| By: |
Osuagwu, Eze Simpson;
Hsu, Sara;
Adesola, Ololade |
| Abstract: |
This paper investigates the impact of microfinance institutions on the
informal sector of the Nigeran economy drawing from a cross-sectional data of
14,189 customers from two major microfinance clusters – the Self-Reliance
Economic Advancement Programme (SEAP) and ASHA Microfinance Bank Limited with
a combined membership of over 700,000 clients. The study applies a descriptive
and fully modified ordinary least square (FMOLS) model to evaluate the
statistical relationship on average monthly borrowing amount and explanatory
variables of factors that could affect the ability of clients to seek support
from the various microfinance institutions. Empirical evidence suggests that
amount of money borrowed by clients is significantly affected by the nature of
business; whether the business is operating in the formal or informal sector,
gender of the entrepreneur, and on the other hand whether the degree of
borrowing is strongly affected by monthly household expenses of borrowers. The
paper therefore concludes that the informal sector is largely supported by
micro finance institutions but seeks a policy redirection for government to
take steps to formalize the large stream of informal borrowers in order to
improve domestic resource mobilization and actualize sustainable development
of the Nigerian economy. |
| Keywords: |
Microfinance, Informal Economy, Domestic Resource Mobilization, Sustainable Development, Nigeria |
| JEL: |
D1 D14 |
| Date: |
2021–06 |
| URL: |
http://d.repec.org/n?u=RePEc:pra:mprapa:112947&r= |