Impact of Microfinance on Poverty Alleviation: A Global Analysis

Abstract

This paper investigates the impact of microfinance on poverty alleviation by using the cross-country data of microfinance institutions in 96 countries. We find that such institutions significantly affect poverty alleviation and are an effective tool for economic and financial development. Our results also show that a higher proportion of female recipients of microfinance loans and a large number of active borrowers are likely to lead to a lower level of poverty. These results remain qualitatively the same with various poverty measures and in random-effect models and a fixed-effect model.