 Microfinance and poverty reduction: Evidence from DjiboutiMohamed Abdallah Ali, Mazhar Mughal and Dina Chhorn Review of Development Economics, 2022, vol. 26, issue 2, 1189-1224 Abstract: Does access to microfinance improve household welfare? We seek the answer to this question using data on 2,060 borrower and nonborrower households based in six major urban centers of Djibouti. We construct a composite index of multidimensional poverty that captures various aspects of household well‐being, including ownership of agricultural and livestock assets, land, transportation, employment, quality of housing, and sanitation facilities. We carry out estimations using an instrumental variable–based empirical strategy and a number of econometric techniques. Our results show that neither access to microcredit nor its ostensibly productive use is significantly associated with poverty regardless of the duration of time since the loan was acquired. This holds for both access to and the amount of microcredit obtained. The results are robust across specifications and econometric techniques employed. The lack of significant beneficial effect of microfinance found in the study adds to the growing literature questioning the effectiveness of microfinance as a tool for poverty alleviation. The findings raise doubts on the usefulness of Djibouti's microfinance program. Date: 2022 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:rdevec:v:26:y:2022:i:2:p:1189-1224 Ordering information: This journal article can be ordered from Access Statistics for this article Review of Development Economics is currently edited by E. Kwan Choi More articles in Review of Development Economics from Wiley Blackwell |
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