Macroeconomic Effects of Microfinance: Evidence from Developing Countries

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Charles Ficawoyi Donou-Adonsou Kevin Sylwester


This paper investigates the macroeconomic effects of microfinance loans. Using a sample size of 71 developing countries over 2002-2011, we find with the system generalized method of moments methodology that microfinance loan growth has a positive and significant effect on economic growth and total factor productivity . However, there is no strong evidence of microfinance loan growth on investment and education . Our results suggest that microfinance loans can lead to income growth in developing countries, albeit slowly.

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