Impact Analysis of Formal Microcredit on Income of Borrowers in Rural Areas of Sidama Region, Ethiopia: A Propensity Score Matching Approach
Abera Alemu () and
Zerhun Ganewo
Additional contact information
Abera Alemu: Hawassa University
Zerhun Ganewo: Hawassa University
Journal of the Knowledge Economy, 2023, vol. 14, issue 1, No 4, 65-85
Abstract:
Abstract Microcredit has been found to be a critical instrument in improving the livelihood of poor people who have no financial access from other formal financial institutions. This study examined the impact of formal microcredit on income of borrowers in the rural areas of Sidama Region, Ethiopia. Data was collected from 456 sampled rural households consisting of 200 borrowers and 256 non-borrowers. This study applied propensity score matching (PSM) model to analyze the impact of microcredit on income of the borrowers. The result of this analysis indicates that microcredit had a positive and significant impact on the income of the borrowers. The sensitivity analysis result showed that the impact result estimated by this study is insensitive to unobserved selection bias and it is a true impact of formal microcredit. Therefore, microfinance institutions, other governmental, and nongovernmental organizations working in credit provision should expand access to credit to rural households in poverty reduction strategies.
Keywords: Formal credit; Income; Propensity score matching; Rural households (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s13132-021-00863-1 Abstract (text/html)
Access to the full text of the articles in this series is restricted.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:spr:jknowl:v:14:y:2023:i:1:d:10.1007_s13132-021-00863-1
Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/13132
DOI: 10.1007/s13132-021-00863-1
Access Statistics for this article
Journal of the Knowledge Economy is currently edited by Elias G. Carayannis
More articles in Journal of the Knowledge Economy from Springer, Portland International Center for Management of Engineering and Technology (PICMET)
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().