peterson K. Ozili & David Mhlanga, 2024. "Why is financial inclusion so popular? An analysis of development buzzwords," Journal of International Development, John Wiley & Sons, Ltd., vol. 36(1), pages 231-253, January.
    5. Ambreen Khursheed, 2022. "Exploring the role of microfinance in women’s empowerment and entrepreneurial development: a qualitative study," Future Business Journal, Springer, vol. 8(1), pages 1-13, December.
    6. Yakubu, Ibrahim Nandom & Bunyaminu, Alhassan, 2021. "Financial Inclusion and Economic Growth in West Africa: The Moderating Effect of Financial Openness," MPRA Paper 115183, University Library of Munich, Germany.
    7. Vandana Pareek & Manish Kumar Yadav & Neeraj Singh, 2022. "Unearthing the character of microfinance in self-employment generation for bridging the gaps of disparity: a case study," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 12(1), pages 71-81, December.

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