TITLE:
Microfinance and Poverty Eradication in the North African Countries: A Heterogeneous Panel Causality Analysis
AUTHORS:
Marwa A. Elsherif
KEYWORDS:
Microfinance, Poverty, Panel Causality, Heterogenity
JOURNAL NAME:
Open Journal of Social Sciences,
Vol.11 No.10,
October
26,
2023
ABSTRACT: Microfinance is considered as an effective tool for poverty reduction and
socioeconomic development. This paper examines the impact of microfinance on
poverty eradication by analyzing the causal links between the intensity of
microfinance and poverty estimates. It employs heterogeneous panel causality techniques on a sample of North African countries
over the period 1990-2021. Furthermore, the paper studies the impact of
other control variables on poverty namely: arable land; agricultural value added; inflation; youth population; trade
openness; school expenditure; health expenditure; rural population and per
capita GDP growth rate. Parameters are measured using the fixed-effect estimation. Results reveal that, access to microfinance
through the increase in the number of active
borrowers along with the average loan size reduce poverty significantly in the sample countries as measured by the headcount ratios and poverty gap.
Policymakers and regulators should ensure that microfinance is targeted at more
efficient and equitable lending which will create more opportunities, thus
increasing income, economic empowerment and reducing poverty.