Role of microfinance saving in Cameroon: a neo‐structuralist analysis

Jacob Tche

International Journal of Development Issues, 2009, vol. 8, issue 1, 48-60

Abstract: Purpose - The aim of this paper is to establish an original database from fieldwork on microfinance institutions in Cameroon. Design/methodology/approach - The main method used for the research involved statistical analysis of an original survey data. The latter fieldwork analysis has enabled us to test the hypothesis of neoclassical and neo‐structuralist economists advocating a significant relationship between microfinance savings and liberalised real bank deposit interest rates. Findings - The statistical analysis carried out indicated that microfinance savings are associated to variables other than the rate of interest. The failure of a liberalised interest rate policy to cause a significant portfolio shift from microfinance into the banking system does not support the interest responsiveness of savings as advocated by the McKinnon‐Shaw school. This paper supports, therefore, the neo‐structuralist analysis of financial development where microfinance institutions are an important structural feature of financial systems in many developing countries. Research limitations/implications - It would be interesting to extend statistical analysis undertaken in this paper to other African countries. Practical implications - The main policy issue affecting microfinance from the empirical analysis is the need to mitigate the extremely high interest rates utilised by microfinance. Banks may be encouraged to undertake a series of measures such as guaranteeing of future loans to their customer by linking savings and loans to attract microfinance members. Originality/value - The contribution of this paper, therefore, is to provide a unique opportunity to investigate the association between microfinance institution assets and real interest rates in an African country.

Keywords: Interest rates; Cameroon; Savings; Personal finance; Credit institutions (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijdipp:v:8:y:2009:i:1:p:48-60

DOI: 10.1108/14468950910967065

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