Working Paper: CEPR ID: DP10484
Authors: Nargiza Alimukhamedova; Jan Hanousek
Abstract: The majority of microfinance impact studies focus on finding their effect on a specific group of beneficiaries, in contrast we aim to identify the impact on whole economies (economic growth, and financial sector development and reductions in income inequalities), which is an important policy concern, not previously addressed. To address heterogeneity across countries, we group countries into three broad clusters delineated by a set of macro-institutional determinants. We find long-term evidence of a significant ability of microfinance to affect broader economies. Moreover, the impact and dynamics differ substantially by macro-institutional environment; the microfinance effect is more pronounced in weaker environments.
Keywords: Development; Economic Growth; Income Inequality; Microfinance
JEL Codes: C5; G2; O1; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| microfinance expansion (O16) | economic growth (O49) |
| microfinance expansion (O16) | financial sector development (O16) |
| economic growth (O49) | income inequality (D31) |